The main legal point established in the judgment is that the effective rate of duty must be deducted from the normal price, and any amount charged and collected as excise duty, subsequently refunded, if the benefit of refund has not been passed on to the buyer.

( 1 ) IN this Writ Appeal, the following three Questions of Law are referred for the Opinion of the Full Bench: (1) Whether it is correct to hold that as per the 2nd part of the explanation to Section 4 (4) (d) (ii) of the Act only the effective rate of duty can be deducted from the normal price and not that element of duty which is refunded by the Department, the benefit of which has not been passed on to the buyer? (2) Whether as per clause (ii) of the 2nd part of the explanation to 4 (4) (d) (ii) of the Act, the refunded amount can be included in the normal price, in cases where the higher rate of duty is initially assessed and collected from the customers and subsequently on a proper computation of value as per Section 4, the value of goods gets reduced resulting in refund of duty, the benefit of such refund is not passed on to buyer? (3) Where full duty is levied on exempted goods and subsequently as a result of applying the exemption notification, the excess duty is refunded, whether as per clause (i) of the 2nd part of the Explanation to 4 (4) (d) (ii) of the Act, such excess amount (i. e. , the difference between the full amount of duty and the duty payable at reduced rate) the benefit of which is not passed on to buyers becomes part of the normal price?

( 2 ) BRIEF facts of the case, to the extent necessary for answering the questions referred for our Opinion, are as follow: The respondent-Alembic Glass Industries Limited, was engaged in the manufacture and sale of glass and glass-wares at its factory situated in White Field near Bangalore. During the year 1975, the respondent filed the price-lists of their products before the Superintendent of central Excise, Bangalore, for the purpose of enabling the Excise department to levy the excise duty leviable under the provisions of the Central Excise and Salt Act, 1944 ('the Act' for short ). In the price-lists the respondent stated that cartons and packing materials used for packing the glass and glass-ware articles, manufactured and sold by the respondent, were being supplied by the buyers and therefore the cost of such packing material were not includible in the assessable value of the goods for the purpose of levy of excise duty. The price-lists as submitted by the respondent was provisionally accepted by the Superintendent. The Assistant Collector of Central excise, however, had issued a notice to the respondent calling upon it to show cause as to why the provisional approval accorded to the price lists by the Superintendent should not be withdrawn and the cost of packing material should not be included in the assessable value. After the issue of the show cause notice, the respondent presented writ Petition No. 5995 of 1975, inter alia, challenging the legality of the proposal to include the value of the packing material in the assessable value of the goods and to levy excise duty on the total value so arrived at. The Division Bench of this Court allowed the said writ Petition by its order dated 23-1- 1985. The Division Bench held that as according to Section 4 (4) (d) (i) of the Act, value of packing material which is of a durable nature and is returnable by the buyer, has to be excluded, in finding out the assessable value of the goods for the purpose of levy of excise duty, there was no logic or reason to include the value of the packing material supplied by the buyers themselves. On this view of the matter, the show-cause notice was set aside and the Division Bench also held that the respondent was entitled to make an application for refund of excise duty, to which the respondent would become entitled to consequent on the quashing of the show-cause notice on the ground that the value of packing material supplied by the buyers could not be included in the assessable value of the goods for purposes of levy of excise duty under the Act. The relevant portion of the Judgment is Paragraph-18. It reads:-"18. On the above discussion, it follows that the impugn