1. Dispute regarding the inclusion of the difference between freight collected and freight actually paid in the assessable value for excise duty. (Para 1 )
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1997 Supreme(SC) 951
SUPREME COURT OF INDIA
J.S.Verma, CJI., B.N. Kirpa, K Venkataswami, JJ.
BARODA ELECTRIC METERS LTD., APPELLANT
VERSUS
COLLECTOR OF CENTRAL EXCISE, RESPONDENT.
Civil Appeals Nos. 15457-59 of 1996, decided on July 15, 1997.
Important Points
Excise duty is a tax on the manufacturer and not on the profits made by a dealer on transportation. Therefore, any difference between equalized freight collected and actual freight paid cannot be included in the assessable value for excise duty.
Subject
Tax Law - Central Excise
Headnote
(A) Central Excise - Assessable Value - Freight charges - Equalised freight charged by manufacturer - Where freight actually paid is less than the amount collected by way of freight and transportation charges, the difference cannot be considered part of the assessable value - Duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. (Para 1)
Facts of the case:
The appellant charged equalised freight from all customers. The Tribunal held that since the actual freight paid was less than the amount collected, the difference appropriated by the appellant should be included in the assessable value for the purpose of calculating excise duty.
Findings of Court:
The Tribunal proceeded on an incorrect premise. It is established that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation.
Issues: Whether the difference between the equalised freight collected and the actual freight paid should be included in the assessable value for the purpose of calculating excise duty.
Ratio Decidendi: Excise duty is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation; therefore, the difference in freight charges cannot be part of the assessable value.
Result: Appeals allowed.
Facts of the case:
The appellant charged equalised freight from all customers. The Tribunal held that since the actual freight paid was less than the amount collected, the difference appropriated by the appellant should be included in the assessable value for the purpose of calculating excise duty.
Findings of Court:
The Tribunal proceeded on an incorrect premise. It is established that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation.
Issues: Whether the difference between the equalised freight collected and the actual freight paid should be included in the assessable value for the purpose of calculating excise duty.
Ratio Decidendi: Excise duty is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation; therefore, the difference in freight charges cannot be part of the assessable value.
Result: Appeals allowed.
Legal Category Hierarchy
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tax law
-
excise duty
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assessable value
- freight charges (Para 1)
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assessable value
-
excise duty
Table of Contents
2. Whether the difference between freight collected and freight paid, being appropriated by the manufacturer, forms part of the assessable value. (Para 1 )
3. The court found the Tribunal's premise incorrect, noting that excise duty is a tax on the manufacturer rather than on transportation profits. (Para 1 )
4. Excise duty is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. (Para 1 )
5. Appeals allowed and the impugned judgment of the Tribunal set aside. (Para 2 )
6. Does the profit earned from transportation charges form part of the assessable value for excise duty?
No, because excise duty is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. (Para 1 )
ORDER
1. The Tribunal accepted the position that equalised freight was charged by the appellant from everyone, but proceeded to say that even though freight cannot be a part of the assessable value that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In our opinion, the Tribunal proceeded on an incorrect premise. It was clearly held in Indian Oxygen Ltd. v. CCE [1988 Supp SCC 658 : 1989 SCC (Tax) 9] that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained.
2. Consequently, the appeals are allowed and the impugned judgment of the Tribunal is set aside.
