Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 1975-Rules 5 and 7 Central Excises and Salt Act 1944-Section 4(1)(a) and (b) Central Excise Valuation Rules |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Central Excises and Salt Act, 1944-Section 4(1)(a) and (b)-Sale of goods by manufacturer to a company in one State and to independent dealers in other States-Sale price to the Company lower than the price charged from independent dealers-Previously resale price by the company to the dealers declared as assessable value for payment of excise duty as the Company was treated by Revenue, as related to the manufacturer-Central Board of Excise and Customs held that dealers in different regions cannot be treated as different class of buyers-Notice by Revenue to the manufacturer to take the highest price, at which the goods were sold as assessable value-Excise duty paid on the basis of price at which goods sold to independent dealers-Show cause notice by Revenue under third proviso to Section 4(1)(a) proposing to take resale price of company as the basis for determining assessable value and demanding differential duty-Demand confirmed by Collector holding that assessable value to be u/s. 4(1)(b)-Appellate Tribunal, invoking first proviso to Section 4(1)(a), held that the dealers purchasing through the Company and the dealers directly purchasing from the manufacturer being different class of buyers, price to the independent dealers cannot be the basis for assessing sale to the Company-On appeal, held: Normal price to independent dealers being available, same to be treated as basis for arriving at the assessable value to Company also-First proviso to the Section is inapplicable as the sale to related buyer is not covered by the Section and since the dealers, as per the Circulars, cannot be treated as different class of buyers-Tribunal having invoked first proviso to Section 4(1)(a) has gone beyond the show cause notice and order of Collector-Section 4(1)(b) also not applicable-Central Excise Valuation Rules, 1975-Rules 5 and 7. Appellant-manufacturer used to sell its goods to independent dealers throughout the country except State of Uttar Pradesh. It sold the goods in the State of Uttar Pradesh though Company 'S' at a lower price. Company 'S' was also an independent manufacturer. Appellants used to tile two sets of price list, one in respect of the sale to the independent dealers and other in respect of sale to 'S'. In the price list for sales to 'S', the resale price of 'S' to dealers was declared as assessable value for payment of excise duty because the Revenue treated 'S' as related to the appellant. Pursuant to a Circular issued by Central Board of Excise and Customs, to the effect that the wholesale dealers in India could not be considered as belonging to different classes, Revenue issued notices proposing to take the highest price at which the goods were sold by the appellants. Appellant filed single price list in Part - 1 u/s. 4(1)(a) of Excise Act, 1944 in respect of their Sales made to independent dealers based on the sale price charged to these dealers. The price list also covered sales in Uttar Pradesh made to 'S'. Excise duty was paid on the appellant's price to independent dealers including sales made to 'S'. Show cause notice was issued by Revenue in relation to applicability of Section 4(1)(b), proposing to take resale price of 'S' as the basis for determining the assessable value in respect of sales made by the appellant to 'S' in Uttar Pradesh. On this basis, differential duty was demanded. Respondent-Collector confirmed the demand holding that 'S' was a related person and, therefore, in view of third proviso to Section 4(1)(a) of the Act, excise duty was to be paid by the appellants based on the price at which the goods were resold by 'S' to its dealers; and that assessable value has to be only u/s. 4(1)(b). In appeal, the Tribunal upheld the order of Collector relying on first proviso to Section 4(1)(a) holding that Section 4(1)(b) was not applicable; and that dealers of 'S' in Uttar Pradesh constitute a different Class of buyers than the dealers in other regions and therefore, the price of 'S' to its dealers should be the value under first proviso to Section 4(1)(a) in respect of sales made by appellant to 'S'. In appeal to this Court, appellant-assessee contended that Tribunal, by deciding the dispute under first proviso to Section 4(1)(a) had gone beyond the show cause notice and the order of the Collector, as the same were passed under third proviso to Section 4(1)(a); that when wholesale price to independent dealers satisfying the requirements of Section 4(1)(a) is available, even sales to related persons should have been assessed on the wholesale price to independent dealers; and that first proviso to Section 4(1)(a) was also not invokable in the present case. Respondent-Revenue contended that Section 4(1)(a) was not applicable as there was no comparable sale price available for independent buyers as in the State of U.P. no sale was affected directly; that when the goods were not offered for sale to any dealer nor supplied in U.P. except the Company, then the wholesale price charged at the depot when the goods enter the wholesale market for the first time, would be the normal price u/s. 4(1)(b) r/w. Rules 7 and 5 of the Central Excise Valuation Rules, 1975; that though the Circulars are binding on the Department, the same could be ignored, having been held invalid by judicial order; and that the Tribunal having held that Section 4(1)(b) was not applicable, it was not open for it to hold that Section 4(1)(a) was applicable. |
Judge | Hon'ble Dr. Justice A.R. Lakshmanan |
Neutral Citation | 2005 INSC 230 |
Petitioner | M/s. Saci Allied Products Ltd., U.p. |
Respondent | Commissioner Of Central Excise, Meerut |
SCR | [2005] 3 S.C.R. 881 |
Judgement Date | 2005-04-26 |
Case Number | 5854 |
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