TMI Blog1978 (10) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed under Item 13 of the First Schedule of the Act. It is further alleged that the goods the petitioners manufacture are packed and sold in metal containers which are durable in nature and are returnable to the petitioners. 3. Before 1st March, 1969 the Excise duty payable by the manufacturers of vegetable product under Item 13 was leviable by weight per quintal of the excisable goods. By Finance Act of 1969 which came into force on 1st March, 1969, Item 13 of the First Schedule was amended so that from that date the excisable duty leviable was made ad valorem. Metal containers are also subject to excise duty under Item 46 and this duty is also leviable ad valorem and this duty has been made chargeable for the first time with effect from Ist March, 1970. 4. Under Rule 173A of the Rules framed under the Act, the Central Government has made the provision contained in Chapter VIIA of the aforesaid Rules applicable to vegetable factories. Under Rule 173A the petitioners are required to file a price list of goods assessed ad valorem for the purpose of determination of value in accordance with Section 4 of the Act. According to the petitioners the value for the purpose of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the containers would be chargeable under Item 13. Learned counsel, in support of his contentions, placed reliance on the decision reported in Union of India v. Delhi Cloth and General Mills, AIR 1963 S C. 791 = 1977 E.L.T (J 199) : In re - Sea Customs Act. AIR 1963 S.C. 1760; Orient Paper Mills Ltd. v. Union of India - AIR 1967 S.C. 1564 = 1978 E.L.T. (J 328); Atic Industries Ltd. v. H.H. Dave, Asstt Collector of Central Excise - AIR 1975 S.C. 960 = 1978 E.L.T. (J 444); and the unreported decisions of the Bombay High Court in Indian Tobacco Co. Ltd. v. Union of India Misc. petition No 593 of 1974, decided on 15-12-1975 and in Union of India v. Mansingka Industries Private Ltd., First Appeal No. 257 of 1972, decided on 6-9-1974 = 1979 (4) E.L.T. (J 158) Learned counsel also referred to a decision of the Calcutta High Court printed at p. 39D in the April, 1978 issue of the Central Excise Customs Journal (Hindustan Pilkington Glass Works Ltd. v. Superintendent, Central Excise - 1978 E.L.T. (J 229). 6. Learned Counsel for the respondents contended that the vegetable product manufactured by the petitioners which is commonly known as vanaspati is well known to be sold in containers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n are : (i) while assessing the duty whether the value of Vanaspati shall include the freight and the value of the container; and (ii) whether the present petition is maintainable in view of clause (3) of Article 226 of the Constitution. 10. Section 2(d) of the Act provides; "excisable goods" means goods specified in the First Schedule as being subject to a duty of excise and includes salt;' This provision provides that excisable goods means goods specified in the First Schedule as being subject to duty of excise. The goods in question, i.e., Vanaspati, are chargeable under Item 13 of the First Schedule; "13 VEGETABLE PRODUCT" Description of goods Rate of duty Vegetable Product : "Vegetable product" means any Vegetable oil or fat which, whether by itself or in admixture with any other substance, has by hydrogenation or by any other process been hardened for human consumption." 10% ad valorem. By this item it is indicated that duty is chargeable on vegetable products and it has been defined as vegetable oil or fat which by itself or in admixture with any other substance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods which are produced or manufactured 12. It was also contended that the definition of "manufacture" provided in Section 2(f) of the Act indicates that ancillary process of packing and tinning will also form part of the process of manufacture; whereas learned counsel for the petitioners, on the other hand, contended that in this definition where Legislature intended to include the process of packing and tinning it has specifically so provided and as in the case of the product in question, i.e. eatable product, if it has not been so provided, it could not be said that the process of putting the goods in containers or tins is a process of manufacture. Section 2(f) provides the definition of "manufacture" :- "2(f) 'manufacture' includes any process incidental or ancillary to the completion of a manufactured product; and (i) in relation to tobacco, includes the preparation of cigarettes, cigars, cheroots, biris, cigarette or pipe or hookah tobacco, chewing tobacco or snuff, and (ii) in relation to salt, includes collection, removal, preparation, steeping, evaporation, boiling or any one or more of these processes, the separation or purification of salt obtained in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -clause (iii) of the definition of 'manufacture' in Section 2(f) The 'process incidental or ancillary to the completion of a manufactured product' if is analysed, it could not be doubted that the manufactured product is vegetable product, i.e. vanaspati. In getting this product, packing or putting it in containers could not be said to be a process incidental or ancillary to the completion of the manufactured product as the manufactured product chargeable under Item 13 is Vanaspati or Vegetable product. Apparently, therefore, this contention advanced by learned counsel for the respondents could not be accepted. 14. In Union of India v. Mansingka Industries, Appeal No. 257 of 1972 = 1979 (4) E.L.T.(J 158) before the Bombay High Court a similar contention was advanced; "Mr. Nain has also referred to Section 2(f) of the Act of 1944 which defines "manufacture" and has shown to us that where it was intended that packaging should be included as a process of manufacture, the Legislature has said so. In sub-clause (iii) to Section 2(f) there is a provision that in relation to patent or proprietary medicines as defined in item No. 14E; as also in relation to cosmetics and toilet preparat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in dispute that for the purpose of this petition we are concerned with the provisions contained in Section 4 as it stood before it was amended by the Central Excises and Salt (Amendment) Act, 1973. This provision provides for assessment of value on the basis of which the duty is to be computed. The scheme of this section clearly indicates that the value for the purpose of duty would be the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at a time when this article is chargeable to duty i e. removal of the article from the factory or any other premise or the manufacture or production for delivery at the place of manufacture or production; and if such a price is not ascertainable, then clause (b) of this section provides for an assessment of the price on the basis of the price of an article of the like kind and quality capable of being sold. The Explanation to this section provides that no abatement or deduction shall be allowed except in respect of trade commission and the amount of duty payable at the time of removal of the article. 16. The question about the value of the article for the purpose of assessment of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring operation. The price charged by the manufacturer for sale of the goods in wholesale would, therefore, represent the real value of the goods for the purpose of assessment of excise duty. If the price charged by the wholesale dealer who purchases the goods from the manufacturer and sells them in wholesale to another dealer were taken as the value of the goods, it would include not only the manufacturing cost and the manufacturing profit of the manufacturer but also the wholesale dealers selling cost and selling profit and that would be wholly incompatible with the nature of excise. It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions. In fact the more common and less expensive the goods, there would be greater possibility of more then one tier of wholesale transactions. For instance, in a textile trade, a manufacturer may sell his entire production to a single wholesale dealer and the latter may in his turn sell the goods purchased, by him from the manufacturer to different wholesale dealers at State level, and they may in their turn sell the goods to wholesale d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Misc. petition No. 293 of 1974 D/15.12.75, and their Lordships held that marketing and distribution expenses, advertising expenses, freight on cigarette and smoking mixture, interest on the wholesale price charged to its wholesale dealer will have to be excluded in order to arrive at the value for the purpose of collection of duty. 19. The question about the cost of packing and freight and transport charges came up for consideration before the Calcutta High Court in Hindustan Pilkington Glass Works Ltd. v. Superintendent, Central Excise - 1978 E.L.T. (J 229) wherein it was observed; "Thus it is clearly established in view of the decisions referred to herein above that the cost of packing, freight and transport charges are post manufacturing cost and cannot be included in determining the assessable value of the excise duty of the goods." 20. Learned counsel for the respondents referred to decision of the Madras High Court in Aurofood Private Ltd. v. Government of India and others 1978 E.L.T. (J 673) wherein it was held that the value of the tin containers will have to be included in assessing the value for excise. In that decision the learned judge observed : "What is stre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of the Constitution it was contended by learned counsel for the petitioners that the order which is challenged in this petition is not an order of assessment. Orders will only be passed when the assessments are finalised and as stated in some of such cases appeals were preferred which it appears have been disposed of. It was contended that the order which is the subject matter of this petition will ultimately cover a number of orders of assessment and by pursuing those appeals the question of law raised could not be decided. Section 35 of the Act provides for appeals under the Act and it is no doubt true that this provision provides for appeals against any decision or an order and Section 36 provides for revisions. The order against which the present petition has been filed is an order passed by the Assistant Collector Central Excise, Indore, by this order the Assistant Collector negatived the contentions advanced by the petitioners and did not approve of the price list submitted by the petitioners for the purpose of assessment of duty. It could not be disputed that the questions raised by the petitioners are of a general nature not limited to any particular assessment and as st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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