Case: Commissioner Of Central Excise, Lucknow Vs. M/S. Chhata Sugar Co. Ltd

1. Doubting the correctness of a two Judge Bench decision of this Court in the case of Commissioner of Central Excise, Meerut v. Kisan Sahkari Chinni Mills Ltd. reported in [2001(132) E.L.T. 523 (S.C.)], a Division Bench of this Court has referred the matter to a three Judge Bench. 2. Since common question of law and fact arises in these appeals before us, the same are disposed of by this common judgment. However, for the sake of convenience we quote hereinbelow the facts in Civil Appeal No. 7488-7492 of 2001. POINTS FOR DETERMINATION 3. It is convenient to set out, at the outset, the question involved in these appeals. That question is: whether administrative charges collected by the sugar factory for molasses sold from the buyers/allottees on behalf of the State Government in terms of S.8(5) of the U.P. Sheera Niyantran Adhiniyam, 1964 (hereinafter referred to as the U.P. Act") constituted a duty or impost in the nature of a tax and consequently not includible in the value as defined in terms of S.4(4)(d)(ii) of Central Excise Act, 1944 (hereinafter referred to as "the Act"). BACKGROUND FACTS 4. M/s. Chhata Sugar Company Ltd., Tehsil - Chhata, District - Mathura, U.P. (hereinafter referred to as "the assessee) is engaged in the manufacture and clearance of molasses falling under tariff item No. 1703.10. The assessee is registered with the Department under R.174 of Central Excise Rules, 1944. While determining the assessable value of molasses for computing central excise duty, the assessee did not include administrative charges collected from the buyer at Rs. 10 per quintal on behalf of the State Government under the provisions of the U.P. Act. Accordingly, demands show cause notices were issued under the Central Excise Act for alleged contravention of S.4 of the Act read with R.9 and 173G of the Central Excise Rules, 1944. The Assistant Commissioner, Central Excise, Aligarh confirmed the demands holding that the administrative charges are includible in the value on the ground that these administrative charges are not a tax but they are in the nature of fees. The order of the Assistant Commissioner however was set aside by the Commissioner (Appeals), Central Excise, Allahabad vide order dated 14th May, 1998. Being aggrieved, the Department preferred on appeal before the Customs, Excise and Gold Control (Appellate) Tribunal (CEGAT), New Delhi. However, CEGAT vide impugned judgment and order dated 27th July, 1999, rejected the appeal holding that the said administrative charge was a tax and it was not includible in the assessable value in terms of S.4(4)(d)(ii) of the Act by placing reliance on the judgment of this Court in the case of D.G. Gose & Co. (Agents) (P) Ltd v. State of Kerala reported in [(1980) 2 SCC 410] . Against the impugned judgment, the revenue has come by way of appeal to this Court under S.35 L of the Central Excise and Salt Act, 1944. ANALYSIS OF THE CENTRAL EXCISE ACT, 1944 AND U.P. ADHINIYAM, 1964 5. In order to answer the point at issue one has to analyse the relevant provisions of Central Excise Act, 1944 (as it stood at the relevant time). We quote hereinbelow S.4 of the said Act:-- "4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be -(a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assesses to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale:Provided that-(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in Clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers;(ia) where the price at which such goods are ordinarily sold by the assessee is different for different places of removal, each such price shall, subject to the existence of other circumstances specified in Clause (a), be deemed to be the normal price of such goods in relation to each such place of removal;(ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in Clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof;(iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail;(b) where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed.(2) Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price.(3) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under Sub-section (2) of S.3.(4) For the purposes of this section, -(a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent;(b) "place of removal" means-(i) a factory or any other place or premises of production or manufacture of the excisable goods;(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, from where such goods are removed;(ba) "time of removal", in respect of goods removed from the place of removal referred to in Sub-clause (iii) of Clause (b), shall be deemed to be the time at which such goods are cleared from the factory;(c) "related person" means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor.Explanation.-In this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the Companies Act, 1956 (1 of 1956);(d) 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 assesses.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 to 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 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, or reduction of duty of excise under such Act on such goods equal to any duty of excise under such Act, or the additional duty under S.3 of the Customs Tariff Act, 1975 (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 reference 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.(e) "wholesale trade" means sales to dealers, industrial consumers. Government local authorities and other buyers, who or which purchase their requirements otherwise than in retail." 6. S.3(1) of the Central Excise Act, 1944 is a charging section, which creates the liability to pay the excise duty on the goods produced or manufactured in India and the said Sub-section clearly indicates the nature and character of the duty, namely, that it is a tax on production and manufacture of goods, while S.4 is in the nature of machinery provision and, therefore, any thing said therein must be read so as to carry out the basic Concept of excise duty. S.4 of the said Act provides for determination of value for the purposes of charging the duty of excise under the Act. Further, the valuation is to be based ordinarily on the price thereof, that is to say, the price at which the excisable goods are ordinarily sold by the manufacturer to a buyer. According to S.4(1)(a) normal price is the price at which excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal provided the buyer is not a related person and the price is the sole consideration for sale. However, there are three provisos to S.4(1)(a) to clarify what would be the normal price in the circumstances mentioned in the three provisos. For the purposes of this case we are concerned with proviso (ii) which inter alia states that if excisable goods are sold in course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at the maximum price fixed under any such law, the price or the maximum price as the case may be, so fixed, shall be deemed to be the normal price. Therefore, S.4(1)(a) indicates what is normal price whereas the three provisos to S.4(1)(a) indicate three different normal prices in the circumstances mentioned under the three provisos. Consequently, under proviso (ii) to S.4(1)(a), if the excisable goods are sold by a manufacturer in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price being the maximum fixed under any such law then the price or the maximum price as the case may be so fixed shall be the normal price. 7. The U.P. Act has been enacted to save and preserve the total production of molasses in the State and for development of industrial growth and equitable distribution to distilleries and other industrial establishments. It deals with storage, gradation and price of molasses produced by sugar factories in the State of Uttar Pradesh and for regulation of supply and distribution thereof. Under S.2 (a), Controller has been defined to mean Controller of Molasses appointed under S.4. Under S.4 the State Government may by notification in the gazette appoint the person to be the Controller of molasses for the purposes of exercising the powers under the Act. Under S.5 of the U.P. Act, every occupier of sugar factory is required to take steps enumerated in the section to preserve the molasses. Under S.7 of the U.P. Act, the Controller is required to take steps to remove adulterated molasses. S.8 and 10 of the U.P. Act are relevant for the purposes of deciding these appeals and accordingly they are quoted hereinbelow:-- "8. Sale and supply of molasses. - (1) The Controller may by order require the occupier of any sugar factory to sell or supply in the prescribed manner such quality of molasses to such person, as may be specified in the order, and the occupier shall, notwithstanding any contract, comply with the order.(2) The order under Sub-section (1) -(a) shall require supply to be made only to a person who requires it for his distillery or for any purpose of industrial development;(aa) may require the person referred to in Clause(a) to utilise the molasses supplied to him under an order made under this section for the purpose specified in the application made by him under Sub-section (1) of S.7-A and to observe all such restrictions and conditions as may be prescribed.(b) may be for the entire quantity of molasses in stock or to be produced during the year or for any portion thereof, but the proportion of molasses to be supplied from each sugar factory to its estimated total produce of molasses during the year shall be same throughout the State, save where, in the opinion of the Controller, a variation is necessitated by any of the following factors:(i) the requirements of distilleries within the area in which molasses may be transported from the sugar factory at a reasonable cost:(ii) the requirement for other purposes of industrial development within such area; and(iii) fee availability of transport facilities in the area.(3) The Controller may make such modifications in the order under Sub-section (1) as may be necessary to correct any error or omission or to meet a subsequent change in my of the factors mentioned in Clause (b) of Sub-section (2).(4) The occupier of a sugar factory shall be liable to pay to the State Government, in the manner prescribed, administrative charges at such rate, not exceeding five rupees per quintal as the State Government may from time to time notify, on the molasses sold or supplied by him.(5) The occupier shall be entitled to recover from the person to whom the molasses is sold or supplied an amount equivalent to the amount of such administrative charges, in addition to the price of molasses.** ** ** **10. Maximum prices of molasses. -- (1) The occupier of a sugar factory shall sell molasses in respect of which an order under S.8 has been made at a price not exceeding that prescribed in the schedule.(2) The State Government may, by notification in the Gazette amend the Schedule if such amendment is necessitated by reason of any variation in the cost of storage of molasses or leading or shunting charges of molasses in tank wagons or in order to bring the prices of molasses in conformity with the prices, if any, fixed by the Government of India.Explanation - Prices shall include all costs incidental to the loading of molasses into railway tank wagons, tank lories or other containers and shunting charges of railway tank wagons." 8. A bare reading of S.8 inter alia indicates that the Controller may by order require a sugar factory to sell or supply such quantity of molasses to such person(s) as may be specified in his order and the sugar factory shall comply with the order notwithstanding any contract to the contrary. However, S.8(2) makes it clear that such supply of molasses shall be made only to a person who requires it for Ms distillery or for industrial development. Under S.8(4), the sugar factory shall be liable to pay to the State Government and in the manner prescribed, administrative charges at specified rates on the molasses sold or supplied by the sugar factory. Under S.8(5), the sugar factory shall be entitled to recover from the person to whom the molasses is sold or supplied, an amount equivalent to such administrative charges, in addition to the price of the molasses ( underline supplied by us ). A perusal of S.8(5) shows that the said administrative charges do not form part of the consideration for which the molasses are sold or supplied. Under S.8(5) of the U.P. Act administrative charges are recoverable by the sugar factory from the buyers in addition to the price of the molasses. It shows that liability to pay administrative charges is on the buyer and that it has no corelation with the price of the molasses. The sugar factory recovers these administrative charges from the buyers and passes it on to the government. These administrative charges are not appropriated to the revenue of fee assessee. Under S.10 of the U.P. Act the sugar factory has to sell the molasses at the price not exceeding the price prescribed in the schedule thereto. Further, under the explanation to the said section, prices shall include all costs incidental to loading of molasses into railway tank wagons, lorries or other containers. It is important to note that administrative charges contemplated by S.8(4) of the U.P. Act are not included in the explanation to S.10. This is because there is a dichotomy under S.8(4) of the U.P. Act between the prices of molasses on one hand and the administrative charges. It is for this reason that it is expressly provided under S.8(5) that the sugar factory shall recover the administrative charges or the amount equivalent thereto from the buyer in addition to the price of molasses. Under S.22, the State Government is empowered to make rules in order to carry out the purposes of the U.P. Act. 9. At this stage it would be necessary to quote R.2(b) and R.23 of U.P. Sheera Niyantaran Niyamawali, 1974 (hereinafter referred to as "U.P. Rules") which run as under:-- " R.2. Definitions. -- In these Rules, unless there is anything repugnant in the subject or context thereof-(a) ....(b) "Allottee" means a person in whose favour an order under S.8 of the Act has been made for purpose of purchase of molasses from the occupier of a sugar factory.** ** ** **Rule 23. Administrative charges. --Every occupier of a sugar factory shall deposit the amount of administrative charges payable on molasses sold or supplied by him in the treasury or sub-treasury of the district in which the sugar factory is situate and produce the treasury challan as evidence of such payment to the excise officer in charge of the sugar factory before making actual delivery of the molasses to the purchaser." 9.1. R.23 shows that every sugar factory shall deposit the administrative charges payable on molasses sold or supplied by it in the Government Treasury before making actual delivery of the molasses to the buyer/allottee. This rule further shows that in the first instance, administrative charges shall be paid by the sugar factory in advance before actual delivery of the molasses with a right of reimbursement at a later date from the buyer/allottee. It also indicates that the sugar factory is only a collecting agent for the State Government. It is for this reason that S.8(5) of the U.P. Act requires the sugar factory to recover from the buyer or the allottee an amount equivalent to the administrative charges in addition to the price of the molasses. Reading S.8(5) of the U.P. Act with R.23 it is clear that the liability to pay administrative charges under the U.P. Act is on the buyer/allottee and not on the factory. ARGUMENTS 10. At the outset, learned Attorney General submitted that the main question which arises for consideration is: whether the administrative charges levied under the U.P. Act are "other taxes" within the meaning of S.4(4)(d)(ii) of the Act. It was inter alia urged that above judgment of the Division Bench in the case of Commissioner of Central Excise v. Kisan Sahkari Chinni Mills Ltd. (supra) is erroneous for interpreting the words "other taxes" in S.4(4)(d)(ii) of the Act in the light of the words "taxation" as defined in Art.366 (28) of the Constitution of India, that there is no warrant for interpreting the words "other taxes" in the Act with similar amplitude, that it was clear from the scheme of the Act that the exclusion under S.4(4)(d)(ii) was intended for duties of excise, sales tax and other similar levies and not for every levy or duty or charge under a statute, that Parliament has deliberately not incorporated the wide definition of taxation in Art.366(28) of the Constitution in S.4(4)(d)(ii) of the Act, and the Division Bench failed to notice that the wide definition in Art.366(28) is for interpretation of the expression "taxation" appearing in the Constitution and not for other statutes and that the Division Bench had erred in holding that administrative charges would be covered by the words "other taxes" as it is compulsory exaction made under an enactment and, therefore, a duty or impost must he held to he in the nature of a tax. In this connection, it was also submitted that a levy being under a statute is not decisive of its character as a tax, and a fee can also be a compulsory levy under a statute and reliance was placed on the judgment of this Court in the case of Ratilal Panachand Gandhi v. State of Bombay reported in [1954 SCR 1055 ]; Sreenivasa General Traders v. State of A.P. reported in [(1983) 4 SCC 353] ; BSE Brokers Forum v. Securities and Exchange Board of India reported in [(2001) 3 SCC 482] . Learned Attorney General further contended that the U.P. Act is a regulatory legislation and the administrative charges levied thereunder are in the nature of regulatory fees. In this connection he invited our attention to the preamble of the U.P. Act which declares that the Act is intended to provide in public interest for the control of storage, gradation and price of molasses produced by sugar factories in U.P. and the regulation of supply and distribution thereof. Our attention was also invited to S.3 and 4 of the U.P. Act which deal with establishment of Advisory Committee to advise the State Government on matters relating to storage, preservation, gradation, price, supply, disposal of molasses and for a Controller of molasses. Our attention was also invited to S.5, 6, 7, 7A and 8 of the U.P. Act which provide for preservation and prevention of adulteration and which also provide for distribution and supply of the product. Thus a person who requires molasses for his distillery or for industrial establishment has to apply to the Controller and the Controller is entitled under S.8(1) of the U.P. Act to order any sugar factory to sell or supply the given quantity of molasses to an intending buyer. These provisions also found place in the U.P. Rules which provide inter alia for analysis and testing of samples and maintenance of accounts. It was submitted that regulatory regime for molasses was required in the public interest in view of the potential danger to public health and environment if the industry and the product are not properly regulated. In this connection it was submitted that this Court has held that regulatory fees do not require an element of quid pro quo in the strict sense and that a reasonable relationship between the levy and the services rendered is sufficient. That if the activities for which a license is given requires regulation, the fee charged for this purpose is correctly classifiable as a fee and not as a tax. In support of this contention, reliance was placed on the judgments of this Court in the case of City Corporation of Calicut v. Thachambalath Sadasivan and Ors. [(1985) 2 SCC 112] ; Commissioner and Secretary to Government Commercial Taxes and Religious Endowments Department and Ors. v. Sree Murugan Financing Corporation, Coimbatore and Ors. [(1992) 3 SCC 488] ; Krishi Upaj Mandi Samiti and Ors. v. Orient Paper & Industries Ltd. [(1995) 1 SCC 655] ; Secretary to Government of Madras and Ors. v. P.R. Sriramulu and Anr. [(1996) 1 SCC 345] ; Vam Organic Chemicals Ltd and Anr. v. State of U.P. and Ors. [(1997) 2 SCC 715] ; B.S.E. Brokers Forum, Bombay and Ors. v. Securities And Exchange Board of India and Ors. [(2001) 3 SCC 482] . Placing reliance on the above judgments it was contended that so far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not loose the character of a fee provided it is not excessive. The mere fact that the charges may be recovered under S.8(5) of the U.P. Act by the sugar factory (producer) from the buyer of molasses does not militate against the administrative charges being in the nature of regulatory fees, nor lead to the conclusion that it is a tax. The reason being, since the benefit of the regulation of molasses goes to the buyer, the administrative charges may be recovered from him. It was accordingly submitted that the levy under the U.P. Act is a regulatory fee and not a tax and is, therefore, includible in the assessable value for the purpose of imposition of excise duty. It was submitted that the impugned judgment of the tribunal and the decision of the Division Bench of this Court in Commissioner of Central Excise v. Kisan Sahkari Chinni Mills Ltd (supra) have overlooked the abovestated legal position and, therefore, was erroneous. FINDINGS: 11. The basic issue in this batch of cases is: whether the administrative charges payable by the assessee under S.8(4) of the U.P. Act are to be included while determining "Value" of goods for the purposes of assessment under the Act. We have analysed both the Acts earlier. Briefly it may be mentioned that S.3(1) of the Act is a charging section which creates the liability to pay the excise duty on the goods produced as manufactured in India and the said Sub-section indicates the nature and character of the duty, viz. that it is a tax on production, and manufacture of goods, while S.4 of the Act is a machinery provision and therefore meant to carry out the basic concept of excise duty. S.4 of the Act provides for determination of value for the purpose of charging the excise duty under the Act. However, the valuation is based on the price thereof, that is to say, the price at which the excisable goods are ordinarily sold by the manufacturer to a buyer. In the case of Union of India and Ors. etc. v. Bombay Tyre International Ltd. and etc. reported in [AIR 1984 SC 420 ], it was inter alia held that under the Act while the levy is on the manufacture or production of goods, the stage of collection need not in point of time tally with the completion of the manufacturing process, that while the levy has the status of a constitutional concept, the point of collection is located where the Act declares it will be and that where the excise duty is levied on ad valoram basis the value on which such duty is levied is a "conceptual value". This judgment of the Apex Court is relevant for two reasons. Firstly, it lays down that levy under the Act has the status of a constitutional concept. Therefore, we do not find merit in the argument of the learned Attorney General that the definition of the word taxation" in Art.366(28) cannot be read into the words "other taxes" under S.4(4)(d)(ii) of the Act. Secondly, it lays down that an article becomes an object of assessment when it is sold by the manufacturer but that circumstance does not detract from its true nature that it is a levy on the fact of manufacture. Hence, the judgment of this Court in the case of Union of India v. Bombay Tyre International (supra) gives us an insight into the connotation of the words "other taxes" in S.4(4)(d)(ii) of the Act. Further, S.4(1)(a) of the Act shows that the assessable value of ah article is based on the normal price, which is the price at which excisable goods are ordinarily sold by the assessee to the buyer in the course of wholesale trade. In this case, we are concerned with the provisions of the Act as it stood at the relevant time. It is to be noted that taxes are one of the items of deduction from the normal price to arrive at the assessable value. A normal price under S.4(1)(a) of the Act includes numerous cost factors including taxes and therefore, under S.4(4)(d)(ii) the legislature has provided for express deduction of taxes from the normal price to arrive at the assessable value. However, the normal price may vary under the three situations mentioned in the three provisos to S.4(1)(a) of the Act Under the second proviso to S.4(1a), which applies to facts of this case, the normal price is the statutory price fixed under any law for the time being in force or at a price, being the maximum, fixed under such law, which in the present case is the U.P. Act. Under S.10 of the U.P. Act the sugar factory has to sell molasses at the prescribed price. The said price is the maximum price fixed by the Controller under S.8 of the U.P. Act Under S.8(5) of the U.P. Act however, administrative charges are levied in addition to the price of molasses which the buyer has to pay to the sugar factory (producer). Therefore, these administrative charges are distinct, separate and in addition to tile price of the molasses, which price is the statutory price fixed under S.10 of the U.P. Act and which consequently is the normal price under S.4(1)(a) of the Act. Under the second proviso to S.4(1)(a) of tile Act the normal price which is the assessable value is the statutory price and since the statutory price under the U.P. Act does not include administrative charges there is no question of deducting these administrative charges from the normal price to arrive at the assessable value in terms of S.4(4)(d)(ii) of the Act. Hence, there is no merit in the contention advanced on behalf of the revenue that administrative charges payable by the assessee under S.8(4) of the U.P. Act are includible while determining Value" of goods for the purposes of assessment under the Act. The matter can also be looked at from a conceptual angle. An assessee under the Act incurs expenses in the course of manufacture of goods, which includes taxes. The concept of price covers cost plus profit plus taxes. Therefore, under S.4(1)(a) if the normal price includes taxes, {See [(1978) 4 SCC 271] they have to be deducted. But if an item of expenditure or cost does not fell in the normal price, there is no question of deduction of that item from such a price as such a component never formed part of the normal price in the first instance and, therefore, it cannot come within the ambit of assessable value under S.4(1)(a) of the Act. On this very point, this matter stands concluded. 12. However, as stated above, in these civil appeals, we are required to decide the true purport of the words "other taxes" in S.4(4)(d)(ii) of the Act. It is argued on behalf of the Department that administrative charges levied on the sugar factory under the U.P. Act do not fall within the words "other taxes"; that while construing the said expression under S.4(4)(d)(ii) of the Act, one cannot take the assistance of the word taxation" as defined in Art.366(28) of the Constitution and consequently, the judgment of the Division Bench of this Court in the case of Commissioner of Central Excise v. Kisan Sahkari Chinni Mills Ltd. (supra) needs reconsideration. We may repeat that in our view, administrative charges under the U.P. Act do not enter assessable value under S.4(1)(a) of the Act. However, even assuming for the sake of argument that administrative charges form part of the assessable value, even then such charges are in the nature of tax and, therefore, excludible in terms of S.4(4)(d)(ii) of the Act for reasons mentioned hereinafter. 13. Before dealing with the foregoing issue, it may be noted that in this case we are concerned with identification of the nature of levy of administrative charges under S.8(4) and S.8(5) of the U.P. Act. As stated above, the U.P. Act has been enacted with the object of regulating supply and equal distribution of molasses to distilleries and other industrial establishments. Under S.8(4) of the U.P. Act, every sugar factory is made liable to pay to the Government administrative charges at the specified rate on sale or supply of molasses to the distillery. Under S.8(5), every sugar factory is entitled to recover from the buyer administrative charges in addition to the prices of molasses. Under S.10(1) of the U.P. Act, the sugar factory has to sell molasses at a price not exceeding that prescribed in the Schedule. Therefore, the levy of administrative charges is on production for sale of molasses. In the case of Chotabhai Jethabhai Patel & Co. etc. v. Union of India and Anr. etc. reported in [AIR 1962 SC 1006 ], the question before this Court was the nature and character of the duty of excise. It was held that the duty of excise was a tax or duty not intended by the taxing authority to be borne by the person on whom it is imposed and from whom it is collected but it is intended to be passed on to those who purchased the goods on which the duty was collected. That excise duty is a tax as it is imposed in respect of some dealing with the commodities, such as their import or sale, or production for sale. It has been further held that going by the general tendency of a tax, it is capable of being passed on to the consumer or the buyer. In our view, the above test is important because a tax is capable of being passed on to the consumer or tie buyer whereas a fee is a counter payment by the buyer who receives the benefit of the services for which he is charged and such fees are not capable of being passed on as fees to the consumer or the buyer. The above point of distinction is applicable to the facts of this case. In the present matter, as stated above, levy of administrative charges under S.8(4) of the U.P. Act is on the producer of molasses; it is imposed on production of molasses for sale and under S.8(5) the same is passed on to the buyer - distillery. In the circumstances, levy of administrative charges under the U.P. Act is a tax. There is one more circumstances which indicates that the levy of administrative charges under the U.P. Act is a tax. In the case of Matthews v. The Chicory Marketing Board (Victoria) reported in [(1938) 60 Commonwealth Law Reports 263], it has been held that customs and excise duties are indirect taxes as they are additions of definite amounts to the prices at which the goods upon which they are imposed are, in the ordinary course of business, sold by persons who have paid the duties. This test is also applicable to the present case. Under S.8(5) of the U.P. Act, administrative charges is in addition to the prices at which goods are sold in the ordinary course of business by the sugar factory (producer of molasses). Moreover, the predominant object of the U.P. Act is to maximize the revenue by way of tax while regulating storage and supply of molasses. The beneficiary under the said Act is the distillery. It is the distillery which provides important source of revenue to the State. In our view, the said levy of administrative charges is in nature of tax. 14. We can look at the problem from another viewpoint. One of the test to decide whether a levy is a tax or fee is that while tax is a compulsory exaction, fee relates to the principle of quid pro quo. This test can usefully be applied to the facts of the present case. As stated above, the beneficiary of the U.P. Act is the distillery (buyer). All regulatory measures are for the benefit of the said buyer. The sugar factory is merely a collecting agent of administrative charges for the State Government. The administrative charge is not a component of the consideration received by the sugar factory. This is clear from the provisions of S.8(5) which state that the administrative charges shall be collected in addition to the price of the molasses from the buyer - distillery. The said administrative charges do not form part of the revenue of the sugar factory. The said administrative charges cannot be appropriated to the revenue account of the sugar factory. Therefore, there is no element of quid pro quo as far as the administrative charges in the hands of the sugar factory are concerned. On the other hand, under S.8(4) of the U.P. Act read with R.23 of the said U.P. Rules, every sugar factory is required to deposit administrative charges on the molasses sold/supplied before actual delivery to the distillery (buyer), which brings in the principle of compulsory exaction. Hence, administrative charge under the U.P. Act is a tax and not a fee.15. We have decided this case in the light of the scheme of the U.P. Act and the Rules framed thereunder a and, therefore, it is not necessary to examine numerous judgments cited at the bar on the question of difference between the tax and fee. Ultimately, each matter will have to be decided in the light of the provisions of the statute in question. We are, therefore, in agreement with the view expressed in the case of Commissioner of Central Excise, Meerut v. Kisan Sahkari Chinni Mills Ltd. (supra).

Decision:
0[ds]8. A bare reading of S.8 inter alia indicates that the Controller may by order require a sugar factory to sell or supply such quantity of molasses to such person(s) as may be specified in his order and the sugar factory shall comply with the order notwithstanding any contract to the contrary. However, S.8(2) makes it clear that such supply of molasses shall be made only to a person who requires it for Ms distillery or for industrialS.8(4) of the U.P. Act, every sugar factory is made liable to pay to the Government administrative charges at the specified rate on sale or supply of molasses to the distillery. Under S.8(5), every sugar factory is entitled to recover from the buyer administrative charges in addition to the prices of molasses. Under S.10(1) of the U.P. Act, the sugar factory has to sell molasses at a price not exceeding that prescribed in the Schedule. Therefore, the levy of administrative charges is on production for sale of molasses. In the case of Chotabhai Jethabhai Patel & Co. etc. v. Union of India and Anr. etc. reported in [AIR 1962 SC 1006 ], the question before this Court was the nature and character of the duty of excise. It was held that the duty of excise was a tax or duty not intended by the taxing authority to be borne by the person on whom it is imposed and from whom it is collected but it is intended to be passed on to those who purchased the goods on which the duty was collected. That excise duty is a tax as it is imposed in respect of some dealing with the commodities, such as their import or sale, or production for sale. It has been further held that going by the general tendency of a tax, it is capable of being passed on to the consumer or the buyer. In our view, the above test is important because a tax is capable of being passed on to the consumer or tie buyer whereas a fee is a counter payment by the buyer who receives the benefit of the services for which he is charged and such fees are not capable of being passed on as fees to the consumer or the buyer. The above point of distinction is applicable to the facts of this case. In the present matter, as stated above, levy of administrative charges under S.8(4) of the U.P. Act is on the producer of molasses; it is imposed on production of molasses for sale and under S.8(5) the same is passed on to the buyerdistillery. In the circumstances, levy of administrative charges under the U.P. Act is a tax. There is one more circumstances which indicates that the levy of administrative charges under the U.P. Act is atest is also applicable to the present case. Under S.8(5) of the U.P. Act, administrative charges is in addition to the prices at which goods are sold in the ordinary course of business by the sugar factory (producer of molasses). Moreover, the predominant object of the U.P. Act is to maximize the revenue by way of tax while regulating storage and supply of molasses. The beneficiary under the said Act is the distillery. It is the distillery which provides important source of revenue to the State. In our view, the said levy of administrative charges is in nature oftest can usefully be applied to the facts of the present case. As stated above, the beneficiary of the U.P. Act is the distillery (buyer). All regulatory measures are for the benefit of the said buyer. The sugar factory is merely a collecting agent of administrative charges for the State Government. The administrative charge is not a component of the consideration received by the sugar factory. This is clear from the provisions of S.8(5) which state that the administrative charges shall be collected in addition to the price of the molasses from the buyerdistillery. The said administrative charges do not form part of the revenue of the sugar factory. The said administrative charges cannot be appropriated to the revenue account of the sugar factory. Therefore, there is no element of quid pro quo as far as the administrative charges in the hands of the sugar factory are concerned. On the other hand, under S.8(4) of the U.P. Act read with R.23 of the said U.P. Rules, every sugar factory is required to deposit administrative charges on the molasses sold/supplied before actual delivery to the distillery (buyer), which brings in the principle of compulsory exaction. Hence, administrative charge under the U.P. Act is a tax and not a fee.15. We have decided this case in the light of the scheme of the U.P. Act and the Rules framed thereunder a and, therefore, it is not necessary to examine numerous judgments cited at the bar on the question of difference between the tax and fee. Ultimately, each matter will have to be decided in the light of the provisions of the statute in question. We are, therefore, in agreement with the view expressed in the case of Commissioner of Central Excise, Meerut v. Kisan Sahkari Chinni Mills Ltd. (supra).