TMI Blog1976 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of sale of air-coolers and electric fans and has thus set up various branches and depots all over the country namely, at Delhi, Madras, Bombay, Calcutta, Patna, Ahmedabad, Hyderbad, Ghaziabad and Chandigarh for sales promotion and to ensure prompt supplies and maintain after sales and service. The Petitioner Company alleges to have a large number of dealers to look after the sales of its products. Trade discounts and credit terms are given to its dealers by the. petitioner Company in the normal course of business, keeping in view the potential of the town, the financial capability of the dealer and expenses incurred in moving its products to its branches in different towns. The various products of the petitioner Company are being sold on its uniform list prices. It is alleged that the list prices comprise not only of manufacturing cost and manufacturing profits but also of post-manufacturing expenses which inter alia include octroi, freight, interest, service charges, royalty, publicity, advertisement charges and selling expenses incurred in marketing and distribution. 3. The products manufactured by the petitioner Company are admittedly subject to the levy and payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged that the petitioner company then realised and discovered the correct legal excise duty, which according to the petitioner Company, was position and therefore, claimed for the refund of the being illegally and unauthorisedly charged and realised in excises inasmuch as while excise duty was chargeable legally only on the real profits in respect of these products Excise Duty according to the petitioner had been assessed, determined and realised on the value inclusive of post-manufacturing expenses coupled with selling cost and selling profits. Vide letter dated 30th March, 1973, the petitioner Company submitted the revised price list dated 24th March, 1973 in respect of air coolers approval of respondent No. 2 the Assistant Collector, Central Excises, Sector 4, Faridabad. ln working out the assessable value, the petitioner-Company allegedly excluded the post manufacturing expenses, namely, octroi, frieghl etc. etc. and a request was made to approve the declared price. Similarly, on 26th April, 1973, the petitioner Company submitted the price lists in respect of electric fans for approval of the Superintendent, Central Excise, Faridabad, respondent No. 3. Correspondence went on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding with the respondents. 7. The claim of the petitioner Company is that the excise duty is a tax on the manufacture of goods and not on its sale and thus the same can be levied only on the amount representing manufacturing cost and manufacturing profits. It is claimed that all expenses, which are incurred after the manufacturing of goods, have necessarily to be excluded in determining the wholesale price of the goods under Section 4 (a) of the Act. It is claimed that in view of the provisions of Section 4 (a) of the Act itself, the wholesale cash price must be free from loading non-manufacturing charges incurred in relation to the goods and that being so, the Explanation to Section 4 of the Act, will not in any manner stand in the way of the petitioner for claiming the relief prayed for. 8. In the reply filed on behalf of the respondents by way of affidavits of K.K. Dwivedi, Collector, Central Excise Chandigarh, it has been pleaded that the petitioner-Company has not exhausted the alternative remedies of appeal and revision provided under the Act. Therefore, the petition is not maintainable. It has further been averred that the petition is a petition for the refund, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. It is claimed that the approved price list was in fact the wholesale cash price of the goods which were being sold at ex-factory prices directly to independent buyers. Further in para 23 of the return, it has been averred that it is wholly wrong that the authorities did not challenge the basis of the refund claims. In fact the petitioner-company has no basis at all for the refund claims. It is further averred in para 34 of the return that the prices of the petitioner for manufacturing goods were correctly approved under Section 4(a) of the Act and in view of the reasons advanced in the adjudication order, the refund applications were correctly rejected. In para 36 of the return, it has been averred that the petitioner-Company is now alleging non-existent facts to erroneously bring its case at par with Voltas case (supra). 11. From what has been stated above, it would be seen that the case the petitioner-Company that the price list earlier got approved by the Company from the Revenue included post-manufacturing expenses, has been vehemently disputed in the return. The impugned order by which the prayer for refund was rejected, also held that the ratio in Voltas case (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreted by the learned counsel for the petitioners could be made applicable to the case of the petitioner-Company. As has been pointed out the averments made in the petition that the said price list included the post-manufacturing expenses has been vehemently denied in the return and therefore the facts on the basis of which the legal argument is sought to be based by the learned counsel for the petitioners are not in fact available as the same are disputed. lt is not possible for this Court to go into the disputed questions of facts as to whether the price list approved earlier by the authorities at the instance of the petitioner-Company itself before the decision of the Voltas case (supra) included the post-manufacturing expenses or not. Therefore the premises on which the legal argument is sought to be based, are non-existent in this case and therefore even in Voltas case and Atic Industries case (supra) be taken to be as is being given by the learned counsel for the petitioners the petitioner-Company cannot get any relief in these proceedings. 12. I have very carefully gone through the judgments of their Lordships of the Supreme Court in Voltas case and Atic industries case ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he retailer would take into account the profit which would go into the coffers of the wholesale with which the manufacturer had nothing to do. It was in this contest that their Lordships have made this observation on which strong reliance has been placed by the learned council for the petitioners to contend that Section 4(a) provided that the real value should be found out after deducting the selling cost and the selling profits and that the real value could include only the manufacturing cost and the manufacturing profits. In my opinion, this decision of their Lordships only gives the rational basis of the measure embodied in Section 4, of the wholesale cash price at the factory gate in the context of the controversy whether the retail price realised by the manufacturing concern a large percentage of goods produced in a case where the manufacturer has also the selling organisation for sale directly to the consumers should be taken as a basis for computing the liability. This decision could never be pressed in aid for the view that any further deductions were contemplated to be made in favour of the manufacturer on any score, which are nowhere indicated in Section 4(a) keeping in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n wholesale dealers and the respondent in respect of sales to them or that the price of the articles was under-stated in the agreements or that any extra-commercial advantages to the dealers were taken into account in fixing the price their Lordships thought that they should not go into the question whether the discount allowed to the wholesale dealers was "trade discount" or not for the purpose of the Explanation to Section 4 of the Act. These findings of their Lordships clearly go to show that from the earlier observations made by their Lordships, it could not be as has been contended that the post-manufacturing cost was to be excluded in view of the working of sub-clause (a) of Section 4, but in fact the case was brought under the purview of Explanation to Section 4 and that finding having been recorded, 22 per cent was held to be a "trade discount". 14. Even in the next decision in Atic Industries case (supra), their Lordships only elaborated two concepts of excise and factory gate. The facts giving rise to that case may summarily be stated. The manufacturer of the dye stuffs sold its products to two wholesale buyers, namely. I.C.I. (India) Ltd. and Atul Products Ltd., to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been emphasised only in the context of making a distinction between the first wholesale price and the subsequent price after the goods have entered the stream of trade because at the earlier stage there would be no question of loading the price with any post-manufacturing element, namely, selling cost and selling profit of the wholesale dealer as envisaged by their Lordships. 16. From the above discussion, it would be seen that in these cases, namely, Voltas case and Atic Industries case (supra), it was held that where the manufacturers sold the goods manufactured by them in wholesale to a wholesale dealer at arms length at the factory gate and in the usual course of business, the wholesale cash price charged by them to the wholesale dealer less trade discount, if any, as envisaged under the Explanation to Section 4 of the Act, would represent the real value of the goods for the purpose of assessment of excise irrespective of the quantity of the manufactured goods sold at wholesale cash price. 17. The learned counsel for the petitioners has relied on various decisions of various High Courts in support of the proposition advanced by him. Reliance has been placed on a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etail price or the first wholesale price where and the second or subsequent wholesale prices. They have with great respect, ignored the very working of the Explanation which is so emphatic and the "emphasis which their Lordships of the Privy Council had placed on the term "easily ascertained wholesale price" where adjustment would be only of such items as interest, freight and octroi etc. so that the measure would be truly applied by arriving at the real wholesale cash value at the factory gate at the time of the removal of the goods by taking into account the item of interest where is a credit sale or the amount of freight charged upto the factory gate or the nearest market place to translate that price into the wholesale cash price there and then at the factory gate when the goods first enter the stream of trade. The whole aspect of post-manufacturing expenses would come in only after the first whole-sale at the stage of subsequent wholesale dealing or the retail dealings and if that subsequent wholesale price or retail price is not to be basis for this excise levy, it is obvious that no adjustment could be made by way of any such apportionment which would make the wholesale pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the order of the authority on the ground that the said order has been passed on the wrong interpretation of the provisions of Section 4(a). The preliminary objection is, therefore, without any merit and is over-ruled. 20. The only other plea taken by the learned counsel for the respondent is that some of the claims of refund are barred by time. If the petition was found to be well founded on merits, it could not be dismissed on this ground, if the petition was to be allowed, the authority who was to decided about the entitlement of the refund, if any, could go into this question and the same was not to be gone into by this court. 21. The next contention that the petitioners have not availed of the alternative remedy, therefore, the writ petition be dismissed, is also without any merit. As would be seen in a number of cases, which were decided by various High Courts reliance on which was placed by the learned counsel for the petitioners, namely, (1) The Madras Rubber Factory's case, (2) l.T.C.'s cases, (3) Vazir Sultan Tobacco's case (4) Indian Tobacco Company's case (supra), the Union of India took the plea that the interpretation as given to the binding decisions of their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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