NDLI: Kirloskar Brothers Ltd., Dewas (m.p.) Vs. Union of India and Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	central excise and salt
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Central Excise Act, 1944 (1 of 1944)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Central Excises and Salt Act, 1944: Section 4-Explanation (prior to Amendment) and Section 36(2). Excise Duty-Central Government's Notification No. 84/72-CE dated 17.3.72 as amended by Notification No. 84/72 dated 22.3.72- Power driven and monoblock pumps-Electric Motors purchased and used in manufacture of pumps-Excise duty paid on Electric Motors-Whether deductible in arriving at assessable value. Trade discount-Discount given to distributors providing after sales service-Also discount given to wholesalers not providing after sales service-Whether entitled for deduction from excise value. The appellant-Company was manufacturing power-driven pumps and monoblock pumps. It was purchasing electric motors from another company and using them in the manufacture of these pumps. The Superintendent of Central Excise issued show cause notices to the appellants for recovery of short levy of duty relating to the period from 17th March, 1972 to 31st March 1973 stating that (1) there was less determination of the assessable value of pumps due to non-inclusion of Central Excise duty paid on electric motors used in the manufacture or pumps and that (2) there was deduction of irregular trade discount on wholesale cash price while determining the assessable value of the articles in question. The Assistant Collector directed the appellant to pay the duties short levied holding that the excise duty paid by the appellant on electric motors G fitted to the pumps could not be deducted while computing the assessable value or the pump sets for purposes of assessment and that the wholesale ':>< cash pri.ce minus the trade discount, which is uniformly given to all wholesale dealers, would represent the assessable value for assessment purposes.Against the orders of the Assistant Collector the appellant preferred an appeal before the Appellate Collector who allowed the appeal and quashed the demand notices holding (i) that the assessable value of the pumps had to be arrived at after deduction from the wholesale cash price of the excise duty payable not only on the pumps which are manufactured but also the excise duty paid on the electric motors which were used as a component of the pumps and (ii) that in determining the assessable value of the PD pumps a discount of 30 per cent declared by the appellant and allowed to wholesale dealers was liable to be deducted from the wholesale cash price of the pumps under the provisions of the section 4 of the Central Excises and Salt Act, 1944. In exercise of the powers conferred on it under section 36(2) of the Act the Central Government suo moto issued a show cause notice dated 21st June, 1976 to the appellant proposing to set aside the order of the Appellate Collector and restore the orders of the Assistant Collector stating that the Appellate Collector has erred in his decision. The appellant filed its reply to the notice and also made its submissions during the course of personal hearing. After considering the appellant's reply as well as points urged by it during the course of personal hearing the Central Government set aside the Appellate Collector's order and restored the Assistant Collector's orders.The appellant filed a writ petition in the Madhya Pradesh High Court challenging the Central Government's order contending that the Central Government erred in setting aside the order of the Appellate Collector and in restoring the orders of the Assistant Collector. The High Court held that the Explanation to Section 4 of the Act provides for deduction of trade discount and the amount of duty payable at the time of removal of the article from the factory. The 'duty' referred to in the explanation is the duty payable on the product which is manufactured and does not refer to the duty paid on the raw material or the component of the product manufactured. The High Court agreed with the order of the Central Government on the deduction on trade discount and rejected the appellant's contention that the excise duty paid on the component parts could not be treated as manufacturing cost and that it was not competent for the Government to levy excise duty on excise duty paid. In appeal to this Court it was contended on behalf on the appellant (1) that while computing the assessable value the duty paid on electric motors for purposes of manufacturing monoblock pumps was also liable to be excluded; (2) that the Central Government ignored the _Notification No. 84/72-CE dated 17.3.1972 as amended by Notification No. 113/72 dated 22.3.72; and (3) that besides the depots of the appellant there are other, five independent wholesalers and the Central Government should not have ignored the trade discount allowed to them.
Judge	Hon'ble Mr. Justice Yogeshwar Dayal
Neutral Citation	1992 INSC 70
Petitioner	Kirloskar Brothers Ltd., Dewas (m.p.)
Respondent	Union Of India And Ors.
SCR	[1992] 2 S.C.R. 81
Judgement Date	1992-03-10
Case Number	1773

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