TMI Blog1977 (9) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner further prays for a refund of ₹ 47,71,166.00 realised from the petitioner by way of excise duty in respect of the selling cost and selling profits, the forwarding and special packing charges and discount in the assessable value of the goods in respect of the price list submitted by the petitioner. 4. The petitioner, M/s Hindustan Pilkington Glass Works Ltd., carries on business of manufacturing wire and figured glass of various qualities at its factory situate at G.T. Road, Asansole in the district of Burdwan, West Bengal. Excise duty is leviable under the Central Excise and Salt Act, 1944 (hereinafter referred to as the said Act), on the manufacture of wire and figured glass. Glass and Glass Wire are excisable goods falling under the Central Excise Tariff No. 23A. The duty is leviable ad valorem. Section 4 of the Act provides for determining the assessable value where an article is chargeable at a rate dependent on its value. 5. Provisions of Chapter VII-A of the Central Excise Rules, 1944 consisting of Rules 173-A to 173-Q as framed under Section 37 of the said Act (introducing a scheme known as self removal procedure) have been extended to item 23-A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the items of glass wire in the assessable value declared in the said price list for determination of Central excise duty and disallowed the petitioner s claim for Regional Trade discounts on the ground that these discounts were not made available to independent buyers in all regions. All sales of white figured rough cast/wired glass are effected by the sole selling agent M/s A.P. W.G. (P) Ltd. at Calcutta. According to the Respondents there is no open market at the factory gate for sale of those glass and the nearest market for these glass is at Calcutta. Therefore the special packing, forwarding charges and freights up to Calcutta were included in the assessable value. It is the case of the petitioner that before determining the said assessable value, the respondent No. 1 never afforded any opportunity whatsoever to the petitioner to make its representation in the matter. Petitioner was never required by the respondent No. 1 to explain as to why the said forwarding and special packing charges would not be included in the assessable value or as to the inclusion of assessment in the assessable value no notice was issued to the petitioner requiring to make its representation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Mr. Bajoria further contended that where any assessments have been made without any authority of law, such orders amounted to deprivation of the petitioner s property without any authority of law within the meaning of Art. 31 of the Constitution and as such the present petition under Art. 226 of the Constitution should be regarded as petition for enforcement of fundamental rights within clause (1) of Art. 226 of the Constitution as amended. 13. In Spackmen v. Plumstead District Board of Works - (1885) 10 App. Case 229, Lord Selborne said that there could be no decision within the meaning of the statute if there is anything done contrary to the essence of justice. 14. In Ridge v. Baldwin - (1964) A.C. 40, Lord Reid and Lord Hodson held that a decision rendered contrary to the principle of natural justice and audi alteram partem was void and that in Wood v. Wood (1874) 9 Exch. 190 it was expressly decided. 15. In Ponkunnam Trader v. Addl. Income Tax Officer, Kottayam - (1972) (83) I.T.R. 508 Mathew, J. (as he then was) said that failure to conform to the principle of natural justice of audi alteram partem would make a judicial or quasi-judicial order void. Where a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a valid decision to expel him is subsequently made. Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body? 18. In Barnard v. National Dock Labour Board - (1953) 2. Q.B. 18, Denning L.J. observed that where a decision is null by reason of want of jurisdiction, it cannot be cured by any appellate proceedings; failure to take advantage of this somewhat futile remedy does not affect the nullity inherent in the challenged decision. The party affected by the decision may appeal but he is not bound to do so, because he is at liberty to treat the act as void. 19. In Nepal Ch. Banerji v. Commercial Tax Officer, Jalpaiguri - 81 CWN 836. T.K. Basu, J. held that when a Taxing Authority acting under a statute makes a demand of tax which is not leviable under the statute, such a demand amounts to deprivation of property without any authority of law within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight which were not assessable to duty according to Section 4 (a) and (b) of the Act. It is further contended that under the explanation to Section 4 the deduction which was claimed in respect of trade discount has not been allowed by the Superintendent of Central Excise in determining the assessable excise duty of the glass manufactured by the petitioner. 22. Mr. Dutt, appearing on behalf of the respondents, contended that there was no open market condition at the factory gate for sale of those glass without going through the agency of M/s. AP WG (P) Ltd. The nearest market of the glass was at Calcutta. The glass and glass ware are very sophisticated and delicate in nature and are likely to be damaged in transit. For those reasons the goods are sold only in packed condition. Cost of packing is recovered by the petitioner from the customers. Such packing constitutes a process incidental to the completion of the manufactured article and as such cost of packing is required to be included in the assessable value. Forwarding charges at specific rates according to the thickness of the articles are charged by the petitioner in the invoices uniformly from all customers irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue can include only the manufacturing profit. The section makes it clear that excise duty is levied only on the amount representing the manufacturing cost plus the manufacturing profit and exclude post manufacturing cost and the profit arising from post manufacturing operation, viz. selling profit. The section postulates that the wholesale price should be taken on the basis of cash payment thus eliminating the interests involved in wholesale price which gives credit to the wholesale buyer for a period of time and that the price has to be fixed for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the article. The Supreme Court further observed that wholesale market does not always mean that there should be an actual place where articles are sold and bought on a wholesale basis. So, even if there is no market in the physical sense of the term at or near the place of manufacture where the articles of a like kind and quality are or could be sold, that would not in any way affect the existence of a market in proper sense of the term provided the articles themselves could be sold wholesale to traders even though the article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciseable goods could not form part of the value for the purpose of levying excise duty. 29. In Union of India v. I.T.C. Ltd. - (1976) T.L.R. 2003, a Division Bench of the Karnataka High Court held that wholesale price must be determined on the basis of cash payment representing only the manufacturing cost and manufacturing profit, but excluding the selling cost and selling profit, and that the price has to be fixed for delivery at the factory gate. 30. In l.T.C. Ltd. v. Union of India - (1977) T.L.R. 2060, the wholesale market for the manufactured articles exists at some other places and not at the factory gate. For purpose of transporting those articles to those places the petitioner has to incur certain expenses like freight and octroi. To sell the goods at each of those places the petitioner has to maintain an establishment and incur expenses thereon. Following the decision of the Supreme Court in Voltas and Atic s cases a Division Bench of the Allahabad High Court held that such expenses should be regarded as post-manufacturing expenses. 31. The points decided by the Supreme Court in Voltas case may be summarised as follows :- (a) A wholesale market does not mean ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er ending with the ultimate consumer the assessable value is to be determined on the basis of the price at the first point of wholesale from the manufacturer to the wholesale dealer, eliminating, packing charges and transport charges has not been indicated by the Supreme Court in Atic s case. 34. In Atic s case the Supreme Court said that the assessable value must be taken to be the price at which the manufacturer sold the articles to the first wholesale dealer. The reference to price means the wholesale cash price charged by the manufacturer at the first point of sale. Accordingly one has to go back to rely upon the Voltas decision to find out what is the wholesale cash price. In Atic industries case the manufacturers did not contend that in the price so determined elements other than manufacturing cost and manufacturing profit were included. The Atic s decision is an authority for the proposition that where there are series of transactions between the manufacturer and the subsequent wholesale dealer before the goods reached the ultimate consumer, the assessable value will have to be determined on the basis of the wholesale cash price at the first point of sale. The said decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were money which could not be described as excise duty as they were contrary to law. 42. lt appears from the records that the petitioner never raised the issue of refund nor ever submitted any price list showing separately the manufacturing cost and manufacturing profit and/or selling cost and/or selling profit involved in the said prices. Even after the Supreme Court s judgment the petitioner has been clearing goods and paying duties according to the price list which did not specify whether the price referred to therein included the post manufacturing expenses and/or profits and if so, to what extent. 43. In Ogle Glass Works v. Union of India 1975 Cencus 115, before the Division Bench of the Maharashtra High Court a similar question arose; where a person has paid the tax under a mistake whether he was entitled to get it back, where the Court found that the assessment was void. In that case the Division Bench observed that justice not lie on the side of the petitioner and that the Court would be doing justice in ordering the respondent to refund the amount of ₹ 12 lakhs to the petitioner when, to begin with that money never came from the petitioner s pocket. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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