2002 (3) TMI 64 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of Explanation 2 to Section 4A of the Central Excise Act, 1944.
2. Validity of Note No. 2 to the Proforma of Declaration appended to the Circular dated 8-6-1999.
3. Discrimination and violation of Articles 14 and 301 of the Constitution of India.

Summary:

Issue 1: Interpretation of Explanation 2 to Section 4A of the Central Excise Act, 1944
The appellant, a manufacturer of ceramic glazed tiles, declared different MRPs for different regions on their packages. The Department contended that excise duty should be based on the highest MRP among those declared. The Court held that Explanation 2 to Section 4A should be read in conjunction with sub-sections (1) to (4) of Section 4A, meaning that if only one retail sale price is printed on packages for a region, that price alone is the retail sale price for excise duty purposes. If more than one retail price is declared on the same package, the highest price applies. The Court supported this interpretation with the amended Explanation 2 effective from 12-5-2001, which clarified that different retail prices on different packages for different areas should each be considered for the respective areas.

Issue 2: Validity of Note No. 2 to the Proforma of Declaration appended to the Circular dated 8-6-1999
The appellant challenged Note No. 2, which required declaring the highest retail price for excise duty purposes, as ultra vires Section 4A. The Court found that the form of declaration prescribed under Rule 173C(2A) cannot override the statutory provisions of Section 4A. Explanation 2 refers to the retail price declared on the package, not in the declaration form. Therefore, the Department's insistence on using the highest retail price declared in the form was incorrect.

Issue 3: Discrimination and violation of Articles 14 and 301 of the Constitution of India
The appellant argued that Note No. 2 discriminated against manufacturers selling in multiple states compared to those selling in a single state, violating Article 14. It also impeded free trade across states, violating Article 301. The Court did not find it necessary to declare Note No. 2 ultra vires or address these constitutional issues explicitly, as the primary issue was resolved by interpreting Explanation 2 correctly.

Conclusion:
The appeal was allowed, and the order dated 20-7-1999 was set aside. The Court declared that different retail sale prices on different packages for different areas should each be considered for excise duty purposes. The Respondents were directed to act accordingly for the period from 1-8-1998 to 11-5-2000. The Court did not find it necessary to declare Note 2 ultra vires or quash the letter dated 2-7-1999.