Civil Appeal No 353 N of 1971
From the Judgment and Order dated 297
1970 of the Punjab and Haryana High Court in CW No 233170
Civil Appeal No 1469 N of 1972
From the judgment and order dated 28
1971 of the Patna High Court in CW No 133010
AND Civil Appeal No 1470 of 1972
From the judgment and order dated 24
1971 of the Calcutta High Court in FMA No 201 of 1971 Dr Y section Chitale Anil Sharma and Praveen Kumar for the Appellants
M section Gujaral V K Punjwani C V Subba Rao and Ms A Subhashini for the Respondents
The Judgment of the Court was delivered by BALAKRISHNA ERADI J
In these three appeals the parties involved are the same and the point arising for determination is identical
Hence they were heard together and are being disposed of by this judgment
963 The Bata Shoe Company Ltd hereinafter called the company  is an existing company within the meaning of The  with its head office at No 30 Shakespeare Sarani Calcutta 17
The company is engaged in the business of manufacturing and dealing in articles of footwear and accessories
For the purposes of the said business the company has three manufacturing establishments namely a factory a Batanagar in the district of 24 Parganas West Bengal another factory at Batanagar near Patna in the State of Bihar and a third manufacturing establishment at Faridabad in the State of Haryana
By virtue of Entry 36 of the First Schedule in the hereinafter called the Act   footwear and parts thereof in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power is chargeable to excise duty the rate of duty being ten per cent ad valorem in respect of footwear and fifteen per cent ad valorem in respect of parts of footwear 
By a Notification G section R 360 dated February 28 1965 issued by the Central Government in exercise of the powers conferred by Sub rule 1 of Rule 8 of the Central Excise Rules 1944 for short the Rules footwear and parts thereof were completely exempted from levy of excise duty
However shortly thereafter by other Notification dated May 26 1967 the exemption from duty granted in respect of footwear and parts thereof by the preceding Notification dated February 28 1965 was withdrawn
Thereafter followed yet another Notification dated July 24 1967 which was in the following terms NOTIFICATION CENTRAL EXCISES G section R
In exercises of the powers conferred by Sub rule 1 of rule g of the Central Excise Rule 1944 the Central Government hereby exempts with effect from the 26th may 1967 footwear falling under Item No 36 of the First Schedule to the I of 1944 of which the value does not exceed Rs 500 per pair from the whole of the duty of excise leviable thereon
No 17167 964 The sole question raised in these appeals Concerns the interpretation of this Notification
During the year 1967 and 1968 the company was manufacturing certain items of footwear of which the wholesale price was RS 625 per pair The company contended that since the assess able value of such items of footwear calculated in accordance with the provisions of Section 4 of the Act as they stood at the relevant time was only Rs 494 and hence less than Rs 5 per pair such items qualified for exemption from duty under the Notification dated July 261967
Though originally the Department appears to have been inclined to accept the correctness of the stand taken by the company
Later on they changed their stand and informed the company that the articles of footwear manufactured by it of which the wholesale price was Rs 625 per pair were chargeable to excise duty since while computing the value of the articles for the purpose of judging the applicability of the exemption the duty element of the cost structure could not be deducted from the whole sale price and on such calculation the value of such footwear would exceed Rs 5 per pair
The company took up the matter with the respective Collectors of Central Excise in West Bengal Bihar and Haryana but without success In the meantime the Department continued to levy and collected from the company substantial amounts by way of duty on such articles of footwear
The company therefore instituted separate Writ Petition in the High Courts of Calcutta Patna and Punjab and Haryana The Patna High Court allowed Writ Petition of the company and upheld its contention that the articles of footwear in question were not exigible to duty since they fell within the scope of exemption granted the Notification of July 26 1967
Accordingly a mandamus refund of the duty illegally collected from the Company was issued by the Patna High Court
The High Court of Calcutta however took a different view and accepted the stand of the Department that the expression value occurring in the Notification dated July 26 1967 is not the deemed value  calculated according to the provisions of Section 4 of the Act but is the real and actual value  of the goods after payment of duty
The High Court of Punjab and Haryana was moved by the company only after short interval of time during which it had been pursuing its remedies before the highest Departmental a Authorities as well 965 as before the Patna and Calcutta High Courts
A Division Bench consisting of two learned Judges of the Punjab and Haryana High Court dismissed the company s Writ Petition in limini on the ground that the company had approached the High Court at a very belated stage
The Division Bench however certified the case to be St one to this Court under Article 133 of the Constitution of India
Similar certificates were granted to the company and to the Union of India respectively by the High Courts of Calcutta and Patna
That is how these appeals have come to be filed in this Court
After hearing Counsel appearing on both sides and giving our anxious consideration to the matter in all its aspects we are clearly of the opinion that the view taken by the High Court of Patna is the correct one and the contrary view taken by the High Court of Calcutta cannot be sustained We are also of opinion that on the facts and circumstances of the High Court of Punjab and Haryana was not justified in dismissing the Writ Petition of the company in limini on the ground of delay especially having regard to the fact that the matter was throughout being actively pursued by the company before the Departmental Authorities as well as before the two other High Courts
Section 3 of the Act is the charging section and Sub section 1 thereof lays down that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in or imported by land into any part of India as and at the rates set forth in the First Schedule Section 4 deals with the subject of valuation of excisable goods for purposes of charging of duty of excise
We shall reproduce that section as it stood at the relevant time omitting portions thereof which are unnecessary for our present purpose 4
Determination of value for the purposes of duty where under this Act any article is chargeable with duty at a rate dependent on the value of the article such value shall be deemed to be a the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the articles chargeable 966 with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture of production or if a wholesale market does not exist for such article at such place at the nearest place where market exists
b Not relevant Explanation In determining the price of any article under this section no abatement or deduction shall be allowed except in respect of trade discount and amount of duty payable at the time of removal of the article chargeable with duty from the factory or other premises aforesaid
 Under this Section in all cases where any article is charge able with duty at a rate dependent upon its value  such value  is to be computed by deducting from the wholesale cash price referred to in clause a two components of the price structure namely 1 trade discount and 2 the amount of duty payable on the article at the time of its removal from the factory or other premises of manufacture or production
The short question for consideration is whether the mode of determination of value prescribed by Section 4 is not attracted while computing the value  of the articles of footwear for the purposes of testing the availability of the exemption granted under the Notification dated July 26 1967
To our mind the answer to the question is perfectly simple
Section 4 is comprehensive in its coverage and it lays down the procedure to be followed for determination of value of any article in every case where the article is chargeable with duty at rate dependent on the value of the article
On a careful reading of the Notification dated Jul y 26 1967 it also become clear that the effect of the Notification is to render the chargeability or otherwise to duty of excise of footwear falling under Item 36 of the First Schedule is made wholly dependent upon the value  of the article of footwear in case such value  exceeds Rs 5 per pair duty will be chargeable at the rate of 10 whereas if the value does not exceed Rs 5 per pair no duty will be chargeable on such items of footwear that is the rate of duty will be nil 
It is precisely to such a situation that the provision of Section 4 gets attracted because as expressly stated in the opening part 967 part of the said section the mode of determination of value  specified in the section will be applicable to all cases where any article is chargeable with duty at a rate dependent upon the value of the article
In the case of a total exemption the rate will be nil 
Thus Entry 36 read along with the Notification dated July 24 1967 clearly shows that the chargeability to duty in respect of any article of footwear is made dependent upon its value in the sense that the chargeability to duty of excise ill arise only if the value  of the article does not exceed RS
5 per pair
 It is therefore plain that before determining the question of availability of the exemption under the Notification dated July 24 1967 the first essential step is to determine the value of the article in the manner prescribed in Section 4 of the Act
The fact that on such a computation the article may ultimately be found to be exempted from excise duty does not have any bearing on the question of applicability of Section 4 of the Act for
determining the value for purpose of duty
The expression for the purposes of duty  occurring in Section 4 has a wide import
For all purposes connected with the determination of chargeability and levy of duty the provisions of the section are to be applied for comuptation of the value  of the article
Under the Explanation to Section 4 it is mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as payable on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in clause a are to be deducted from such wholesale price
This is the view taken by the High Court of Patna in the judgment appealed against C A No 1469 of 1972 and we have no hesitation to agree with the said view
The High Court of Calcutta was of opinion that Section 4 only lays down the formula or the principle for determination of value for the purpose of duty and it has not laid down any principle or formula for the determination of value for exemption from duty as already indicated
In our opinion this is not a correct interpretation of the scope and ambit of Section 4 of the Act
In the result we hold that inasmuch as the value of the articles of footwear in question calculated in accordance with the provisions of Section 4 of the Act did not exceed Rs 5 per pair the articles in question were exempt from the charge to duty of excise under the Notification dated July 24 1967
968 In the result C A No 1470 of 1972 arising out of the judgment of the High Court of Calcutta C A No 353 of 1971 filed against the order of the High Court of Punjab and Haryana and the Writ Petitions filed by the company in the High Courts will stand allowed with the direction that the amounts of duty illegally realised by the Department from the company should be forthwith refunded to it
C A No 1469 of 1972 filed by the Collector of Central Excise Patna against the decision of the Patna High Court will stand dismissed In C A No 1470 of 1972 and C A No 353 of 1971 the appellants will get their costs from the respondents
There will be no order as to costs in C A No 1469 of 1972
SR Civil Appeal Nos
3531971 and 14702 allowed
Civil Appeal No 146972 dismissed


Summary:
By virtue of Entry 36 of the First Schedule in the footwear and parts thereof in or on relation to the manufacture of which any process is ordinarily carried on with the aid of power is chargeable to excise duty the rate of duty being 10 ad valorem in respect of footwear and 15 ad valorem in respect of parts of footwear
By a Notification dated July 24 1967 issued In exercise of the powers conferred by sub rule 1 of rule 8 of the Central Excise Rules 1944 the Central Government exempted with effect from the 26th May 1967 footwear falling under item No 36 of the First Schedule to the  of which the value did not exceed Rs 5 per pair from the whole of the duty of excise leviable thereon
During the year 1967 and 1968 Bata Shoe Company was manufacturing certain items of footwear of which the wholesale price was Rs 625 per pair
The contention of the company that since the assessable value of such items of footwear calculated in terms of section 4 of the Act as it stood at the relevant time was only Rs 494 and thus less than Rs 5 per pair were qualified for exemption under the Notification was negatived by the department on the ground that while computing the value of the articles for the purpose of judging the applicability of the exemption the duty element of the cost structure could not be deducted from the wholesale price and on such calculation the value of such footwear would exceed Rs 5 per pair
Three Writ Petitions were therefore filed in the High Courts of Patna Calcutta and the Punjab  Haryana since the company had three manufacturing establishments attracting the jurisdictions of these Courts
The Patna High Court allowed the writ petition accepting the contention of the company and granted certificate of appeal to the department
The High Court of Calcutta 961 dismissed the petition and accepted the stand of the Department that the expression value occurring in the Notification dated July 241967 is not the deemed value calculated according to the provisions of section 4 of the Act but is the real and actual value of the goods after the payment of the duty
The High Court of Punjab  Haryana dismissed the petition in limini on the ground of laches
Both these two High Courts however granted certificate of appeal to the company
Hence the three appeals by certificates
Allowing the appeals of the company and dismissing the State appeal he Court  HELD 11 While computing the value of the articles of footwear for the purposes of testing the availability of the exemption granted under the Notification dated July 241967 section 4 of the gets attracted
Section 4 is comprehensive in its coverage and it lays down the procedure to be followed for determination of value of any article in every case where the article is chargeable with duty at a rate dependent on the value of the article
966H 967A 12 While the notification makes it clear that the effect of the Notification is to render the changeability or otherwise to duty of excise of footwear falling under item 36 of the First Schedule is made wholly dependent upon the value of the article of footwear in case such value exceeds Rs 5 per pair duty will be chargeable at the rate of 10
whereas if the value does not exceed Rs5 per pair no duty will be chargeable on such items of footwear that is the rate of duty will be nil
Thus entry 36 read along with the Notification dated July 24 1967 clearly shows that the changeability to duty in respect of any article of footwear is made dependent upon its value in tho sense that the chargeability to duty of excise will arise only if the value of the article does not exceed Rs 5 per pair
966D E 967A B 13 Before determining the question of availability of the exemption under the Notification dated July 24 1967 the first essential step therefore is to determine the value of the article in the manner prescribed in section 4 of the Act
The fact that on such a computation the article may ultimately be found to be exempted from excise duty does not have any bearing on the question of applicability of section 4 of the Act for determining the  value for purpose of duty
967B D 14 The expression Ior the purpose of duty occurring in section 4 has a wide import
For all purposes connected with the determination of chargeability and levy of duty the provisions of the section are to be applied for computation of the value of the article
Under the Explanation to section 4 it is mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as payable on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in clause a are to be deducted from such wholesale price
967D E In the instant case in as much as the value of the articles of footwear in 962 question calculated in accordance with the provisions of section 4 of the Act did note exceed Rs5 per pair the articles in question were exempted from the charge to duty of excise under the Notification dated July 24 1967 and the company is entitled forthwith to a refund of the amounts of duty illegally realised by the Department
967G H The Collector of Central Excise Patna  Ors
vs The Bata Shoe Company P Ltd AIR Patna approved
The Bata Shoe Company P Ltd vs The Collector of Central Excise  Ors Calcutta AIR Calcutta  The Bata Shoe Company P Ltd vs The Collector of Central Excise  Ors AIR Pun jab  Haryana reversed