1986 (12) TMI 35 - SUPREME COURT

Whether the price to the Defence Department Ex-factory gate (ex-factory) is to be considered as the wholesale cash price under old Section 4 as this was disallowed .by the Assistant Collector/

Held that:- Different prices can be declared with reference to different classes of buyers and each price is deemed to be a normal price of such goods. In this view of the matter, merely because the product is sold at a lower price to the Government and its Departments does not enable the MRF to contend that the difference in price with reference to an ordinary dealer and the Government is a discount to the Government. The difference in price is not a discount but constitutes a normal price for the Government as a class of buyer and no deduction on this head is liable to MRF Ltd. [1983 (11) TMI 70 - SUPREME COURT OF INDIA]

The assessable value is arrived at only after the permissible deductions are made. Excise duty is a ratio of the assessable value. Ad valorem excise duty is computed only on assessable value after arriving at such assessable value by making proper permissible deductions. Excise duty cannot be computed without proper determination of the assessable value, namely assessable value exclusive of permissible deductions. Even in the cum-duty sale price, the same principle must be followed to arrive at the assessable value. To compute an excise duty as a pre-determined amount without making the permissible deductions for reducing the cum-duty selling price is a fallacy both legally and mathematically as demonstrated above. The ad valorem excise duty can only be computed after reducing the assessable value by permissible deductions and then applying the tariff rate to the assessable value. To reverse this sequence is to mis-interpret the scheme and mode of levy of excise duty on the assessable value. In the light of our aforesaid discussions and keeping in line with our previous format orders, we direct the assessing authorities to quantify and re-determine the permissible deductions