JUDGMENT

PATHAK, J. - On May 9, 1983 we made an order ((1983) 4 SCC 210 : 1983 SCC (Tax) 315) setting forth the legal position in respect of various aspects of the levy of excise duty under the Central Excises and Salt Act, 1944, both before its amendment by the Central Excises and Salt (Amendment) Act, 1973 (Act XXII of 1973) and after such amendment. We record now the reasons for that order.

2. At the outset, we may state that it is not possible in this judgment to deal with the numerous individual appeals, writ petitions, special leave petitions and transferred cases before us on the particular facts of each, and we propose to consider the points arising therein from a general perspective.

3. The Central Excises and Salt Act, 1944 relates to central duties of excise and to salt. Sub-section (1) of Section 3 provides that duties of excise shall be levied and collected on all excisable goods, other than salt, which are produced or manufactured in India, at the rates set forth in the First Schedule. We are not concerned with the provision relating to salt. Sub-section (2) empowers the Central Government to fix, for the purpose of levying the duties, tariff values of the articles enumerated in the First Schedule as chargeable with duty ad valorem.

4. Before its amendment by Act XXII of 1973 Section 4 read as follows :

4. Determination of value for the purposes of duty. - Where, under this Act, any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be -

(a) the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufactures or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or

(b) where such price is not ascertainable, the price at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer or producer, or his agent, at the time of the removal of the article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production, or if such article is not sold or is not capable of being sold at such place, at any other place nearest thereto.

Explanation. - In determining the price of any article under this section, no abatement or deduction shall be allowed except in respect of trade discount and the amount of duty payable at the time of the removal of the article chargeable with duty from the factory or other premises aforesaid.

5. It seems that with the increase in the ad valorem levies in the Central Excise. Tariff the operation of Section 4 presented certain practical difficulties, some of which were prominently brought out in the judgment of this court in A. K. Roy v. Voltas Limited ((1973) 2 SCR 1089 : (1973) 3 SCC 503 : 1973 SCC (Tax) 261 : AIR 1973 SC 225). Among other observations the Court appears to have said that the real value of an article for the purses of the excise levy would include only the manufacturing cost plus the manufacturing profit. In order to overcome the various difficulties, Parliament enacted Act XXII of 1973 which substituted a new Section 4 for the original provisions with effect from October 1, 1975. The new Section 4 provides :

4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be -

(a) The normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consi