Case: Union of India and Others Etc Vs. Metal Box Company of India Limited

But first we must mention that the filing of, and entertaining, the writ petition straightaway against a notice of demand issued by a Central Excise Officer (Superintendent of Central Excise) in a matter involving valuation was inadvisable. It has been repeatedly deprecated by this Court, the latest decision being in Executive Engineer, Bihar State Housing Board v. Ramesh Kumar Singh & Ors. which decision refers to and affirms the ratio of the earlier decisions of this Court. 4. Now coming to the merits of the case, the relevant tariff item, viz. Tariff Item 27 in the Schedule to the Central Excise Act, as it stood at the relevant time, read as follows : ALUMINIUM (a) (i) In any crude from including ingots, bars, blocks, slabs, billets, shots and pellets. (ii) Wire bars, wire rods and castings, not otherwise specified. (b) Manufactures, the following : Namely, plates, sheets, circles and strips in any form or size, not otherwise specified.(c) Foils, that is a product of thickness (Excluding any backing) not exceeding 0-15 millimetres. (d) Pipes and tubes, other than extruded pipes and tubes. (e) Extruded shapes and sections including extruded pipes and tubes. 5. Subsequently, clause (f) has been added in the above Tariff Item, which reads : (f) Containers, plain, lacquered or printed or lacquered and printed. The definition of manufacture, as inserted by the Finance Act (No. 25) of 195 with effect from March 1, 1975 reads, insofar as is relevant, thus : "(2f) Manufacture includes any process incidental or ancillary to the completion of a manufactured process; and Section 4 provides that where the duty of excise is chargeable with reference to value, such value shall, subject to other provisions of the said section, be deemed to be the normal price thereof. The normal price means the price at which such 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, where the buyer is not a related person and the price is the sole consideration for the sale - vide Section 4(1)(a)." 6. In Bombay Tyre International, it has been held by this Court that the wholesale cash price at the place of removal is the basis for determination of value of an excisable article and whatever be the wholesale cash price at which the excisable article is sold in wholesale trade at the place of removal would represent the value of the excisable article on which excise duty is leviable and that no deduction from such wholesale cash price is permissible except in respect of trade discount and the amount of excisable duty payable at the time of removal of the excisable article from the place of removal. It has been held that the expenses incurred by the assessee upto the date of delivery cannot be excluded from the assessable value. Of course, so far as the cost of packing is concerned, separate principles have been enunciated in that behalf which have been reiterated and explained recently in Madras Rubber Factory Limited, where it has been reiterated that the fundamental criterion for computing the value of the excisable article is the price at which the excisable article is sold by the manufacturer and that it is not the bare manufacturing cost and manufacturing profit which constitute the basis for determining such value. It has also been held that no deductions except those provided by Section 4 are permissible to be made from the wholesale price and that all expenses incurred on account of several factors which have contributed to the value of the excisable goods upto the date of sale/date of delivery are liable to be included. Applying the said test, it would be evident that the theory underlying the judgment of the learned Single Judge that only the value of the extruded tube shall from the basis of the assessable value and that the costs/charges for coating/printing etc. are not includible in the assessable value, is unsustainable in law. It is not necessary to discuss the issue relating to packing charges for the reason that it has not been agitated before us. [As we have said earlier, the law in that behalf is enunciated in Bombay Tyre International and Madras Rubber Factory Limited.]For these reasons, it is also not possible for us to agree with the decision of the Gujarat High Court in Extrusion Process Private Limited. 7. So far as the value of the plastic cap is concerned, it is submitted by the learned counsel for the assessee that it is not only supplied by the purchaser to the assessee but that it does not form part of the tube which is sold by the assessee to the purchaser. It is further submitted by the learned counsel that fitting of the cap to the tube does not amount to manufacture, because these caps are manufactured separately and by another manufacturer. The learned counsel invited our attention to the order of this Court dated November 20, 1989 dismissing Civil Appeal No. 1930 of 1984 filed by the Collector of Central Excise, Calcutta, against the Appellate Tribunals order in the case of Metal Box of India Ltd., Calcutta v. Collector of Central Excise itself [reported in whereunder the Tribunal had upheld the aforesaid contention of the Metal Box. We are, however, of the opinion that whether the cap forms part of the tube cleared and sold by the respondent, or not, is a question of fact to be decided in a given case and no generalisation is possible. There has been no investigation of this factual aspect in this case because the respondent rushed to the High Court soon after receiving the demand notice. Moreover, the said decision was rendered prior to the decisions of this Court in Bombay Tyre International and Madras Rubber Factory Limited. We do not, however, express any opinion on the correctness or otherwise of the said decision of the Tribunal in Metal Box of India Ltd.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]A reading of the judgment of the learned Single Judge, which was rendered on July 24, 1979, shows that it is influenced by the concept of post-manufacturing expenses, which was then in vogue but which theory has since been rejected by this Court in Union of India v. Bombay Tyre International (SC) = ECR C 663 SC and again recently by this Court in Government of India & Ors. v. Madras Rubber Factory Ltd. & Ors. (SC) where even the expression post-removal expenses is held to be not an accurate description of the method of levy and valuation underlying Sections 3 and 4 of the Central Excise Act. We find it difficult to sustain the judgment of the learned Single Judge and of the Division Bench, for more than one reason. But first we must mention that the filing of, and entertaining, the writ petition straightaway against a notice of demand issued by a Central Excise Officer (Superintendent of Central Excise) in a matter involving valuation was inadvisableApplying the said test, it would be evident that the theory underlying the judgment of the learned Single Judge that only the value of the extruded tube shall from the basis of the assessable value and that the costs/charges for coating/printing etc. are not includible in the assessable value, is unsustainable in law. It is not necessary to discuss the issue relating to packing charges for the reason that it has not been agitated before us. [As we have said earlier, the law in that behalf is enunciated in Bombay Tyre International and Madras Rubber Factory Limited.]For these reasons, it is also not possible for us to agree with the decision of the Gujarat High Court in Extrusion Process Private LimitedWe are, however, of the opinion that whether the cap forms part of the tube cleared and sold by the respondent, or not, is a question of fact to be decided in a given case and no generalisation is possible. There has been no investigation of this factual aspect in this case because the respondent rushed to the High Court soon after receiving the demand notice. Moreover, the said decision was rendered prior to the decisions of this Court in Bombay Tyre International and Madras Rubber Factory Limited. We do not, however, express any opinion on the correctness or otherwise of the said decision of the Tribunal in Metal Box of India LtdCivil Appeal No. 2132 of 1991,The challenge is liable to fail in view of the decision of this Court in Ujagar Prints & Ors. etc. v. Union of India & Ors. (SC) = ECR C 1281 SCNot only is this argument untenable in law but it does not actually arise for consideration in view of our holding in Civil Appeal No. 100 of 1981, that even apart from the said clause (f), the said charges are includible in the assessable value