Case: Union Of India  Vs. Mahindra &amp; Mahindra Ltd

of the scheme. The new scheme was merely more comprehensive and the language employed more precise and definite. As in the old Section 4, the terms in which the value was defined remained the price charged by the Assessee in the course of wholesale trade for delivery at the time and place of removal. Under the new Section 4 the phrase "place of removal" was defined by Section 4(b) not merely as "the factory or any other place or premises of production or manufacture of the excisable goods" from where such goods are removed but was extended to "a warehouse or any place or premises wherein the excisable goods have been permitted to be deposited without payment of duty" and from where such goods are removed. The judicial construction of the provisions of the old Section 4 had already declared that the price envisaged under Clauses (a) and (b) of that section was the price charged by the manufacturer in a transaction at arms length. After referring to several cases, some of which have already been mentioned here earlier, this Court pointed out in Voltas Limited, (1973) 3 SCC 503 :"the wholesale cash price has to be ascertained only on the basis of transactions at arms length. If there is a special or favoured buyer to whom a specially low price is charged because of extra-commercial considerations, e.g., because he is a relative of the manufacturer, the price charged for those sales would not be the wholesale cash price for levying excise Under Section 4(a) of the Act. A sole distributor might or might not be a favoured buyer according as terms of the agreement with him are fair and reasonable and were arrived at on purely commercial basis.34. Both learned Counsel for the Assessees and the learned Solicitor General for the Revenue are agreed that in enacting the new Section 4 Parliament did not intend to bring into existence a scheme of valuation different from that embodied in the old Section 4. Reference was made in that connection to the Statement of Objects and Reasons. The difference, however, lies in this that while learned Counsel for the Assessee attempted to show by reference to the old Section 4 that the legislative intent was to confine the value of an excisable article to the manufacturing cost and manufacturing profit and that therefore the same limitations should be read into the new Section 4, the learned Solicitor-General approached the problem from the other end and contended that since on a plain reading of the new Section 4 the price actually charged by the Assessee was the true criterion and was not limited to the manufacturing cost and manufacturing profit, it is that construction which should be put also on the old Section 4. We have earlier indicated our inability to accept the proposition that the old Section 4 defined the value of an excisable article in terms of the manufacturing cost and manufacturing profit exclusively. We find from an examination of the provisions of the new Section 4 that a similar conclusion must follow. The normal price mentioned in the new Section 4(1)(a) is the price at which the goods are ordinarily sold by the Assessee in the course of wholesale trade. It is the wholesale price charged by him. It is a price which may vary, according to the first proviso to the new Section 4(1)(a) with different classes of buyers. It may also be, according to the second proviso to the new Section 4(1)(a), the price fixed as the wholesale price under any law or the maximum price where the law fixes a maximum. The price may also be a different price if the case falls within the third proviso to the new Section 4(1)(a). In that event it will be the price charged by a related person in the course of wholesale trade. Clearly, it is not possible to conceive of the price under the new Section 4(1)(a) being confined to the manufacturing cost and the manufacturing profit. Moreover, it is reasonable to suppose that the central principle for the determination of the value of the excisable article should be the same, whether the case falls under Clause (a) or Clause (b) of the old Section 4 or under the new Section 4(1). When regard is had to the provision of Clause (b) in each case, it is not possible to limit the price to its components representing the manufacturing cost and manufacturing profit. 17. In Collector of Central Excise v. Indian Oxygen Ltd., AIR 1988 SC 1873 , referring to the decision in Union of India v. Bombay Tyre International Ltd., (1984) 1 SCC 467 , this Court held that in the light of the aforesaid principles it has to be borne in mind that any activity ancillary to but not incidental to the manufacture cannot be included as part of the activity for the manufacture. Any income either in the form of interest on deposits, notional or real earned on the deposit etc. would not be the price for the manufacture though they might be profits or gains, if any, of any ancillary or allied venture. 18. In the present case the Assessee failed to bring the ascertainable price of the tractor, cost of transportation to depot, etc. to the notice of the High Court. The Assessee simply challenged the show-cause notices on the ground that the amended Section 4 is not applicable. The High Court without looking into the relevant fact, only on the ground that Sub-clause (iii) to Section 4(b) was subsequently added by amendment including depot, premises of consignment agent or any other place or premises from where the excisable goods were to be sold after their clearance from the factory, declared the notices illegal and set aside the same. Even the matter was not remanded back to competent authority allowing the Assessee to bring to its notice "normal price", in course of wholesale trade, place of removal of tractors, transportation charges, etc.

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

Explanation:
1[ds]18. In the present case the Assessee failed to bring the ascertainable price of the tractor, cost of transportation to depot, etc. to the notice of the High Court. The Assessee simply challenged the show-cause notices on the ground that the amended Section 4 is not applicable. The High Court without looking into the relevant fact, only on the ground that Sub-clause (iii) to Section 4(b) was subsequently added by amendment including depot, premises of consignment agent or any other place or premises from where the excisable goods were to be sold after their clearance from the factory, declared the notices illegal and set aside the same. Even the matter was not remanded back to competent authority allowing the Assessee to bring to its notice "normal price", in course of wholesale trade, place of removal of tractors, transportation charges,