1977 Supreme(Cal) 348

High Court Of Calcutta
A. K. MUKHERJI
HINDUSTAN PILKINGTON GLASS WORKS LIMITED - Appellant
Versus
SUPERINTENDENT CENTRAL EXCISE, ASANSOLE - Respondent
CR 1386 (W)  Of  1974
Decided On : 09/27/1977

The assessable value for the purpose of excise duty under the Central Excise and Salt Act, 1944, should include only the manufacturing cost and manufacturing profit and exclude post-manufacturing costs and profits, including special packing charges, forwarding charges, and freight.

Headnote:

EXCISE DUTY - Assessable value - Determination - Inclusion of special packing charges, forwarding charges and freight - Disallowance of trade discounts - Refund of duty paid on selling cost and selling profits - Maintainability of writ petition - Violation of principles of natural justice - Availability of alternative remedy - Scope of judicial review.

Fact of the Case:

The petitioner, a manufacturer of wire and figured glass, challenged the orders of the Central Excise Authorities determining the assessable value of the glass products manufactured by the petitioner and the assessment of excise duty for the relevant periods. The petitioner also sought a refund of the excise duty paid on the selling cost and selling profits. The petitioner contended that the inclusion of special packing charges, forwarding charges, and freight in the assessable value was not permissible under the Central Excise and Salt Act, 1944, and that the disallowance of trade discounts was contrary to the provisions of the Act. The respondents contended that the inclusion of the said charges was justified as they were incidental to the completion of the manufactured article and that the trade discounts were not available to all independent buyers in all regions.

Finding of the Court:

The Court held that the inclusion of special packing charges, forwarding charges, and freight in the assessable value was not permissible under the Act as they were post-manufacturing costs. The Court also held that the disallowance of trade discounts was not justified as the petitioner had provided evidence that the discounts were available to traders at different rates in different regions and that an average rate could be computed for the purpose of allowing the discounts. The Court further held that the petitioner's claim for a refund of the excise duty paid on the selling cost and selling profits was not maintainable as the petitioner had not raised the issue of refund at any stage and had already paid the duty to the Government.

Issues: 1. Whether the inclusion of special packing charges, forwarding charges, and freight in the assessable value was permissible under the Central Excise and Salt Act, 1944? 2. Whether the disallowance of trade discounts was contrary to the provisions of the Act? 3. Whether the petitioner's claim for a refund of the excise duty paid on the selling cost and selling profits was maintainable?

Ratio Decidendi: 1. The Court held that the inclusion of special packing charges, forwarding charges, and freight in the assessable value was not permissible under the Act as they were post-manufacturing costs. The Court relied on the Supreme Court's decision in A. K. Roy v. Voltas Ltd., wherein it was held that the assessable value should include only the manufacturing cost and manufacturing profit and exclude post-manufacturing costs and profits. 2. The Court held that the disallowance of trade discounts was not justified as the petitioner had provided evidence that the discounts were available to traders at different rates in different regions and that an average rate could be computed for the purpose of allowing the discounts. The Court observed that trade discounts are allowed to traders and not to independent buyers and that if the discounts are given by the petitioner at different rates to traders at different regions, then an average rate is to be computed and on such average rate trade discounts are to be allowed. 3. The Court held that the petitioner's claim for a refund of the excise duty paid on the selling cost and selling profits was not maintainable as the petitioner had not raised the issue of refund at any stage and had already paid the duty to the Government. The Court observed that justice did not lie on the side of the petitioner and that it would not be appropriate to order the refund of the amount as it never came from the petitioner's pocket.

Final Decision: The Court quashed the orders of assessment for the relevant periods and the demand of Rs. 46,277.92. The petitioner's claim for a refund of Rs. 47,71,166 was rejected. The Court, however, allowed the Central Excise Authorities to make a fresh assessment with respect to the aforesaid periods in light of the observations made in the judgment.