2002 Supreme(SC) 1048

2002(7) Supreme 357
SUPREME COURT OF INDIA
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, Kolkata)
S.N. Variava & Brijesh Kumar, JJ.
The Tata Iron & Steel Co. Ltd. -Appellant
versus
Collector of Central Excise, Jamshedpur -Respondent
Civil Appeal No. 508 of 1998
With
C.A.No. 3530/1997, C.A.Nos. 987-996/1998, C.A.Nos. 2785-2790/2001, C.A.Nos. 3002-3003/2001, C.A.Nos. 3857-3859/2001, C.A.No. 4226/2001, C.A.No. 4227/2001, C.A. 4760/2001, C.A.Nos. 4541-4558/2001, C.A.Nos. 4559-4630/2001, C.A.Nos. 4631-4657/2001 and C.A.Nos. 749-751/2002
Deided on 24-10-2002
Counsel for the Parties :
For the Appearing Parties : Mukul Rohtagi, Additional Solicitor General, Ashok H. Desai, Sr. Advocate, Ravinder Narain, Rajan Narain, Ms. Sonu Bhatnagar, Ajay Aggarwal, Amit Bhagat, V. Lakshmikumaran, A.R. Madhav Rao, Alok Yadav, V. Balachandran, Gaurishankar Murthy, Ms. Nisha Bagchi, Ajay Sharma, B.K. Prasad, Ravinder Narain, Rajan Narain, Ms. Sonu Bhatnagar, Ajay Aggarwal, Amit Bhagat, Vikram S. Nankani, Ms. Bina Gupta, Ms. Vanita Bhargava, Advocates.

VERY IMPORTANT POINT
The elements required to be added by the members steel plants, as per the decision of the Joint Plant Committee are not admissible deductions u/s 4(4)(d)(ii) of Central Excise & Sale Act, 1944 as they do not fall within the definition of term "other taxes" and that though such addition, which is a compulsory impost, since is for the benefit of members, can be considered to be price on which excise duty is payable by the parties.

Headnote:(i) Central Excise and Salt Act, 1944-Section 4-Valuation of Excisable goods for purposes of charging of excise duty-Value of the goods-Natural price-To exclude excise, a sale tax, a trade discount and "other taxes"-Notification No. SC/19(6)(9) dated 16.1.92-The addition of an element to the ex-works price of steel fixed by Joint Plant Committee (JPC) and Steel Priority Committee (SPC) by Steel Companies-Whether falls under "other tax" thus exempt from levy of excise? (No)-Case law referred-2000(4) SCC 137 relied on.

       Held : In the present case, it has already been held by this Court in Ispat Industries case that there is no backing of any statutory provision for the creation of these funds. Further it has already been held, and in our view correctly, that these main steel plants were the only member steel plants. The levy was only on them and the fund was created for the utilization by these member steel plants only. Also to be noted that even though the Essential Commodities Act empowers regulation of price, it does not empower imposition of any taxes. The addition of an element to the ex-works price has no statutory backing or force. It is not by the Central Government or the State Government or any local authority. It is a levy by a Committee majority of whose members are representatives of the steel plants. The purpose of creating funds is for the benefit of these member steel plants. Such a levy, even though, it may be compulsory can never be "tax". (Para 15)

       (ii) Determination of value of goods for Excise Duty and Determination of Income for Income Tax-Whether same principles will apply? (No)-Result-Contrary view of larger Bench of CEGAT is incorrect-Revenue appeals allowed and appeals of assessee companies dismissed-Directions issued for pending matters-Appeals disposed of accordingly.

       Held : We have heard the parties. In our view, Mr. Rohtagi is right. Principles on which "income" is to be determined under the Income Tax Act cannot apply when determining "value" for purposes of Excise Duty. Under the Income Tax Act, tax is payable on income which reaches the assessee. On the other hand, Section 4 of the said Act shows that excise is payable on the price at which goods are ordinarily sold to the buyer. Thus the principles on which Bijli Cottons Mills case and Tollygunge Club s case were decided would not be appropriate and would not apply for deciding "value" for the purposes of the said Act. In our view the decision of CEGAT in Mohan & Co. s case cannot be said to be good law. We are supported in our view by the decision in the case of Hindustan Sugar Mills v. State of Rajasthan reported in (1978) 4 SCC 271. In this case the question was whether the assessee was liable to pay Sales Tax on the amount of railway freight collected by them from the purchaser. It was held that the assessee was bound to pay Sales Tax on such amounts. In the case of E.I.D. Parry (I) Ltd. v. Asst. Commissioner of Commercial Taxes reported in (2000) 2 SCC 321 it was held that the purchase price is the total amount of consideration for the purchase of goods. It was held that this would include price and also other amounts payable by the purchaser. These authorities are under the Sales Tax Act. The principles for computing value for purposes of Sales Tax are similar to those of computing value for purposes of Excise Duty. It is these principles which would apply. In any event, a plain reading of the Notification makes it clear that what has been added in an "element of price". Neither JPC nor the SPC could have made any compulsory exaction from the purchaser. They could only regulate prices as the powers which they derived are only those which are conferred on them by the Notification which established them. Clause 8 of the Notification dated 7th April, 1971 only gave a power to determine the prices. The amended Clauses (9A) and (9B), which were introduced by Notification dated 27th December, 1978, also empowered them merely to add elements to the ex-works price. In other words the ex-works price could be increased by adding an element to it. Thus what was being added was to the price. Another aspect to be kept in mind is ultimate beneficiaries of these amounts are the steel plants themselves. In our view therefore the view expressed by the larger Bench of CEGAT, Delhi cannot be said to be the correct view. In our view, the decision of CEGAT, Calcutta in SAIL v. Collector of Central Excise reported in 1997(90) ELT 502 is correct. In this view of the matter, the Appeals filed by the Revenue are allowed. The Appeals filed by the Companies against the Judgment, in the case of SAIL v. Collector of Central Excise reported in 1997(90) ELT 502 are dismissed. We are told that in some of the matters the question of a proper calculation of the duty also arises. We are told that CEGAT did not undertake the exercise of proper calculation as they held in favour of the assessee. In those cases where a question of re-calculation arises, the matters will necessarily stand referred back to CEGAT for determination of the exact amounts in accordance with law. Parties to jointly intimate the Office, a list of such matters. In case of dispute liberty to apply. With these directions the Appeals stand disposed of. There will be no order as to costs. (Paras 25 to 31)