9911796707
TMI Blog1974 (9) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... rvants from collecting excise duty from the plaintiff-respondent on the amount of trade discount allowed by the plaintiff to its dealers and distributors. Plaintiff also prayed for the recovery of a sum of ₹ 89,246.70 paise, wrongly collected from the plaintiff along with interest at 9 per cent. per annum and the costs of the suit. * * * * The learned trial Judge has passed the following decree : "The plaintiff do recover from the defendant ₹ 82,571.10 paise with the full costs of the suit and running interest at 6 per cent. on the principal amount of ₹ 75,742/- from the date of suit till realisation. Further, it is hereby declared that action of the Excise authorities and officers of the Union of lndia in refusing to allow the plaintiff to clear the electric motors without payment of duty on the amount of trade discount is illegal, ultra vires, male fide and outside their powers and jurisdiction. It is further declared that the action of the Excise authorities and offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On all these electric motors of the standard type, ranging from 0.5 Horse Power to 125 Horse Power, whether sold through the aforesaid sole selling agents or by the plaintiff itself directly, the trade discount at the uniform rate of 15 per cent. is invariably given to its appointed dealers and distributors. In case of electric motors sold through the plaintiff's sole selling agents, referred to above, the trade discount at uniform rate of 181/2 per cent. is allowed to them, i.e. M/s. Jyoti Calor Engg. Ltd. with condition that out of the said 181 per cent. they have to pass on 15 per cent. discount to the dealers and distributors, and that is invariably done. 8. According to the plaintiff company, in view of the clear provisions of Section 4 of the Act, the prices at which electric motors are sold by it to M/s. Jyoti Calor-Engg. Ltd. less 181/2 per cent, should be taken as the value for the purpose of computing the excise duty payable. Alternatively, in any case, all the standard electric motors, whether sold by M/s. Jyoti Calor-Engg. or by the plaintiff itself to their dealers and distributors, are sold at fixed price determined by the plaintiff company from time to time les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifications and requirements. In such cases, it quotes a special price and a special trade discount. The said special price is normally higher than the price of the standard motors. The Central Excise Department, for the purpose of charging excise duty does accept those special prices which are always higher than the prices of the standard motors. But at the same time, they do not allow deduction of the trade discount for the purposes of duty. Not only that, but utilising it as a lever, the Central Exeise Department goes to the length of disallowing deduction of 15 per cent. trade discount, which is invariably given to all the dealers and distributors. 12. The plaintiff company had represented the matter to the Collector of Central Excise, Baroda and also to the Central Board of Revenue, New Delhi. The Central Government has accepted in principle that IS per cent. trade discount should be deducted for the purpose of duty vice their letter dated 24th March 1965, Ex. 28. However, as the Central Excise authorities at Baroda insisted on not allowing deduction on trade discount, the matter was again represented by plaintiff to the Collector of Central Excise, Baroda, by its le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of defendant that the plaintiff was not giving the trade discount at the uniform rate of 15 per cent invariably to all dealers and distributors. After referring to Ex. 24, 31, 40 and 41, relied upon by the plaintiff, to which we will make reference at an appropriate stage the learned trial Judge has observed : ......lt is clear from both these statements at Ex. 24, and 41, that the plaintiff company gives the trade discount uniformly to all its dealers at the rate of 15 per cent in case of standard motors. It is also clear that in case of special motors, the plaintiff company gives discount to its dealers, as mutually agreed upon. Thus, it can safely be stated that the plaintiff company gives trade discount uniformly to all its dealers at the rate of 15 per cent, in case of standard electric motors and thus even if we accept the interpretation put up by the defendant, the action of the Central Excise Officers in not allowing deduction of trade discount at 15 per cent is illegal." The learned trial Judge has further observed that there was nothing in Section 4 of the Act to indicate that the excise is not to be charged on trade discount only if it is uniformly g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;Section 3 of the Act is a charging section. Section 2(c) of the Act defines 'excisable goods'. It is not in dispute that the goods are excisable goods. The expression 'manufacture' has been defined in clause (f) of Section 2 of the Act. Chapter II deals with 'Levy and Collection of Duty'. The relevant part of Section 3 of the Act reads : "(1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and duty on salt manufactured it or imported by land into any part of India as and at the rates set forth in the First Schedule." The relevant item in the First Schedule with which we are concerned is Item No. 30, and the description of goods, referred to therein, is electric motors, all sort and parts thereof and the duty is to be levied at 15 per cent ad valorem. 17. Section 4 of the Act, which was substituted by Act No. 15 of 1955, and which is material for our purposes, reads : * * * &e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. There is no positive provision for deduction of trade discount and the amount of excise duty payable. According to him, if the assessing authority, in a given case, does not give deduction of trade discount, it does not amount to non-compliance with the provisions of the Act and as a necessary corollary same will be the position in case deduction is not given for the amount of excise duty payable. According to him, such an assessment may be an erroneous assessment and nothing higher than it. It may be erroneous, submitted Mr, Desai, because the excise duty is a duty on the value of the manufactured goods, that is, cost of manufactured goods inclusive of manufacturing profit. Mr. Desai has submitted that if any deduction other than the aforesaid deduction is given, it will be non-compliance with the provisions of the Act, but if any of those two deductions is not given, it will not be a case of non-compliance with the provisions of the Act. 19. The second limb of Mr. Desai's submission was that the expression 'trade discount' will indicate that it is a discount given in trade or business. If such a discount is given in the trade, it will not be manufacturer's profit. l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine. All along, their case is that such a deduction cannot be allowed as it is not uniformly given. Provisions of Section 4 of the Act, to which we have made reference, clearly support the submission made by Mr. Kaji that the "trade discount" contemplated in the Explanation to Section 4 of the Act is the "trade discount" given to the wholesale i e. wholesale dealers and distributors and not any discount given to the consumers or retailers. It is significant to note that the excise authorities had examined 4,000 to 5,000 invoices of the plaintiff company and have filed statement Ex. 41, indicating cases, in some of which 15 per cent, discount was not given. There are only 65 such cases. Plaintiff company replied by Ex. 24 explaining each and every of those cases referred to. The analysis of it shows that there are six categories of cases. The first category of cases is consumers. The second category of cases is of dealers and distributors where some discount is given to the consumers and the balance to the distributors (at the request of the distributors in cases were the goods are sold to the consumers through the distributors. The third category of cases is of contracts with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the dealers." In para 5 of his deposition, he has made positive assertion : "We give trade discount to our sole selling agents at the rate of 31/2 per cent on which refund of excise duty is not claimed." It is thus evidence that they have not claimed this additional amount of trade discount which they give to their sole selling agents. He has in terms stated that the said trade discount is given to their sole selling agents over and above 15 per cent allowed. He has also stated, where the dealings are directly with the consumers, the rate of trade discount may not be uniform. In para 9, he has stated : ".....It is true that in respect of item at Serial No. 62, we have given the same dealer 15 + 21/2 per cent. For items at Serial Nos. 14, 30, 37, 38,45, 51 and 62 Explanations have been given in the Remarks column for giving those rates to the dealers, and those remarks are correct. These remarks indicate that actual discount passed by the plaintiff company is more than 5 per cent. It is true that the particulars mentioned in Serial Nos. 37 to 41 are all our dealers. It is true that uniform rates of discount are not given to them for the reasons stated in the Remarks column wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of the Explanation." 27. In the instant case also, there was no such averment made. This decision, in our opinion, is a complete answer to the arguments advanced by Mr. Desai in this behalf. 28. As said by us earlier, there is a clear finding arrived at by the learned trial Judge, which is supported by the evidence to which we have also made reference that there is not a single case of wholesale transaction pointed out where trade discount given is less than 15 per cent. The excise duty is to be levied on the wholesale cash price in view of the clear provisions contained in Section 4 and Explanation given to it. The legislature has given a clear mandate that deduction has to be given for such trade discount as well as the amount of excise duty payable. No other deduction is to be given, which clearly and by necessary implication indicates that deductions have to be given in respect of two items referred to in that Explanation. 29. Interpretation put by Mr. Desai that it is only within the discretion of the excise authorities to give such deduction is not a correct interpretation. It is not at all warranted by the language of the Explanation. It is clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers and that is the material factor to be taken into account for determining the real value of the goods, i.e. the wholesale cash price and it is on the basis of this determination of the value that the excise duty is to be levied. 32. The whole question, therefore, that boils down is, if on these grounds the excise authorities have not given deduction of trade discount can it be said that their action amounts to non-compliance with the provisions of the Act and that the act of theirs would amount to a nullity, i.e their order on that ground will become inoperative and invalid. It is in this context one has to find out whether the Civil Court has jurisdiction to entertain such a suit and grant the relief. 33. Before we consider the submission made at the Bar in regard to the jurisdiction and consider the authorities cited at the Bar, it is significant to note that in the Act with which we are concerned, there is no ouster or exclusion section ousting the jurisdiction of the Civil Court. It is, therefore, evident that the question of jurisdiction is not to be determined on the basis of interpretation of that exclusion section. It is equally true that the liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides for appeals or revision to the revenue authority. There is no exclusion section, the interpretation of which has to be made for feeding, whether the jurisdiction of the Civil Court is ousted or not. Question arose at the stage when the determination of wholesale cash price was to be made. It is on the determination of it, one can decide about the quantum of excise duty payable. * * * * 38. The learned Government Pleader, relying upon cerain decisions of the Supreme Court, to which we will make reference presently, has urged that the non-compliance with the provisions of the Act would be, when the authority concerned had no jurisdiction to embark upon the enquiry, meaning thereby that certain question may not be remitted to that authority and in respect of it that authority may embark upon that enquiry and decide it, the authority may not be competent to decide such a question and still it may decide it, submitted Mr. Desai would fall within the purview of those observations. 39. Mr. Desai has submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dies provided may be relevant but is not decisive to sustain the jurisdiction of the Civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the interdment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute created a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not. (3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals. (4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim in clearly within the time prescribed by the Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector of customs against an order imposing duty as well as an order refusing to refund duty and the grievance may be carried to the Board of Revenue. The jurisdiction of the Civil Court is by clear implication of the statute excluded." 51. Considerable reliance has been placed by Mr. Desai in support of his submission on these observations made by the Supreme Court in this decision. But it is significant to note the observations made by the Supreme Court in this very decision which follow thereafter. They are : "Civil Courts have jurisdiction to examine cases in which the Customs Authority has not complied with the provisions of the statute or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the authority had acted in violation of the fundamental principles of judicial procedure or he has made an order which is not within his competence or the statute which imposes liability is unconstitutional or where the order is alleged to be mala fide." 52. It is thus evident that the Supreme Court in this case had clearly laid down that the Civil Courts have jurisdiction to examine cases in which the Customs Authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholesale cash price. The present case is a case which stands on a stronger footing than even Voltas' case. In Voltas case 90 to 95 per cent sales were retail sales. In the instant case there are only a few retail sales. The legislature has laid down the criteria for determining the wholesale cash price on the basis of which the excise duty is to be levied in such cases. If there is non-compliance with such provisions, and the taxing authority acts by introducing qualification therein, which is not warranted, it would necessarily mean that there is non-compliance with the fundamental provisions of the Act. It is case where the taxing authority had jurisdiction to embark upon the enquiry. The enquiry is to be made for the determination of wholesale cash price. But in process of that decision making, it deviated and took into account as extraneous considering and overstepped its limit. The moment the authority acts beyond the legislative mandate that act will be invalid and inoperative it being in excess of its power and jurisdiction. It becomes non-est. Once the order is nullity, no question of bar of jurisdiction of Civil Court can arise and it will be more so in a case like the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emsp; * Estates Land (Reduction of Rent) Act, 1949, exclusively on the basis of the recommendation of the special officer must in consequence held to be not in conformity with the provisions of the Reduction of Rent Act, and, therefore, outside the purview of section 3(2) of that Act. Section 8(1) would accordingly be inapplicable and the jurisdiction of Civil Courts cannot be excluded to entertain and decide suit questioning the legality of the notification dated 2-1-1948 reducing the rates of rent is of village (village Kalipatnam) under section 3(2). 63. In our opinion, the present case also will fall within the second part of the first category of cases referred to in Dhulabhai's case. 64. Mr. Kaji has also submitted that it will also fall within number five category of case referred to in Dhulabhai's case. The category referred to therein is, where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected, suit lies. Mr. Kaji has contended that rule 11 of the Rules provides for refund where such amount have been paid through inadvertence, error or misconst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Collector of Central Excise in respect of the price list submitted for the first order of 1962. The memo of appeal is at Ex. 25, dated 2nd April, 1962. This appeal was rejected by the Collector on 27th February, 1972 by his order, Ex. 26. Thereafter, the plaintiff filed the revision application on 17th August, 1962 that revision application is at Ex. 27. It was decided by the Central Government on 6th March, 1965 that order is at Ex. 28. The plaintiff writes a letter Ex. 29, dated 27th August 1966 to the Collector of Central Excise, Baroda, to give refund in pursuance to the order of Central Government which is at Ex. 28. His request was finally rejected on 14th October, 1966 by the reply at Ex. 30. Thus, there is no substance in the contention of the defendant that the suit claim is barred. Article 120 of the Limitation Act would apply." 71. The learned Government Pleader has not raised any submission before us that the suit for declaration and injunction is not filed within the period of limitations. It is admittedly filed within the period of limitation. He had only submitted that so far as the claim for refund of the amount illegally collected from the plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent there would be obligation on the defendant to retain it for the use of the plaintiff and refund to it when demanded. When this decision of the Supreme Court was pointed out to Mr. Kaji, he could note how anything to persuade us to reach the conclusion that this part of the suit claim was not time-barred. We hold that aforesaid part of the suit claim is time-barred. 73. Coming next to submission No. 3 of Mr. Desai, that the claim for interest allowed by the Court is not in accordance with law, in the instant case it is not necessary for us to enter into the controversy. Whether such interest could be allowed by way of damages or not, admitted position is that Interest Act does not apply. Even in the plaint, interest was claimed by way of damages. Plaintiff's only witness examined is Vasudeo Parsuram Bapat, Ex. 42. He has in terms stated that the Central Excise duty is shown separately in invoices and is collected by the plaintiff company. He has in terms admitted that it was true that the plaintiff company pays the actual dues to the Government collected by it. It is thus evident that in the instant case, excise duty paid by the plaintiff company to the Government is colle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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