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Commissioner of Central Excise, Indore Versus M/s Grasim Industries Ltd.

2016 (4) TMI 794 - SUPREME COURT

Whether the charges of containers provided by assessee for transportation of gases are liable to be taken into account for determination of value for the purpose of levy of duty in terms of Section 4 of the Central Excise Act, 1944 as amended with effect from 1.7.2000. - Held that:- Section 4(1)(a) [prior to the substitution] was considered by a Three Judges Bench of this Court in Union of India & Ors. Vs. Bombay Tyre International Ltd. & Ors. [1983 (10) TMI 51 - SUPREME COURT OF INDIA]. Whi .....

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be contrary views with regard to purport and effect and the interconnection between Section 3 and 4 ibid. - Therefore, we are of the view that another Coordinate Bench should not venture into the issues raised and even attempt to express any opinion on the merits of either of the views expressed in Union of India & Ors. Vs. Bombay Tyre International Ltd. & Ors. and Commissioner of Central Excise Vs. Acer Ltd. Rather, the questions referred should receive consideration of a Larger Bench for .....

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0, C.A. No.445/2010, C.A. No.1382/2010, C.A. Nos.2003- 2004/2010, C.A. No.2363/2010, C.A. No.2430/2010, C.A. Nos.7174-7175/2010, C.A. No. 4696/2011, C.A. No.2705/2012, C.A. No.3455/2004, C.A. No.6984/2011 and C.A. No.7272/2005. ORDER 1. By order dated 30.7.2009 the following questions have been referred for consideration by a larger Bench in terms of which the matters have been posted before us. 1. Whether Section 4 of the Central Excise Act, 1944 (as substituted with effect from 01.07.2000) and .....

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ndents-assessees are manufacturers of dissolved and compressed industrial gases and allied products. These gases are transported and supplied to the customers in tonners, cylinders, carboys, paper cones and HDPE bags, BIBs, pipeline and canisters, which may be more conveniently referred to as Containers. Some container items are provided by the assessees and in some instances the customers bring their own cylinders/containers. For providing the containers, the assessees charge the customers cert .....

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with effect from 1.7.2000. 4. Section 3 of the Act is the charging section and reads as follows: 3. (1) There shall be levied and collected in such manner as may be prescribed, (a) a duty of excise to be called the Central Value Added Tax (CENVAT)] on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); … .....

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ssee and the buyer of goods are not related and the price is the sole consideration for the sale, be the transaction value; 6. Transaction Value as defined by Section 4 (3) (d) reads as follows: (d) "transaction value" means the prices actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the .....

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(1) (a) read as follows: 4. Valuation of excisable goods for purposes of charging of duty of excise.-(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this Section, be deemed to be- (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, wher .....

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the nature of the charge. That it is a levy on excisable goods, produced or manufactured in India, is mentioned in terms in the Section itself. Section 4 of the Act provides the measure by reference to which the charge is to be levied. The duty of excise is chargeable with reference to the value of the excisable goods, and the value is defined in express terms by that Section. It has long been recognized that the measure employed for assessing a tax must not be confused with the nature of the t .....

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ader based standard of reference may be adopted for the purpose of determining the measure of the levy. Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy. In our opinion, the original Section 4 and the new Section 4 of the Central Excises and Salt Act satisfy this test. ... ... ... A contention was raised for some of the assessees, that the measure was to be found by reading Section 3 with Section .....

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tion value came up for consideration before another Three Judges Bench of this Court. In the said case, the question that arose is whether value of software attached to a computer, which is otherwise exempt from duty, is liable to be included in the assessable value of the computer for the purposes of levy of duty. Paragraphs 67, 69 and 84 of the judgment in Commissioner of Central Excise Vs. Acer Ltd. (supra) would be relevant and is, therefore, noticed below: 67. It is not in dispute that oper .....

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ble in relation to these two different goods is also different. 69. While calculating the value of the computer the value of the hard disc, value of the firmware, the cost of the motherboard as also the costs for loading operating softwares is included. What is excluded from the total value of the computer is the value of the operating softwares like Windows 2000, Windows XP which are secondary softwares. Indisputably, when an operating software is loaded in the computer, its utility increases. .....

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e is required to place definite orders on the manufacturer. It is also not in dispute that an operating software loaded on the hard disc is erasable. It is also accepted that the operating software despite being loaded on to the hard disc is usually supplied separately to the customers. It is also beyond any controversy that operating software can be updated keeping in view the development in the technology and availability thereof in the market without affecting the data contained in the hard d .....

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lue thereof by taking the total value of the computer and software. So far as the valuation of goods in terms of transaction value thereof, as defined in Section 4(3) ( d ) of the Act is concerned, suffice it to say that the said provision would be subject to the charging provisions contained in Section 3 of the Act as also sub-section (1) of Section 4. The expressions by reason of sale or in connection with the sale contained in the definition of transaction value refer to such goods which is e .....

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