TMI Blog1978 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... dicherry. The biscuits are items falling under Tariff Item 1C of the Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). In November 1972 the third respondent (Assistant Collector of Central Excise, Pondicherry Division) visited the petitioners factory and in the course of the said visit he expressed the opinion that since the two price lists were in force for sale of the petitioners' products, one with reference to Pondicherry and another with reference to the entire southern region, the petitioners should submit two price lists and pay excise duty in accordance with the prices mentioned in those lists. The petitioners submitted to the third respondent that such a claim is opposed to the basic principles of levy of excise duty which is only on the manufacture, and therefore objected to the proposal. 3. An enquiry was conducted into the matter and after ascertaining the basic facts, an order was passed on 15-2-1973 by the third respondent. Therein he observed that there were two distinct types of sales and therefore a distinction should be made as reflected in the price list. They are :- (i) as sales made at Pondicherry without containers; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t biscuits become a different category when put inside containers is legally untenable. 6. The first respondent ought to have seen that the fact whether the containers are returned or not returned, can have no bearing on the assessable value of the biscuits. In this connection the statement that biscuits sold in returnable containers and in non-returnable containers cannot be considered as goods of the like kind and quality, is so erroneous on the face of it, that it cannot be accepted as valid. The order of the first respondent based on such an erroneous stand cannot be sustained. Hence the prayer is for certiorari to quash the order of the first respondent dated 16th May, 1975. 7. In the counter affidavit on behalf of the respondents, it is stated as under : It is submitted that two price lists were in force in respect of the biscuits sold by the petitioner firm one in respect of the sales in Pondicherry area in returnable containers and the other in places outside Pondicherry in non-returnable containers. In respect of sales in Pondicherry the full value of container is not included in the invoiced price, whereas in respect of sales outside Pondicherry with containers th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturnable their full value is not included in the invoiced price. In these circumstances the decision of the department to collect excise duty taking into consideration the value of the containers, in all cases where the biscuits are marketed with containers is correct in accordance with the provisions of Section 4. 8. Manufacture includes any process incidental or ancillary to the completion of a manufactured product. Biscuits are a peculiar commodity where packing is a necessary ancillary process and hence the process of manufacture can be said to be complete only after they are packed in containers. Thus packing is only a process of manufacture and cannot be considered as a process subsequent to manufacture as contended by the petitioner. The biscuits are marketed only in packed condition. The petitioner firm sells biscuits to all dealers both at Pondicherry and at places outside Pondicherry only after being packed in containers. In all cases except in respect of sales at Pondicherry the value of the containers is included in the price. In the case of sales at Pondicherry a portion of the costs of the container is included in the invoice price as the tins are returnable. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not mean excise duty on the container. 13. Mr. T. Chengalvarayan, learned Counsel for the respondents would draw my attention to Section 3 of the Act and submit that no doubt it is undeniable that the excise duty is on manufacture, but in the instant case, it is not a post-manufacture operation when the biscuits are packed in tins. It is the wholesale price charged at the factory gate. It is not the case of the petitioner that as far as sales outside Pondicherry are concerned, they are sold without the tins. Therefore, the various cases which are relied on by the petitioner cannot be of any assistance to determine the wholesale price. 14. Section 3 and 4 must be understood as one being the charging section and while the other is the quantifying section. What is not chargeable can be subject to excise by deeming provision. In fact, that is the intent and the purpose of Section 4. The judgment of Gujarat High Court in Special Civil Application No 858 of 1974 —1977 E.L.T. (J 113) is very clear on this aspect. 15. There was a detailed discussion relating to the wholesale price and it was stated therein that the wholesale price at the factory gate is the quantum on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold be deemed to be the normal price thereof; (iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail. (b) where the normal price of such goods is not ascertainable for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof, determined in such manner as may be prescribed. (2) Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to the following :- (i) The wholesale price for which an article of the like kind and quality is sold or is capable of being sold; (ii) At the time of its removal of the article chargeable with duty from the factory or any other premises of the manufacture or production ; (iii) For delivery at the place of manufacture or production (the rest of the section is not material). What is stressed by the learned counsel for the petitioner is the article chargeable with duty alone could be subject to excise duty. Not any other article. This argument ignore the full effect of deeming clause. As to the importance of the deeming clause, it has been held in East and Dwelling Co. Ltd. v. Finisburg Council = (1951) 2 All E.R. 587 (N.L.) 589 thus : "Lord Asquith stated: if you are bidden to treat an imaginary state of affairs, as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents, which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. The statute says that you must imagine a certain state of affairs. It does not say that having done so, you must cause or permit y ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
