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HIGH COURT OF CALCUTTA
Masud
ELECTRIC LAMP (INDIA) PVT. LTD. - Appellant
Versus
COLLECTOR OF CENTRAL EXCISE - Respondent
Matter 153 Of 1973
Decided On : SEPTEMBER 27, 1974
EXCISE DUTY - LEVY - WHOLESALE CASH PRICE - MANUFACTURING COSTS AND PROFITS - POST-MANUFACTURING COSTS AND PROFITS - REFUND OF EXCISE DUTY - JURISDICTION OF WRIT COURT - ESTOPPEL - WAIVER - ACQUIESCENCE - LIMITATION - INJUNCTION - DISCRETION OF COURT - CENTRAL EXCISES AND SALT ACT, 1944, SECTION 4.
Fact of the Case:
The petitioner, a manufacturer of electric lamps, filed a writ petition challenging the levy of excise duty by the respondents on the basis of the price list of its customer-companies, which was higher than the petitioner's ex-factory price. The petitioner claimed that excise duty could only be levied on the wholesale cash price, which should include only manufacturing costs and manufacturing profits, and not on post-manufacturing costs such as selling costs and profits. The petitioner also sought a refund of the excise duty paid in excess since 1961.
Finding of the Court:
The court held that the petitioner was entitled to levy excise duty only on the wholesale cash price, which should include only manufacturing costs and manufacturing profits, and not on post-manufacturing costs such as selling costs and profits. However, the court found that the facts of the case were distinguishable from those in the Voltas case, which had laid down the principle that excise duty could only be levied on manufacturing costs and manufacturing profits. In the instant case, the petitioner's wholesale cash price was fixed, controlled, and dictated by its four so-called independent customer-purchasers, who were subsidiaries of foreign companies. The court also found that the petitioner had not challenged the vires of the statutory forms prescribed for determining the wholesale cash price. Therefore, the court discharged the rule nisi obtained by the petitioner, subject to the direction that the respondents would deal with pending applications relating to the levy of excise duty in accordance with the principles laid down in the Voltas case.
Issues: 1. Whether excise duty could be levied on the wholesale cash price, which should include only manufacturing costs and manufacturing profits, and not on post-manufacturing costs such as selling costs and profits? 2. Whether the facts of the case were distinguishable from those in the Voltas case, which had laid down the principle that excise duty could only be levied on manufacturing costs and manufacturing profits? 3. Whether the petitioner was entitled to a refund of the excise duty paid in excess since 1961?
Ratio Decidendi: 1. Yes, excise duty could only be levied on the wholesale cash price, which should include only manufacturing costs and manufacturing profits, and not on post-manufacturing costs such as selling costs and profits. (Voltas case) 2. Yes, the facts of the case were distinguishable from those in the Voltas case. In the instant case, the petitioner's wholesale cash price was fixed, controlled, and dictated by its four so-called independent customer-purchasers, who were subsidiaries of foreign companies. The petitioner had also not challenged the vires of the statutory forms prescribed for determining the wholesale cash price. 3. No, the petitioner was not entitled to a refund of the excise duty paid in excess since 1961, as the orders of assessment passed in connection with the excise duty from the year 1961 till today could not be quashed, and the petitioner had already realized the alleged excess excise duty from their wholesale or retail dealers.
Final Decision: Rule nisi discharged subject to the direction that the respondents would deal with pending applications relating to the levy of excise duty in accordance with the principles laid down in the Voltas case.
( 1 ) IN this Writ Petition Messrs. Electric Lamp Manufacturers (India) Private Limited (hereinafter referred to as ELMI) has prayed for an order in the nature of Mandamus directing the respondents to assess-and recover excise duties under Section 4 of the Central Excises and Salt Act, 1944 on the manufacturing costs and manufacturing profits of the product of ELMI and also for an order restraining the respondents from levying and collecting any duty ELMI on the post manufacturing costs including selling costs or profits. The ELMI has also asked for a direction on the respondents to refund to it the sum of Rs. 1,98,40,969. 67 and interest on the ground that the said sum had been illegally demanded and collected from ELMI from 1961 till today. The facts of the case as set out in the petition may briefly be stated as follows :-
( 2 ) ELMI is a manufacturer of diverse electric lamps including fluorescent lamps and bulbs. The petitioner has been selling its products only to a limited number of customers such as "philips India Limited", Central Electric Company (India) Ltd. and Crompton Greaves Limited etc. The products are sold to these companies in accordance with their orders and specification in their respective brand names, "philips," "osram", "mazda" and "crompton" etc. The price at which ELMI sells its goods to these customers includes the actual manufacturing cost and manufacturing profits. These customer-companies sell the products of ELMI in their respective brand names through their own sales organisations. Each of these customer-companies has got its own separate dealer or distribution arrangements. In or about 1955 excise duty was first levied on the products of the petitioner on "specific basis, that is to say, fixed sum of money for a fixed number of say 100 lamps. Since 1961 the excise duties were being collected by the respondents on ad valorem basis excepting ministure pre-focus lamp which was continued to be assessed on specific basis till March 16, 1972. The excise duty was being levied under Section 3 of the said Act on ad valorem basis. The petitioner's definite case is that the levy of excise duty on their products over anything more than manufacturing cost and manufacturing profits was and is illegal. The petitioner has all along been paying the excise duties as assessed and demanded by the respondents on the mistaken belief that the duty was payable also on the selling expenses incurred and selling profits made by the said customer companies. Since 1968 the petitioner has been-filing with the piopet office under the respondents the price list in accordance with Rule 173b of the Central Excise Rules, 1944 for their approval. After approval of the list the petitioner allowed the said customer companies to remove the goods and the duty payable thereon is debited to the petitioner's account against the advance deposit in the account of the petitioner with the Reserve Bank of India at its Calcutta Office. The assessable value of the petitioner company has all along been determined by the respondents not on its' selling price to its customer companies but on the said customer-companies price list less the trade discount. The petitioner has now filed this application on the basis of the judgment of the Supreme Court in A. K. Roy and Anr. v. Voltas Limited A. I. R. 1973 S. C. 225 herein described as "the Voltas case". According to Mr. Subroto Roy Chowdhury, Counsel for the petitioner, respondents are entitled to levy duty only on the manufacturing costs and manufacturing profits of the petitioner company. The levy of excise duty on the basis of the price list of the customer-companies, according to the petitioner, is unwarranted in law.
( 3 ) THE petitioner has, therefore, prayed for refund of the said sum of Rs. 1,98,40,969,67 with interest on the ground that the said duty was illegally collected from the petitioner since 1961 on the basis of the sale price of the Customer Companies which is much highe
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