Prompt:
(Civil) No. 548 of 1987.
(Under Article 32 of the Constitution of India).
M.C. Dhingra for the Petitioners.
Kapil Sibal, K.G. Bhagat, A.K. Ganguli, Ms. Kamini Jaiswal, 664 Ms. Aruna Mathur, A. Mariarputham, Harminder Lal and Naresh K. Sharma for the Respondents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
The petitioners are carpenters 1st and 2nd grade employed at the Wood Working Centre of the Himachal Pradesh State Handicrafts Corporation (the "Corpo ration").
They are termed as daily rated employees.
In this petition under Article 32 of the Constitution, they are seeking enforcement of their fundamental right to have "equal pay for equal work".
They demand payment in terms paid to their counterparts in regular services.
They want the same pay of the regular employees as carpenters or in the alternative, the minimum wages prescribed by the Deputy Commissioner for like categories of workmen.
They also seek regularisation of their services with the benefits of pen sion, gratuity etc.
The Corporation has resisted the petitioners ' claim.
The case of the Corporation is that the unit where the petition ers are working is a factory registered under the Factories Act.
The petitioners are treated as industrial workmen and .are given all benefits due to them under the various labour legislations.
The Government has not fixed the mini mum wages payable to the petitioners engaged in the Corpora tion or other like industries, but the Corporation has adopted the minimum wages payable for similar work in the construction industry.
They are being paid the same wages as are payable to carpenters, painters and carpenters ' helpers engaged in the construction industry.
They are given bonus under the Bonus Act and provident fund benefits under the Employees ' Provident Fund Act.
It is also stated that the petitioners are supplied with the necessary tools for carry ing out their work and also working uniforms like aprons and overalls.
The Corporation has clearly stated that there are no regular employees of the petitioners ' categories in its establishment and, as such, the question of payment to the petitioners, the pay admissible to regular employees does not arise.
A little more information about the purpose and object of the Corporation would be useful for proper understanding of the case.
The Corporation is a company which has been incorporated under the .
The main object of the Corporation as seen from the Memorandum of Associa tion is to preserve the traditional arts and crafts and also to popularise handicrafts and handloom items 665 in the State of Himachal Pradesh and other parts of the country and abroad.
In order to achieve this primary objec tive, the Corporation gives training to artisans, weavers and craftsmen in various traditional arts and crafts.
During the period of training, the trainees are paid a stipend by the Corporation.
Upto 31st March, 1987, the Corporation has imparted training to as many as 1662 persons in different areas like carpet weaving, handloom weaving, painting, metal crafts, wood carving, etc.
Apart from giving training, the Corporation also ensures marketing support to the artisans and craftsmen by purchasing their products at remunerative prices and sell them through the marketing network of the Corporation.
It is thus a service oriented organisation helping the village artisans and craftsmen to produce and market their products on remunerative prices.
It is said that the village artisans and craftsmen make different items on a piece rate basis and in some cases, they execute the work in their own homes.
The financial aspect of the Corporation is stated to be not encouraging, and indeed, it is disappointing.
It has suffered huge loss and the total losses accumulated hitherto is Rs.69.77 lakhs.
Nonetheless, for the purpose of preserv ing and promoting traditional arts and crafts, the Corpora tion has been kept alive.
But to avoid or minimise further loss, it is stated that the Corporation has reduced its overheads and maintained only the administrative staff in the production centers at different parts of the State and no permanent craftsmen are employed.
With these facts, we may now turn to the principle upon which the petitioners ' case is rested.
The principle of "equal pay for equal work" is not one of the fundamental rights expressly guaranteed by our Constitution.
The princi ple was incorporated only under Article 39(d) of the Consti tution as a Directive Principle of State Policy.
Perhaps, for the first time, this Court in Randhir Singh vs Union of India, ; has innovated that it is a constitu tional goal capable of being achieved through constitutional remedies.
There the Court pointed out that that principle has to be read into Article 14 of the Constitution which enjoins the State not to deny any person equality before the law or the equal protection of the law and also to Article 16 which declares that there should be equality of opportu nity for all citizens in matters relating to employment or appointment to any office under the State.
Randhir Singh case was concerned with a driver constable in the Delhi Police Force under the Delhi Administration.
He claimed equal salary for equal work at that of other drivers.
The Court found that the petitioner therein performed the same func 666 tions and duties as other drivers in the service of Delhi Administration.
The Court, therefore, directed the Central Government to fix the pay scale of the petitioner on par with his counterparts doing identical work under the same employer.
In the immediate aftermath of the decision in Randhir Singh case, there were bumper cases filed in this Court for enforcement of the right to "equal pay for equal work", perhaps little realising the in built restrictions in that principle.
It may not be necessary here to refer to all those decisions since almost all of them have been consid ered and explained in the recent two decisions to which one of us was a party (K. Jagannatha Shetty, J.).
Reference may be made to: (i) State of U.P. vs J.P. Chaurasia, ; and (ii) Meva Ram Kanojia vs All India Institute of Medical Sciences and Anr., ; In Chaurasia case the question arose whether it was permissible to have two different pay scales in the same cadre of Bench Secre taries of the Allahabad High Court who were for all practi cal purposes performing similar duties and having same responsibilities.
The Court held that the principle of "equal pay for equal work" has no mechanical application in every case of similar work.
Article 14 permits reasonable classification rounded on rational basis.
It is, therefore, not impermissible to provide two different pay scales in the same cadre on the basis of selection based on merit with due regard to experience and seniority.
It was pointed out that in service, merit or experience could be the proper basis for classification to promote efficiency in administration and he or she learns also by experience as much as by other means.
Apart from that, the Court has expressly observed that the higher pay scale to avoid stagnation or resultant frustration for lack of promotional avenues may also be allowed.
Meva Ram Kanojia is the most recent decision which has exhaustively dealt with all the principles bearing on the question of equal pay for equal work in the light of all the previous decisions of this Court.
There the petitioner was a "Hearing Therapist" in the All India Institute of Medical Sciences.
He claimed pay scale admissible to "Senior Speech Pathologist", "Senior Physiotherapist", "Senior Occupational Therapist", "Audiologist", and "Speech Pathologist".
His case was based on the allegations that he was discharging same duties and performing similar functions as "Senior Speech Therapist", "Senior Physiotherapist", "Senior Occupa tional Therapist", "Audiologist" and "Speech Pathologist".
But the Court held that the principle of equal pay for equal work cannot be invoked invariably in every kind of service particularly in the area of professional services.
It was also held 667 that it is open to the State to classify employees on the basis of qualifications, duties and responsibilities of the posts concerned.
If the classification has reasonable nexus with the objective sought to be achieved, efficiency in the administration, the State would be justified in prescribing different pay scales.
Reference may also be made to the decision in Federation of All India Customs and Central Excise Stenographers (Recognised) vs Union of India, ; There the Personal Assistants and Stenographers attached to the Heads of Department in Customs and Central Excise Department of the Ministry of Finance made a claim for parity of wages with the Personal Assistants and Stenographers attached to Joint Secretaries and Officers above them in Ministry of Finance.
The Court while rejecting the claim expressed the view (at 100): "But equal pay must depend upon the nature of the work done, it cannot be judged by the mere volume of work, there may be qualitative difference as regards reliability and responsibility.
Functions may be the same but the responsibilities make a difference.
One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service.
So long as such value judgment is made bona fide, reasonably on an intelligible criterion which has a rational nexus with the object of dif ferentiation, such differentiation will not amount to discrimination.
It is important to emphasize that equal pay for equal work is a concomitant of Article 14 of the Constitution.
But it follows naturally that equal pay for unequal work will be a negation of that right." Thus the law relating to equal pay for equal work has been practically hammered out and very little remains for further innovation.
In the light of the aforesaid principles, we may now consider whether the equality claims of the petitioners could be allowed.
We have carefully perused the material on record and gave our anxious consideration to the question urged.
From the averments in the pleadings of the parties it will be clear that the Corporation has no regularly employed carpenters.
Evidently the petitioners are claiming wages payable to the carpenters in Government service.
We do not think that 668 we could accept their claim.
In the first place, even assum ing that the petitioners ' jobs are comparable with the counterparts in the government service, the petitioners cannot enforce the right to "equal pay for equal work".
The discrimination complained of must be within the same estab lishment owned by the same management.
A comparison cannot be made with counterparts in other establishments with different management, or even in establishments in different geographical locations though owned by the same master.
Unless it is shown that there is a discrimination amongst the same set of employees by the same master in the same establishment, the principle of "equal pay for equal work" cannot be enforced.
This was also the view expressed in Meva Ram Kanojia vs A.I.I.M.S., ; at 245.
In the instant case, the petitioners are employed by a company incorporated under the .
They cannot claim wages payable to their counterparts in government service.
Secondly, it may be noted that the petitioners are carpenters; better called as craftsmen.
By the general description of their job, one cannot come to the conclusion that every carpenter or craftsmen is equal to the other in the performance of his work.
The two jobs by the mere nomen clature or by the volume of work performed cannot be rated as equal.
It is not just a comparison of physical activity.
It requires the consideration of various dimensions of the job.
The accuracy required by the job and the dexterity it entails may differ from job to job.
It cannot be evaluated by the mere averments in the self serving affidavits or counter affidavits of the parties.
It must be left to be evaluated and determined by expert body.
The principal claim of the petitioners therefore fails and is rejected.
The next contention that the petitioners should be paid at least the minimum wages prescribed by the Deputy Commis sioner under Exhibit P. 2 dated March 20, 1986 cannot also be accepted.
exhibit P. 2 was issued by the Deputy Commissioner in the exercise of his powers under the H.P. Financial Rules.
It is applicable only to skilled and unskilled work ers in class IV employees in Government service.
It has not been extended to employees of the Corporation.
The petition ers have been treated as construction workers and they are being paid the minimum wages admissible to such workmen.
The Court, therefore, cannot direct the Corporation to apply the rates prescribed under exhibit P. 2 unless the Government makes it applicable to employees of the Corporation.
As to the claim for regularisation of services of the peti tioners, 669 we express no opinion, since the factual data is disputed and is insufficient.
We leave the petitioners to work out their rights elsewhere in accordance with law applicable to them.
In the result, the petition fails and is dismissed.
In the circumstances of the case, we make no order as to costs.
P.S.S. Petition dismissed.

Response:
The petitioners employed as daily rated carpenters at the Wood Working Centre of the Himachal Pradesh State Handi crafts Corporation sought enforcement of their fundamental right to have "equal pay for equal work" in terms paid to their counterparts in regular services, or in the alterna tive, the minimum wages prescribed by the Deputy Commission er for like categories of workmen.
The petitioners ' claim was resisted by the respondents.
Their case was that the unit where the petitioners were working was a factory registered under the Factories Act, that they were treated as industrial workmen and given all benefits due to them under the various labour legislations, that the Government had not fixed the minimum wages payable to the workmen engaged in the Corporation or other like industries but the Corporation had adopted for its workmen the minimum wages payable for similar work in the construc tion industry, and that there were no regular employees of the petitioners ' categories in its establishment and, as such, the question of payment to them the pay admissible to regular employees does not arise.
Dismissing the writ petition, HELD: 1.
Unless it is shown that there is a discrimina tion amongst the same set of employees by the same master in the same establishment, the principle of "equal pay for equal work" cannot be enforced.
A comparison cannot be made with counterparts in other establishments with different management, or even in establishments in different geograph ical location though owned by the same master.
[668B] In the instant case, the petitioners were employed by a company incorporated under the Companies Act.
They cannot claim wages pay 663 able to their counterparts in government service.
[668C] Meva Ram Kanojia vs All India Institute of Medical Sciences & Anr., ; , referred to.
Randhir Singh vs Union of India, ; , ex plained.
The principle of 'equal pay for equal work ' has no mechanical application in every case of similar work.
No two jobs by the mere nomenclature or by the volume of work performed can be rated as equal.
It is not just a comparison of physical activity.
It requires the consideration of various dimensions of the job.
The accuracy required by the job and the dexterity it entails may differ from job to job.
It cannot be evaluated by the mere averments in the self serving affidavits or counter affidavits of the parties.
It must be left to be evaluated and determined by expert body.
[666D, 668D E] In the instant case, however, the Corporation had no regularly employed carpenters.
Even assuming that the peti tioners ' jobs were comparable with the counterparts in Government service they could not enforce the right to equal pay for equal work.
[667G, 668A] State of U.P. vs J.P. Chaurasia, ; ; Meva Ram Kanojia vs All India Institute of Medical Sciences & Anr., ; and Federation of All India Customs and Central Excise Stenographers (Recognised) vs Union of India, ; , referred to.
The order issued by the Deputy Commissioner on March 20, 1986 in exercise of his powers under the H.P. Financial Rules prescribing minimum wages was applicable only to skilled and unskilled workers in Class IV employees in Government service.
The benefit of the rates prescribed under that order cannot be extended to the petitioners unless the Government makes it applicable to the employees of the Corporation.
[668F G]


Prompt:
ivil Appeal Nos.
4339 41/86 & 4176 77 of 1984.
From the Judgment and Order dated 4.7.85 & 21.6.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos.
ED(SB)(T) A. Nos. 513 514, & 544 of 1985(A) & ED(SB) 329 & 324/84 A in Order Nos.
450 452/85 A, 473 & 474/84 A. Harish Salve, Ravinder Narain, P.K. Ram and D.N. Mishra for the Appellant.
K. Parasaran, Attorney General, A.K. Ganguli, and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These appeals under Section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter called 'the 979 Act ') are against the order Nos.
450 452 of 1985A dated 4th July, 1985, 473/184A and 474/84A both dated 21st June, 1984 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Tribunal ').
The appellant is a division of McDowell & Co. Ltd. It has its factory at, inter alia, Visakhapatnam.
There it manufactures and sells fusel oil/Styrene Monomer falling under Tariff Item No. 68 of the Ist Schedule to the Act.
The case of the appellant is that the said fusel oil is a com pletely manufactured article and after completion of its manufacture, it is stored in storage tanks duly approved for this purpose.
It is at this stage that the quantity of fusel oil/Styrene Monomer manufactured, according to the appel lant, is entered in the RG 1 Register maintained for goods manufactured by the appellant.
It is also the case of the appellant that the said fusel oil/Styrene Monomer manufac tured by it is sold in bulk and delivered to the customers at the appellant 's factory.
The fusel oil/Styrene Monomer is also capable of being supplied in road tankers to customers.
The appellant had filed its price lists in respect of the same.
In the said price lists, which were duly approved by the Asstt.
Collector, the appellant had shown the value of fusel oil/Styrene Monomer at the rate at which those were sold in wholesale as "naked Ex Works and in bulk".
According to the appellant, the manufacture of fusel oil is complete and it is the fully manufactured fusel oil/Styrene Monomer which is stored in the storage tank.
On 2nd July, 1983, a notice in respect of a consignment was issued to show cause as to why value of the drums should not be included in the value of the goods.
There the drums had been supplied by the buyer.
Another show cause notice as to why value of the drums should not be included in the assessable value of the goods, was issued to the appellant on the 5th April, 1983 pertaining to Gate Pass No. 773 whereunder the appellant had cleared 2.4 KI of fusel oil in drums supplied by the buyer.
Replies were duly filed to the said show cause notices by the appellant contending, inter alia, that as the drums were supplied by the buyer, value thereof could not be included in the assessable value.
On the 11th August, 1983, two orders were passed by the Assist ant Collector one in relation to each of the aforesaid show cause notices.
The Assistant Collector included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer.
Appeals were filed by the assessee.
The same were allowed by the Collector (Appeals).
He held that the appellant had not collected any amount in excess of the amount indicated in the price lists.
Therefore, in addition 980 to this amount, according to the Collector (Appeals), it was not open to the Asstt.
Collector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice.
There was a further appeal to the Tribunal.
The Tribunal held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, there fore, the value had to be included in the assessable value.
The Tribunal, therefore, accepted the revenue 's contention and restored the order of the Asst.
Collector.
Aggrieved therefrom, the appellant has come up in these appeals to this Court.
On behalf of the appellant, Shri Salve contended that the Tribunal had failed to appreciate the admitted factual position that the fusel oil/Styrene Monomer manufactured by the appellant is sold in bulk and is capable of being so sold.
Hence, according to the appellant, it is not necessary for the said fusel oil/Styrene Monomer to be supplied to the customers in drums in the aforesaid situation.
The Tribunal, therefore, it was urged, ought to have held that the value could not be included in the assessable value of the fusel oil/Styrene Monomer.
It was contended that in any event under the Act and the Rules, the duty of excise is payable by the manufacturer on the manufactured goods.
The appellant was not a manufacturer of drums.
The said drums were sup plied by the customers for the purpose of filling the fusel oil/Styrene Monomer.
No duty of excise, therefore, could be collected from the appellant on such drums which were nei ther manufactured nor purchased by the appellant.
It was further urged that on a correct and true interpretation of Section 4(4)(d)(i) of the Act, the cost of packing could be included in the assessable value only when the packing is either manufactured by the assessee or is purchased by the assessee.
The said sub section does not contemplate, accord ing to the appellant, the inclusion of the cost of packing in the value of goods when the packing is supplied by a customer to a manufacturer on its own cost.
It was contended by Shri Salve, appearing on behalf of the appellant, that on a correct analysis of section 4(4)(d), the duty being on the activity of manufacture whatever is necessary to bring the goods into existence alone can be taken into account for duty purposes.
Reliance was placed by Shri Salve as well as by the learned Attorney General, appearing on behalf of the revenue, on the relevant provisions of the Act and the position as explained by this Court in Union of India & Ors.
vs Bombay Tyre International Ltd., ; 981 Shri Salve has, however, contended that so far as this Court is concerned, this question is concluded by the deci sion of this Court in Collector of Central Excise vs Indian Oxygen Ltd., Learned Attorney General, however, contended that this decision did not deal with the present controversy.
The said decision, according to learned Attorney General, was concerned with the rentals of certain oxygen gas cylinders supplied by the assessee.
Reference was made to the decision of this Court in K. Radha Krishaiah vs Inspector of Central Excise, Gooty & Ors., Shri Salve referred to and relied on the decision of tile High Court of Bombay in the case of Govind Pay Oxygen Ltd. vs Asstt.
Collector of Central Excise, Panaji & Ors., as also the decision of the Karnataka High Court in Alembic Glass Industries Ltd. vs Union of India & Ors., Learned Attorney General urged before us that the question whether for determining the assessable value of the excisable goods sold by the assessee in drums or containers provided by its customers (the asses see itself provided such drums/containers on payment of price in Civil Appeals Nos.
4339 41 of 1986) the value of such drums/containers would also have to be included on a correct interpretation of charging sections, namely, sec tions 3 and 4 of the Act.
It was submitted that while deter mining the scope and nature of levy, as contemplated under section 3 of the Act, of central excise and the measure of such levy as provided in section 4 of the Act the principles laid .down in Union of India vs Bombay Tyre International Ltd., (supra), should be followed and reliance was placed on the several decisions of this Court which we will refer to later.
Learned Attorney General emphasised that it is a well settled principle of construction that in taxing statutes one has only to look merely at what is clearly stated.
There is no room, he contended, for any intendment.
There is no equity about a tax, it was submitted.
There is no presump tion as to tax.
Reliance was placed for this proposition by the learned Attorney General on the observations of this Court in Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; at 898.
Learned Attorney General also drew attention to the decision of this Court in A.K. Roy vs Voltas Ltd., and also to Atic Industries Ltd. vs H.H. Dave, Assistant Collector of Central Excise, ; at 568 to emphasise the point that percentages of sales do not in any manner affect determination of the assessable value of the excisable goods.
In this connection, it may be rele vant to mention that in C.A. 4339 41/86, in respect of which show notice was issued as to why value of drums should not be included in the assessable value of fusel oil and Styrene Monomer, 90% of Styrene Mono 982 mer had been sold directly in tanks and only 10% of Styrene Monomer had been sold in drums and the show cause notice on 20th October, 1983 had been issued relating to clearance of fusel oil in 45 drums but the said drums had been supplied by the buyer.
The Asstt.
Collector in those appeals had included the costs of such drums in the value of styrene monomer.
Relying on the two decisions referred to hereinbe fore, learned Attorney General emphasised that percentages of sales would not in any manner affect determination of the assessable value of the excisable goods.
In A.K. Roy 's case (supra), it was held by this Court that though in that case that the fact that the assessee had effected sales to whole sale dealers only to the extent of 5 to 10% of its produc tion and that 90 95% of its production were only retail sales would not affect the question of determination of the assessable value of the excisable goods with reference to its value in the wholesale market.
Therefore, the learned Attorney General submitted, the mere fact that the assessee in C.A. No. 4339 of 1986 sold only 10% of the excisable goods to its buyer where drums were supplied by the buyers themselves and that 90% of the sales were through tankers belonging to the customers would not in any manner affect the question or determination of the assessable value of the excisable goods inasmuch as the 10% of its sales to whole sale buyers were in drums supplied by the buyers at the time of removal.
According to the learned Attorney General, the fact that 90% of the goods were supplied in tankers and not in containers had no relevance at all and the 10% represent ed the entire quantity of excisable goods delivered in packed condition.
Learned Attorney General contended that the decision of Indian Oxygen Ltd. 's case (supra) cannot be relied on in view of the facts of this case.
In that case, the learned Attorney General contended the only question which arose was whether the rental charges received by the assessee for the gas cylinders lent by it to its customers could be included in the assessable value and whether inter est earned on deposits made by the customers for the securi ty of the cylinders supplied by the assessee could also be included in the assessable value of the excisable goods.
This Court clarified in the said decision that the said charges could not be included in the value of the goods since these were only ancillary and not incidental to the activities for the manufacture of gases.
Learned Attorney General submitted that this Court had no occasion in that decision to consider the question which arises in the present case, namely whether the cost of packing materials would have to be included in the assessable value of the goods when goods are delivered in packed conditions.
Learned Attorney General submitted that the decisions of the Bombay and Karnataka High Courts were wrong as they are contrary to the decision of this 983 Court in Bombay Tyre International 's case (supra).
Reference was made both by the learned Attorney General and Shri Salve to the observations of this Court in Union of India vs Godfrey Phillips India Ltd., [1985] Supp.
3 SCR 123.
In order to appreciate the controversy in this case, it is necessary to refer to the relevant provisions.
Section 2(f) of the Act provides the definition of the term "manufacture".
It states, inter alia, that manufacture includes any process incidental or ancillary to the comple tion of manufactured product.
It is, therefore, necessary to bear in mind that a process which is ancillary or incidental to the completion of the manufactured product, that is to say, to make the manufacture complete would be "manufacture".
It is relevant and important to bear this aspect in mind.
Section 3 of the Act provides that there shall be levied and collected in such manner as maybe pre scribed duties of excise on all excisable goods other than salt which are produced or manufactured in India. "Excisable goods", under section 2(d) of the Act, means goods specified in the Schedule to the as being subject to duty of excise and includes salt.
Section 4 of the Act provides for the valuation of excisable goods for purposes of charging of duty of excise.
The relevant provi sion of section 4 of the Act deals with the manner as to how the value is to be computed and section 4(4)(d) stipulates as follows: ""value" in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation.
In this sub clause "packing" means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject t9 such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of 984 the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; (Explanation.
For the purposes of this sub clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of (a) the effective duty of excise payable on such goods under this Act; and (b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods , and the effective duty of excise on such goods under each Act referred to in clause (a) or clause (b) shall be, (i) in a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, for reduction or duty of excise under such Act on such goods equal to, any duty of excise under such Act, or the additional duty under Section 3 of the (51 of 1975), already paid] on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with refer ence to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods.
" The expression "place of removal" has been defined under section 4(4)(b) of the Act to mean a factory or any other place or premises of production or manufacture of the excisable goods; or a warehouse or any other place or prem ises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed.
It is in relation to Section 4(4)(d) that it is contended that except the cost of packing which is of a durable nature and is returnable by the buyer to the asses see to the buyer, in respect of all other costs of packing, the costs should be included in the value of the 985 excisable goods.
The explanation to the said sub section defines the expression "packing" as the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound.
The provisions of these two sections must be judged in the light of the principles laid down by this Court in Union of India vs Bombay Tyre International, (supra).
In that decision, it has been recognized that the measure employed for assessing a tax must not be confused with the nature of the tax, while the measure of the tax may be assessed by its own standard to serve as a standard for assessing the levy the Legislature need not contonour it along lines which spell out the character of the levy it self.
Reliance may be placed to the observations of this Court at pp.
365 367 of the Report.
This Court rejected the contention of the assessee in that case that because the levy of excise is a levy on goods manufactured or produced, the value of an excisable article must be limited to the manufacturing cost plus manufacturing profit.
This Court reiterated that section 4 of the Act provides the measure by reference to which the charge is to be levied.
Therefore, the charge is to be determined by the terms of section 4 of the Act.
But it has to be borne in mind that the duty of excise is chargeable with reference to the value of the excisable goods and the value is defined in express terms in that section.
Though the learned Attorney General referred to the fact that in taxing statutes, one must look merely at what is clearly stated, yet such a construction must be made in the context of the entire scheme of the Act.
Learned Attorney General emphasised that the language of clause (d) of sub section (4) of section 4 of the Act made it clear beyond doubt that in cases where the Act provides for excise duty with reference to value of the excisable goods, while determining the value of such goods, the cost of packing where the excisable goods are delivered at the time of removal in packed condition, would have to be included in the assessable value of the excisable goods.
According to the learned Attorney General, since the Act provides for only one exception to this measure, namely, non inclusion of the cost of such packing where the packing is durable in nature and is returnable by the buyer to the assessee, in all other cases the cost of the packing would have to be included in the assessable value of the excisable goods where such goods are delivered at the time of removal in packed condition.
According to him, the plain language of the Statute does not permit of any further exceptions being read into the Act.
To hold otherwise, it was contended, would make the provision of the measure of the levy unworka ble inasmuch as in every case the measure would have to differ in the light of the contentions as may be raised by the assessees depending upon the business arrangement of each assessee.
986 It was contended that it is not correct to equate the meas ure of tax with the levy itself which is the basis of the contentions of the appellant.
In my opinion, however, the correct position must be found out bearing in mind the essential nature of excise duty.
Excise duty, as has been reiterated and explained, is a duty on the act of manufacture.
Manufacture under the excise law, is the process or activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such.
It is then and then only that manufacture takes place attracting duty.
In order to be goods, it was essential that as a result of the activ ity, goods must come into existence.
For articles to be goods, these must be known in the market as such and these must be capable of being sold or being sold in the market as such.
See the observations of this Court in Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors., ; and Bhor Industries Ltd., Bombay vs Collec tor of Central Excise, Bombay; , In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market.
If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the Section.
The question, there fore, that has to be examined in this case is whether these drums, containers or packing, by whatever name they are called, are necessary to make fusel oil or styrene monomer marketable as such or can these goods be sold without the containers or drums or packing? In my opinion, the facts established that these could be.
The fact that 90% of the goods in C.A. No. 4339 of 1986 were delivered in tankers belonging to the assessee and only 10% of the goods were in packed condition at the time of removal clearly establish that the goods were marketable without being packed or contained in drums or containers.
These were in the storage tanks of the assessee and were as such marketable.
In this connection, it is necessary to refer to the observations of this Court in Collector of Central Excise vs Indian Oxygen Ltd., (supra).
In that case, as mentioned hereinbefore, the respondent Indian Oxygen Ltd. was manufacturer of dissolved acetylene gas and compressed oxygen gas, called therein 'the gases '.
The respondent supplied these gases in cylinders at their factory gate.
987 For taking delivery of these gases, some consumers/customers used to bring their own cylinders and take the delivery, while others used to have the delivery in the cylinders supplied by the respondent.
For the purpose of such supply of cylinders, certain rentals were charged by the respondent and also to ensure that these cylinders were returned prop erly, certain amounts of deposit used to be taken from the customers.
On these deposits, notional interest @ 18% p.a. was calculated.
The two amounts with which this Court was concerned were rentals of the cylinders and the notional interest earned on the deposit of cylinders whether these two amounts were includible in the value under section 4 of the Act was the question.
The revenue 's case was that the no tional value of deposit was rental and hence should be included in computing the assessable value.
The respondent, however, disputed this.
Analysing the scope of section 4 of the Act, it was held by this Court that supply of gas cylinders might be ancillary activity to the supply of gases but this was not ancillary or incidental to the manufacture of gases.
The goods were manufactured without these cylinders.
There fore, the rental of the same though income of ancillary activity, was not the value incidental to the manufacture and could not be included in the assessable value.
Similar ly, in my opinion, drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer; the cost of such drums cannot, therefore, be included in the assessable value thereof.
Furthermore, no cost was, in fact, incurred by the assessee.
Drums had been supplied by the buyers.
This position, in my opinion, was correctly approached in the decision of the Bombay High Court in Govind Pay Oxygen Ltd. vs Assistant Collector of Central Excise, Panaji & Ors., (supra), where it was held that section 4(4)(d)(i) of the Act does not make any provision for including the cost of packing which was supplied by the buyer to the assessee for the obvious reason that the assessee did not spend for such packing.
It was for this simple reason that the legislature had not thought it fit to exempt such pack ing from the value of excisable goods.
In my opinion, that is the correct approach to the problem.
Similarly, Karnataka High Court in Alembic Glass Industries vs Union of India & Ors., (supra) held that the term "value" defined in section 4(4)(d)(i) provides for exclusion of cost of packing materi al which was of durable nature and was returnable by the buyer to the assessee.
Hence, there was no logic or reason for not excluding the value of packing material supplied by the buyer himself which is of durable nature and is return able by the assessee to the buyer.
Furthermore, in my opin ion, in 988 terms of section, it is not includible.
The contention that the value of packing materials including those supplied by the buyer, has to be included in the value of the goods, is repugnant to the very scheme of section 4.
It overlooks the use of the expression "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act.
The word "cost" has a definite connotation, and is used generally in contra distinction of the expression "value".
Thus, the clear implication of the use of the word "cost" is that only packing cost of which is incurred by the assessee, i.e., the seller, is to be included.
The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer.
It has to be borne in mind that such a provision would make the provision really unworkable, since in making the assessment of the seller, there is no machinery for ascertaining the "cost" of the packing which might be supplied by the buyer.
Such a contention further overlooks the scheme of clause (i) where under durable packing returnable by the buyer has to be excluded.
It would create an absurd situation if durable packing supplied by the assessee and returnable to the assessee is not to be included in the assessable value but a durable packing supplied by the buyer to the assessee and returnable to the buyer is made a part of the assessable value.
One has to bear in mind the scheme of clause (d) of section 4(4) of the Act.
The two sub clauses of this clause deal with abatements or deductions in respect of actual burdens, either by way of an expenditure or discount, borne by the assessee.
Clause (ii) deals with duties of excise, sales tax and other taxes, if any, payable on such goods.
Here also obviously, the reference is not generally to the taxes payable on such goods by either the assessee or the buyer but is obviously to the taxes payable by the assessee.
The trade discount is referable to that allowed by the assessee.
Therefore, in the same sense, clause (i) would only be referable to the packing in respect to which "cost" is incurred by the assessee.
It has to be borne in mind that the scheme of old section 4 of the Act and new section 4 is the same as was held by this Court in the case of Bombay Tyre International, (supra) at pages 376 E F, 377 H and 378 A B, H of the Report.
The scheme of the old section 4 is indisputedly to determine the assessable value of the goods on the basis of the price charged by the assessee, less certain abatements.
There was no question of making any additions to the price charged by the assessee.
The essen tial basis of the "assessable value" of old section 4 was the wholesale cash price charged by the assessee.
To con strue new section 4 as now suggested would amount to depart ing from this concept and replacing it with the concept of a notional value comprising of the wholesale cash price plus certain notional charges.
This would be a radical departure from old section 4 and cannot be said to be on the 989 same basis.
It has to be borne in mind that the measure of excise duty is price and not value.
It has been so held by this Court in Bombay Tyre International 's case (supra).
See in this connection, the observations of this Court in Bombay Tyre 's case at pages 368,377,379,382 and 383, where this Court emphasised that in both the old section 4 and the new section 4, the price charged by the manufacturer on a sale by him represents the measure.
Price and sale are related concepts and price has a definite connotation.
Therefore, it was held that the "value" of the excisable article has to be computed with reference to the price charged by the manufacturer, the computation being made in accordance with the terms of section 4.
This Court rejected the contention on behalf of the assessee in that case, that section 4 also levied excise on the basis of a conceptual value which must exclude post manufacturing expenses and post manufacturing profit by observing that the contention proceeded on the assumption that a conceptual value governed the assessment of the levy.
It was reiterated that the old section 4 and new section 4 determine the value on the basis of price charged or chargeable by the particular assessee.
See in this connection, the observations of this Court at p. 388 F & G of the report.
It has also to be borne in mind that in any event in so far as Styrene Monomer Oil is concerned, the value of the drums in which it is packed is not includible in the assess able value of the goods.
It is not all packing which is liable to be included under clause 4(4)(d)(i) in the assess able value of the goods.
It is only that degree of secondary packing which is necessary for assessable articles to be in the condition in which it is generally sold in the wholesale market which can be included at the factory gate which should be included in the value of the article.
See the observations of this Court in Bombay Tyre International 's case (supra) at page 393 D & E.
In the case of Union of India vs Godfrey Phillips Ltd., , this position was clarified by the majority judgment.
In that case, the respondent therein manufactured cigarettes in their factories.
The cigarettes so manufactured were packed initially in paper/cardboard packets of 10 and 20 and these packets were then packed together in paper/cardboard car tons/outers.
These cartons/outers were then placed in corru gated fibreboard containers and delivered by the respondents to the wholesale dealers at the factory gate.
There was no dispute that the cost of primary packing into packets of 10 and 20 and the cost of secondary packing in cartons/ outers must be included in determining the value of the cigarettes for the purpose of assessment of excise duty, since such packing would fall under section 4(4)(d)(i) of the Act.
The question that arose was whether the cost of final packing in corrugated fibreboard containers 990 would be liable to be included in the value of the ciga rettes for the purpose of assessment to excise duty.
The question was answered in negative by a majority of 2:1 of this Court.
Chief Justice Bhagwati dissented.
It was held by Pathak, J. (as the learned Chief Justice then was) that such cost of corrugated fibreboard containers could not be in cluded in the determination of "value" in section 4(4)(d)(i) of the Act for the purposes of excise duty.
For the purpose of measure of levy on cigarettes, the statute has given an extended meaning to the expression "value in section 4(4)(d) of the Act.
Plainly, the extension must be strictly con strued, for what is being included in the value now is something beyond the value of the manufactured commodity itself.
The corrugated fibreboard containers could be re garded as secondary packing.
These were not necessary, it was emphasised by the majority of the Judges, for selling the cigarettes in the wholesale market at the factory gate.
These were only employed, it was emphasised by the majority of the Judges, for the purpose of avoiding damage or injury during transit.
It was perfectly conceivable that the whole sale dealer who took delivery might have his depot at a very short distance only from the factory gate or might have such transport arrangements available that damage or injury to the cigarettes could be avoided.
A.N. Sen, J., who agreed with Pathak, J., observed that on a proper construction of section 4(4)(d)(i), it was clear that any secondary packing done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade could not be included in the value for the purpose of assessment of excise duty.
Chief Justice Bhag wati, on the other hand, held that corrugated fibreboard containers in which the cigarettes were contained fell within the definition of 'packing ' in the Explanation to section 4(4)(d)(i) and if these formed part of the packing in which the goods were packed when delivered at the time of removal, then under section 4(4)(d)(i) read with the Expla nation, the cost of such corrugated fibreboard containers would be liable to be included in the value of cigarettes.
It is apparent from the wide language, according to the learned Chief Justice, of Explanation to section 4(4)(d)(i) that every kind of container in which it can be said that the excisable goods are contained would be 'packing ' within the meaning of the Explanation.
Even secondary packing would be within the terms of the Explanation, because such second ary packing would also constitute a wrapper or a container in which the excisable goods are wrapped or contained.
But the test to determine whether the cost of any particular kind of secondary packing is liable to be included in the value of the article is whether a particular kind of packing is done in order to put the goods in the condition in which they are generally sold in the wholesale 991 market at the factory gate.
If they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty.
According to learned Chief Justice, it makes no difference to the applicability of the definition in section 4(4)(d)(i) read with Explana tion that the packing of the goods ordinarily sold by the manufacturer in the wholesale trade is packing for the purpose of protecting the goods against damage during trans portation or in the warehouse.
However, if any special secondary packing is provided by the assessee at the in stance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such special packing would not be includible in the value of the goods.
It may be necessary in this connection to refer to the observations of this Court in Union of India & Ors.
vs Bombay Tyre International Ltd., (supra) dealing with the aspect of secondary packing, where this Court reiterated that the degree of secondary packing which is necessary for putting the excisable article in which it is sold in the wholesale market at the factory was the degree of packing where the cost would be included in the value of the goods for the purpose of excise duty.
Pathak, J., as the Hon 'ble Chief Justice was then, observed whether it is necessary for putting the cigarettes in the conditions in which they were sold in the wholesale market or at the factory gate.
He answered that it is not.
It was found that these corrugated fibreboard containers are employed for the purpose of avoid ing damage or injury during the transit.
It was conceivable that the wholesale dealer who takes delivery might have its depot at a very short distance only from the factory gate or may have such transport arrangements available that damage or injury to the cigarettes could be avoided.
In those cases, the corrugated fibreboard containers, according to Pathak, J., were not necessary for selling the cigarettes in the wholesale market.
I am of the opinion that the views expressed by the majority of the learned Judges were correct and it appears, with respect, that the observations of Chief Justice Bhag wati were not consistent with the judgment of this Court in Bombay Tyre International (supra) at p. 379.
The learned Attorney General sought to suggest that the decision of this Court in Union of India vs Godfrey Phillips Ltd. (supra) perhaps might require reconsideration.
I am unable to accept this suggestion.
The ratio of the decision in Godfrey Phil lips ' case (supra) is in consonance with the decision of Union of India vs Bombay Tyre International (supra) and further in consonance with the true basis of excise as explained in several decisions mentioned before.
In the premises, on 992 the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade.
There was evidence that 90% of the goods were deliv ered at the time of removal without being put in drums.
There was no evidence that there was any necessity of pack ing or putting these in drums prior to their sale.
It was not necessary that the articles were to be placed in drums for these to be able to generally to enter the stream of wholesale trade or to be marketable.
On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such.
But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities.
The manufac ture of the goods was complete before these were placed in drums.
The completely manufactured product was stored in tanks.
From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and 10% of the sales, the vehicle of removals was drums.
In the premises, the value of the drums with regard to the fusel oil/styrene monomer irrespective of whether these were supplied by the assessee or not, are not includible in the assessable value of the Styrene Monomer.
In the aforesaid view of the matter, I am of the opinion that these appeals have to be allowed and the orders of the Tribunal set aside.
The Tribunal was in error in holding that as at the time of removal, goods were delivered from the factory in packed condition and the containers were not returnable to by the buyer, the value of the drums is to be included.
It is reiterated that in order to be deliverable, it is not necessary that the goods should be delivered in packed condition and that the containers were not necessary to make the goods marketable.
In the aforesaid view of the matter, the appeals are allowed and the orders of the Tribunal are set aside.
The value of the aforesaid drums should, therefore, be excluded from the assessable value for the purpose of excise duty.
In the facts and the circumstances, however, there will be no order as to costs.
RANGANATHAN, J I have perused the judgment proposed to be delivered by my learned brother Sabyasachi Mukharji, J. I agree with the conclusion arrived at by him but I would like to rest it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act, 1944, without going into the larger questions raised by counsel and dealt with by my learned brother.
The assessee company is manufacturing and selling fusel oil.
993 It also manufactures and sells another liquid known as styrene monomer.
The fusel oil and monomer are supplied generally in tankers brought by the customers Sometimes it is supplied in drums provided by the customers who are not charged anything for those drums.
In the case of styrene monomer, the finding is that the supply is in tankers to the extent of 90% and only 10% of the sales were made in drums.
The issue before us is whether the costoat of the drums supplied by the customer for which he is not charged should be included in the assessable value of the goods in ques tion: in other words, whether a notional amount representing the cost of the drums should be added to the sale price charged by the assessee to its constituents.
Shri Harish Salve, arguing for the appellants, con tended that the cost of packing referred to in section 4(4)(d)(i) is such cost incurred by a manufacturer and not the cost of packing borne by the buyer.
In the alternative, he contended that atleast so far as styrene monomer sales are concerned, the cost of drums cannot enter into the picture.
Citing several previous authorities of this Court he contended on the following lines: "It is not all packing that is liable to be included under section 4(4)(d)(i).
It is only that degree of secondary packing which is necessary for the assessable article to be placed in the condition in which it is sold in the wholesale market at the factory gate which can be in cluded in the assessable value of the article.
On the facts of this case, there is evidence that 90% of the monomer was delivered at the time of removal without being put in drums.
There was no evidence that there was any necessity of packing or putting them in drums prior to their sale.
Delivery in drums was only to facilitate their transport in small quantities.
The manufacture of the monomer was complete when it was stored in tanks.
From these tanks, the goods were, to the extent of 90%, removed directly and placed in tankers.
In 10% of the sales, the "vehicle" of removal was drums.
In the premises, the value of the drums irrespective of whether these where supplied by the assessee or not, is not inclu dible in the assessable value of the goods.
The learned Attorney General, on the other hand, contended that the terms of section 4(4)(d)(i) are very clear and specific.
He pointed out though "manufacture" is the taxable event, the measure of the levy need not be and is not to be restricted to the cost of 994 manufacture.
So it is open to Parliament to prescribe any measure by reference to which the charge is to be levied and this is what is done under section 4.
In construing section 4(4)(d)(i), all that has to be seen is whether the goods are delivered in packed condition.
If this question is answered in the affirmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, has to be automatically included in the assessable value if necessary, by addition to the sale price, except only where the packing is of durable nature and returnable to the manufacturer.
He reminded us of the oft quoted truism that, in tax matters, one has to look at what is said and that there is no question of any intend ment, implication, equity or liberality in construing the taxing provision.
I agree with Mukharji, J. that this con tention cannot be accepted.
The principle referred to by the learned Attorney General is unexceptionable but the words of a statute have to be read in the context and setting in which they occur.
The proper interpretation to be placed on the words of section 4(4)(d)(i) has been explained in the judg ment of my learned brother and I am in full agreement with him on this point.
There is ample internal indication in the statute to show that the cost of packing referred to in the above clause is the cost of packing incurred by the manufac turer and recovered by him from the purchaser whether as part of the sale price or separately.
The object and purpose of the levy, the meaning of the expression 'assessable value ' as interpreted in section before its amendment cou pled with the now well established position that the amend ment intended to make no change in this position, the use of the word "cost" rather than "value", the nature of the other payments referred to in sub clause (ii) all these show beyond doubt that, while generally the normal price for which the goods are sold at the factory gate is to be taken as the assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market.
It will indeed be anomalous if the cost of an item of pack ing charged for from the customer is to be excluded from the assessable value where the packing, though durable, is returnable to the manufacturer but the cost of an item of durable packing supplied by the customer and taken back by him is liable to be included in the assessable value.
This conclusion, in my opinion, is sufficient to dispose of the present appeals.
In this view of the matter, I consider it unnecessary to discuss wider questions as to the circumstances in which the cost of packing (primary or secondary) can at all enter into the determination of the 995 assessable value under section 4(4)(d)(i) canvassed by the counsel for the assessee or as to the correctness or other wise of the decision of this Court in Union of India vs Godfrey Phillips, by the learned Attorney General.
My conclusion is that the answer to the question whether the cost of the container should be includ ed in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not.
If the answer is yes, three kinds of situation may arise.
Where the manufacturer supplies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the con tainer.
There will be no question of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the con tainer is a durable one and is returnable to the manufactur er.
If the manufacturer supplies the drums and charges the customers separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer.
If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufacturer.
VERMA, J. I have the benefit of perusing the judgments prepared separately by my learned Brothers Mukharji, J. and Ranganathan, J. both of whom have arrived at the same con clusion.
My conclusion also is the same.
However, I append this short note only to emphasize that in my opinion also the view taken by all of us on the construction of section 4(4)(d)(i) of the (here inafter referred to as "the Act") is alone sufficient, in the present matters, to support the conclusion we have reached and it does not appear necessary to consider the wider propositions canvassed by the two sides.
I agree that the cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in rela tion to any excisable goods is only the "cost of such pack ing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer.
The "cost of such packing" referred in section 4(4)(d)(i) does not in clude within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer.
This construction of the expres sion "cost of such packing" in section 996 4(4)(d)(i) of the Act clearly excludes in these matters the question of its addition to the price of goods recovered by the manufacturer from the buyer for determining the "value" in relation to the excisable goods for computing the duty payable on it.
In my opinion also, the above conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals.
For this reason, I agree with Rangana than, J. that the wider propositions canvassed by the two sides including the question of correctness of the view relating to secondary packing taken in Union of India vs Godfrey Phillips India Ltd., raised by the learned Attorney General need not be considered and decided in these matters.
I agree with my learned Brothers that both these appeals be allowed.
R.S.S. Appeals allowed.

Response:
The appellant company/assessee manufactures and sells fusel oil/ styrene Monomer falling under Tariff Item No. 68 of the 1st Schedule to the .
The said fusel oil/styrene Monomer is sold in bulk and generally delivered to the customers at the appellant 's factory in road tankers.
Some times it is supplied in drums brought by the customers who are not charged anything for those drums.
In the case of Styrene Monomer, the finding is that the supply was in tankers to the extent of 90% and only 10% of the sales were made in drums.
Two notices were issued to the appellant to show cause as to why the value of the drums should not be included in the assessable value of the goods.
In reply, the appellant contended that as the drums were supplied by the buyer the value thereof could not be included in the assessable value.
The Assistant Collector however included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer.
The Collector (Appeals) allowed the appellant 's appeal and held that it was not open to the Assistant Col lector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice.
The Customs, Excise and Gold (Control) Appellate Tribunal allowed the further appeal filed by the Revenue and held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, therefore, the value had to be included in the assessable value.
Before this Court it was contended on behalf of the appellant that it was not all packing that was liable to be included under section 4(4)(d)(i) of the Customs and Central Excises Act, it was only that degree of secon 975 dary packing which was necessary for the assessable article to be placed in the condition in which it was sold in the wholesale market at the factory.
gate which could be includ ed in the assessable value of the article; fusel oil/Styrene Monomer was sold in bulk and was capable of being so sold, hence it was not necessary for the said fusel oil/Styrene Monomer to be supplied to the customer in drums; the duty of excise was payable on manufactured goods and no duty of excise could be collected from the appellant on such drums which were neither manufactured nor purchased by the appel lant; the duty being on the activity of manufacture whatever was necessary to bring the goods into existence alone could be taken into account for duty purposes; and the sub section did not contemplate the inclusion of the cost of packing in the value of goods when the packing was supplied by a cus tomer to a manufacturer on its own cost.
On behalf of the Revenue the learned Attorney General contended that the value of drums/containers would also have to be included on a correct interpretation of charging sections, namely, sections 3 and 4 of the Act; the terms of section 4(4)(d)(i) were very clear and specific; it was a well settled principle of construction that in taxing stat utes one had only to look at what was clearly stated, and there was no room for any intendment; percentages of sales did not in any manner affect determination of the assessable value of the excisable goods; though "manufacture" was the taxable event, the measure of the levy need not be and was not to be restricted to the cost of manufacture; it is open to Parliament to prescribe any measure by reference to which the charge was to be levied and this is what was done under section 4; and in construing section 4(4)(d)(i).
all that had to be seen was whether the goods were delivered in packed conditions and if this question was answerable in the af firmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, had to be automatically included in the assessable value, if necessary, by addition to the sale price, except only where the packing was of durable nature and returnable to the manufacturer.
Allowing the appeals, this Court, HELD: (1) The correct position must be found out bearing in mind the essential nature of excise duty.
Excise duty is a duty on the act of manufacture.
Manufacture under the excise law is the process of activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such.
It is then and then only that 976 manufacture takes place attracting duty.
[986B] (2) Section 2(f) of the Central Excises & Salt Act provides the definition of the term "manufacture".
It states, inter alia, that manufacture includes any process incidental or ancillary to the completion of manufactured product.
In the instant case, the drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer.
[983B C, 987D] (3) In order to be 'manufacture ', there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market. 'If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the section.
[986C E] (4) The clear implication of the use of the word "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act is that only packing cost of which is incurred by the assessee, i.e. the seller, is to be included.
The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer.
[988B] Union of India & Ors.
vs Bombay Tyre International Ltd., ; ; Collector of Central Excise vs Indian Oxygen Ltd., ; K. Radha Krishaiah vs In spector of Central Excise, Gooty & Ors., ; Govind Pay Oxygen Ltd. vs Asstt.
Collector of Central Ex cise, Panaji & Ors., ; Alembic Glass Indus tries Ltd. vs Union of India & Ors., ; Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; ; A.K. Roy vs Voltas Ltd., ; Atic Industries Ltd. vs H.H. Dave Assistant Collector of Central Excise, ; Union of India vs Godfrey Phillips India Ltd., [1985] Supp. 3 SCR 123; Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors.
, ; ; Bhor Industries Ltd., Bombay vs Collector of Central Excise, Bombay, ; and Union of India vs Godfrey Phillips Ltd., , referred to.
977 (5) On the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade.
There was no evidence that there was any necessity of packing or putting these in drums prior to their sale, or to be able to generally to enter the stream of wholesale trade or to be marketable.
On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such.
But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities.
The manufac ture of the goods was complete before these were placed in drums.
The completely manufactured product was stored in tanks.
From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and for 10% of the sales, the vehicle or removal was drums.
In the premises, the value of the drums with regard to the fusel oil/ styrene monomer irrespective of whether these were supplied by the assessee or not.
are not includible in the assessable value of the Styrene Monomer.
[992A D] Per section Ranganathan, J. (agreeing with the conclusion but resting it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act) (1) There is ample internal indication in the statute to show that the cost of packing referred to in section 4(4)(d)(i) of the Central Excises & Salt Act, 1944 is the cost of packing incurred by the manufacturer and recovered by him from the purchaser whether as part of the said price or separately.
[994D] (2) While generally the normal price for which the goods are sold at the factory gate is to be taken as assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market.
[994F] (3) The answer to the question whether the cost of the container should be included in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not.
If the answer is yes, three kinds of situation may arise.
Where the manufacturer sup plies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the ' container.
There will be no ques tion of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the container is a durable one 978 and is returnable to the manufacturer.
If the manufacturer supplies the drums and charges the customer separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer.
If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufac turer.
[995B D] Per J.S. Verma, J. (agreeing with Ranganathan, J. that the conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals).
(1) The cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in relation to any excisable goods is only the "cost of such packing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer.
[995G] (2) The "cost of such packing" referred to in section 4(4)(d)(i) does not include within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer.
[995H]


Prompt:
ivil Appeals Nos.
4582 4585 of 1989.
125 From the Judgment and Order dated 29.7.1988 of the Allahabad High Court in C.M.W.P. No. 11933 & 16493/1987.
1573 1/1987 & 12373/1987.
R.K. Garg, S.P. Singh, N.M. Popli, R.B. Misra, Uma Nath Misra and R.C. Kaushik for the Appellants.
R.B. Mehrotra for the Respondent.
The Judgment of the Court was delivered by MISRA, J.
Special leave granted.
The short question in these appeals is as to whether the High Court was right in upholding the decision of the Uttar Pradesh Public Service Commission to re hold the recruitment examination.
On the requisition of the State Government the State Public Service Commission had undertaken the recruitment to the post of Upper Zila Basic Shiksha Adhikari (Women), District Inspectress of Girls Schools/Associate Regional Inspectress of Girls Schools in Uttar Pradesh Educational Service Junior Scale (Women 's Branch) The advertisement inviting applications from eligible candidates was published on May 5, 1985 and a corrigendum was published on June 8, 1985.
The recruitment examination was in two stages written and interview/personality test.
After the written examina tion was over, on the basis of the results thereof success ful candidates upto a base limit have to be called to be interviewed.
On account of improper feeding into the comput er some of the candidates who had better performance in the written examination were not called and candidates securing lesser marks in the written examination were not only called for interview but were also finally selected.
When this position was known and upon an inquiry was factually estab lished, the Public Service Commission decided to cancel the entire recruitment examination and asked for re holding of it.
The High Court has upheld the action of the Public Service Commission and has dismissed the writ petitions.
We have heard counsel for the parties and are of the view that when no defect was pointed out in regard to the written examination and the sole objection was confined to exclusion of a group of successful candidates in the written examination from the interview, there was no justification for cancelling the written part of the recruitment examina tion.
On the other hand, the situation could have been appropriately met by setting aside the recruitment and asking for a 126 fresh interview of all eligible candidates on the basis of the written examination and select those who on the basis of the written and the freshly held interview became eligible for selection.
We allow the appeals, set aside the judgment of the High Court and direct that the order of the Public Service Com mission cancelling the written examination shall stand vacated.
In lieu thereof we direct that the results of the written examination shall stand sustained and shall form the basis for the interview part of the recruitment and on the basis of the two examinations and in terms of the recruit ment rules fresh selections shall be made.
We would clarify that with the dismissal of the special leave petitions the selection of the two Scheduled Caste candidates and five Backward Class candidates has become final and would not be disturbed.
The State Public Service Commission should have been more careful in dealing with the matter so that four years in the process of recruitment would not have been lost and the public cause would not have suffered; public time would not have been wasted in requiring re doing of what had once been done and the litigation could have been avoided.
We have also not been able to appreciate the justification for cancellation of the written part of the recruitment examina tion and drive the candidates to litigation.
On the facts alleged we direct that the recruitment which is now to be re done by completing the interview examination should be finalised within four months hence.
There shall be no order as to costs.
T.N.A. Appeals allowed.

Response:
The Uttar Pradesh Public Service Commission conducted recruitment examination to the post of Upper Zila Basic Shiksha Adhikari (Women) in two stages written test and interview.
The Commission cancelled the entire recruitment examination for re holding it, after it was found that due to improper feeding into the computer candidates who secured lesser marks in the written examination were interviewed and finally selected while candidates who had better performance were not called for interview.
Writ petitions challenging the action of the Commission were dismissed by the High Court.
Hence these appeals.
Allowing the appeals and setting aside the judgment of the High Court, this Court, HELD: When no defect was pointed out in regard to the written examination and the sole objection was confined to exclusion of a group of successful candidates in the written examination from the interview, there was no justification for cancelling the written part of the recruitment examina tion.
[125G] The situation on the other hand could have been appro priately met by setting aside the recruitment and asking for a fresh interview of all eligible candidates on the basis of the written examination and selection of those who on the basis of the written and the freshly held interview became eligible for selection.
[125H; 126A]


Prompt:
ivil Appeal No. 4649 of 1989.
From the Judgment and Order dated 26.7.1988 of the Allahabad High Court in Review Application No. 27(W) of 1988.
Anil Dev Singh and Mrs. section Dikshit for the Appellants.
Yogeshwar Prasad, Vijay Hansaria, Sunil K. Jain, S.K. Jain for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, CJ.
The Respondent, Arun Govil had been granted a permanent commission in the Indian Air Force and was working as a Pilot Officer.
In the year 1972 he was declared unfit by a Medical Board and was, therefore, inval idated from I.A.F. The Government of India issued a scheme for the benefit of ex military officials.
The State of Uttar Pradesh also adopted the same scheme.
Under that scheme the ex military officials were appointed on Contract basis for a fixed term which could be extended from time to time subject to the suitability of the official concerned but not beyond 58 years of age.
Pursuant to the said scheme the State of Uttar Pradesh appointed the respondent as the Secretary, Zila Sainik Board, Unnao on 20th of August, 1979.
Paragraph 2 of the said order of appointment issued on 20th August, 1979 reads thus: "The appointment shah be on contract for a period of one 241 year w.e.f.
the date of assumption if it is not terminated earlier by giving a one month 's notice by the Hon 'ble Gover nor or on paying one month 's salary in lieu thereof or by giving one month 's notice, by the Officer.
" The respondent was required to furnish his acceptance of the terms and conditions contained in the said order includ ing the above term relating to the period of appointment and on his accepting the terms and conditions he was appointed as the Secretary in the District Soldiers Board in the district of Unnao in the State of Uttar Pradesh '.
The said term was extended retrospectively, first upto 20th August, 1982 by an order passed in September, 1981 and it 'was again extended upto 31st March, 1983 by an order made in February, 1983.
Again the term was extended upto 30th of August, 1985 by an order dated 1st June, 1983.
All these orders of exten sion were couched almost in the same language.
The relevant part of the last of such orders, namely, the order dated 1st June, 1983 reads as follows: "Sir, With reference to your letter No. 1020/Sa.
A.D.M./141, Dated 31.3.1982 on the above subject I am directed to say that the terms of the officers mentioned under para 2 who were appointed w.e.f.
the date mentioned in para 4 (has expired).
The Governor is therefore pleased to accord his sanction to extend the period of the contract upto the period mentioned under para 5 subject to the condi tion that their service tenure shall expire on completion of 58 years of age in case the same is completing earlier during the extended period.
No. Name and Date of Date of Recommen place of appoint expiry dation appoint ment of con extend ment tract the contract 1to 12 13 Ex Pilot 21.8.79 31.3.83 1.4.83 Arun Govil, 30.8.85 Unnao 14 to 21 242 2.
During the extended period of the contract conditions of service of officers shall remain same as are mentioned under their Appointment Order.
Letters of accept ance of relevant conditions of service to be obtained from these officers must be submitted to the Government at an early date.
" It is thus seen that the appointment of the respondent was indisputably in the nature of contract and under the last order of appointment refened to above he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further extension.
But on 29.3.1985 the service of the 1st Respondent was terminated by the issue of a notice and payment of one month 's salary.
The order was to be effective from the date of receipt of termination order and no charges were men tioned therein against the 1st respondent.
The respondent aggrieved by the said order of termina tion filed a Writ Petition on the file of the High Court of Allahabad in Writ Petition No. 3 164 of 1985.
A Division Bench of the High Court found that the order of termination that had been served on the respondent was an invalid one since it had been issued on the basis of Vigilance Report and no opportunity had been given to the respondent to show cause why such action should not be taken against him.
It is not necessary to set out all the reasons given by the High Court for setting aside the order of termination.
The High Court, however, held that the termination order could not be sustained and the Writ Petition was liable to be allowed.
The High Court further issued a direction to the effect that the respondent was entitled to salary upto the period he was entitled to remain in service.
In the instant case the respondent was entitled to be in service till 30th of Au guSt, 1985 unless there was a further extention.
In the Penultimate paragraph of the judgment the High Court further stated: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or of fresh appointment and no observations in this regard are being made by this Court.
" The judgment was delivered on 24.3.1988.
243 The respondent who was not satisfied by the order allow ing the Writ Petition as stated above preferred a Review Petition before the High Court contending that he was enti tled to be reinstated in service on the pronouncement of the Judgment on 24.3.
1988 notwithstanding the fact that his term of office had come to an end on 30th of August, 1985 as stated above and no further order of extention had been passed by the Governor.
In support of the Review Petition the respondent relied on an interim order which had been passed by the High Court during the pendency of the Writ Petition on 10th of July, 1986 which reads thus: "The post will be kept vacant and in case the petitioner succeeds in his Petition it would be made available forthwith to the petitioner by way of an appointment.
" The contention of the respondent was that the said interim order entitled him to be reinstated in service irrespective of the fact whether the Governor had extended the period of his appointment beyond 30th of August, 1985.
The High Court allowed the Review PetitiOn on 26.7.1988 and made an order reinstating the Respondent in service which reads as follows: "This is an application for review of our Judgment dated 24.3.1988 by which we allowed the Writ Petition filed by the Petitioner with certain directions.
It seems that when the writ petition was decided, our attention was not drawn towards the interim order dated 10.7.1986 passed by learned single Judge in which it was provided that one post will be kept vacant and in case the petitioner suc ceeds in his petition it would be made avail able forthwith to the petitioner by way of his appointment.
The petitioner has pointed out inaccuracy in the second paragraph of the operative part of the judgment which says that: "It is open for the opposite parties to consider the claim of the petitioner for continuation in service or of fresh appoint ment and no observations in this regard are being made by this Court."" Aggrieved by the above order made on review which di rected the State of Uttar Pradesh, the appellant herein, to reinstate the respondent in service, the State Government has filed this apeal by special leave.
It is not disputed that the scheme under which the respond ent 244 had been appointed provided for an appointment by contract for a specified term which could be extended from time to time and that the term of the respondent had been extended on different occasions after his first appointment and he was not entitled to continue in service beyond 30th August, 1985 unless there was a further extension.
Clauses 6 & 7 of the first order of appointment stated that the respondent was entitled to the leave admissible for temporary employees and for other matters he was to be treated as a temporary Government employee during the tenure of his office.
The appellant government never accepted the position that the respondent was entitled to be treated as a regular employee who had a vested right to continue to hold the post till he attained 58 years of age.
The true position that emerges from the material on record is that the respondent was employed only under a contract which specified the term of his appointment which extended only Upto 30th of August, 1985.
Since it is admitted that no order of 'extension had been sanctioned by the Governor beyond 30th August, 1985, the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if the order of termination of service served on him on 29.3.
1985 was found to be an invalid one.
It is on this basis that the High court had while setting aside the order of termination by its order dated 24.3.1988 directed that the respondent was entitled to salary upto the period he was entitled to remain in service and further observed that it was open for the opposite parties to consider the claim of the respondent for continu ation in service or of fresh appointment and no observations in this regard were made by the Court.
A reading of the Judgment of the High Court dated 24.3.1988 shows that the respondent had not urged before the High Court that the order of appointment issued in his case was not in the nature of a contract and the subsequent orders extending his period of appointment till 30th of August, 1985 were liable to be ignored and that he should be treated as a person regularly appointed in Government service entitled to con tinue till he completed the age of 58 years.
Even the order passed on Review on 26.7.1988 does not make out that the respondent had put forward at that stage such a case.
His only case was that the interim order that had been passed on 10.7.86 entitled him to be reinstated in service even though there was no order of extension of service.
If the respond ent was really aggrieved by the Judgment dated 24.3.1988 he should have preferred an appeal before this Court and that he did not do but on the other hand he proceeded to file a Review Petition claiming to be reinstated in service on the slender ground that the interim order conferred on him a right to continue in service beyond 30th of August, 1985 even though his service had not been extended by the Gover nor of Uttar Pradesh.
245 In the circumstances, we feel that while the High Court was right in disposing of the Writ Petition on 24.3.
1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e., 30th August, 1985 it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988.
We, therefore, set aside the order dated 26.7.1988 passed by the High Court on review and restore the Judgment dated 24.3.1988 passed in the Writ Petition.
The interim order did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right.
The order passed on review is wholly unsustainable.
We, however, make it clear that what we have stated above does not affect in any way what the High Court has stated in the penultimate paragraph of the Judgment dated 24.3.1988 which reads thus: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or the fresh appointment and no observations in this regard are being made by this Court.
" The appeal is accordingly allowed.
No costs.
T.N.A. Appeal allowed.

Response:
Pursuant to a scheme enacted for the benefit of ex military officials the appellant State appointed the re spondent on 20.8.1979 as Secretary Zila Sainik Board on contract basis for a specified period which was further extended upto 30.8.1985.
On 29.3.1985 the services of the respondent were terminated.
The respondent filed a writ petition before the High Court challenging the termination order.
By an order dated 24.3.1988 the High Court set aside the termination order holding that the respondent was entitled to salary upto the period he was entitled to remain in service i.e. upto 30.8.1985.
The respondent preferred a Review Petition before the High Court contending that pursuant to the interim order dated 10.7.1986 passed by the High Court he was entitled to be reinstated in service even though there was no order of extension of service.
By an order dated 26.7.1988, the High Court allowed the Review Petition directing the appellant State to reinstate the respondent in service.
Hence this appeal by the State.
Allowing the appeal and setting aside the order passed on Review, this Court, HELD: 1.
In the instant case, the appointment of the respondent was indisputably in the nature of contract and under tile order of appointment he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further exten sion.
Since no order of extension had been sanctioned by 240 the Governor beyond 30th August, 1985 the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if tile order of termination of service was found to be an invalid one.
[242B; 244C] 1.1 The High Court was right in disposing of the Writ Petition on 24.3.1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e. 30th August, 1985.
But it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which ' in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988.
[245A B] 2.
The interim order passed by the High Court did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right.
The order passed on review is wholly unsustainable.
[245C]