TMI Blog1974 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ts arise in this appeal. But before we discuss them it is necessary to set out some facts. 5. has been stated that the respondents are manufacturers of vegetable products and under Item No. 13 of the First Schedule to the Act of 1944 the excise duty leviable before the 1st of March, 1969 was by weight i.e. per quintal of the excisable goods. 6. By the Finance Act of 1969, which came into force on the 1st of March, 1969, Item No. 13 of the said First Schedule was amended so that from that date the excise duty leviable was made ad valorem. Therefore, the duty of excise which was earlier chargeable on the actual weight of the vegetable products i.e.. the excisable goods, was altered to ad valorem duty on the value of the vegetable products. 7. Under Rule 173-C the respondents were required to file a price list of goods assessable ad valorem for the purpose of determination of value in accordance with Section 4 of the Act of 1944. It would appear that the respondents' price lists were not accepted by the Central Excise Authorities and that the respondents were ordered to pay excise duty on higher prices. 8. After some correspondence with the Central Excise Authorities the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se before us, falling under Item No. 13 of the First Schedule of the Act of 1944 the appellants have illegally and improperly added the value of the tin-containers which are not excisable goods under Item 13 as well as-the railway freight. In other words, the contention of the respondents is that the appellants have illegally and improperly disallowed the deduction of the cost of the tin-containers and the railway freight. It is not disputed that the value of the tin-containers if Rs. 3.78 and the railway freight is Re. 0.99 P. per tin of 16.5 Kgs. 13. On the question of quantum, therefore, there is no dispute. It may also be mentioned that there was at one time a difference of opinion between the parties as to which maximum price was applicable because the Government of India in the relevant Notifications prescribed different maximum prices as between the producer and wholesaler, and the wholesaler and the dealer. Fortunately, this dispute has been resolved and need not therefore be discussed by us. 14. The claim of the respondents as the plaintiffs in the suit, is, therefore, for recovery of the amount levied illegally on the value of the tin-containers and on account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to wholesale buyer for the vegetable product packed in tin-containers containing 16.5 kgs. as being Rs. 65.58. The freight to destination is shown as 0.99 P. and the cost of tin-containers at Rs. 3.78. 19. According to the respondents, the value for the purpose of assessment under section 4 of the Act of 1944 would, therefore, be Rs. 65.58 less Rs. 4.77. The Central Excise authorities contend that the value for the purpose of ad valorem duty must include the value of the container as well as the cost of freight. 20. Some of the relevant provisions of the Act of 1944 and the Rules made thereunder may now be noticed. 21. Section 2(4) of the Act of 1944 defines "excisable goods" to mean "goods specified in the First Schedule as being subject to a duty of excise and include salt". 22. Section 2(f) defines "manufacture" as including any process incidental or ancillary to the completion of a manufactured product. 23. Item No. 13 of the First Schedule with which we are concerned refers to vegetable product in the following words:- "Vegetable product' means any vegetable oil or fat which, whether by itself or in admixture with any other substance, has by hydrogenation or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value in terms of Section 4 of the Act of 1944 and not otherwise. 29. As we have mentioned, Section 4 of the Act of 1944, before its amendment, came in for determination in many cases. In Voltas Limited v. A.K. Roy, 73 Bom. LR 229, a Division Bench of this Court interpreted the term "wholesale cash price" as contained in clause (a) of Section 4 of the Act of 1944 and held that the phrase "wholesale cash price" as used in the section was in contradistinction with retail price and that that price is relieved of the loading represented by post-manufacture expenses unless they form part of the profits of the manufacturer himself. 30. The matter went in appeal to the Supreme Court and the Supreme Court affirmed the judgment of this Court and held that Section 4 of the Act of 1944 provides that the value should be found after deducting the selling cost and the selling profit and that the real value can include only the manufacturing cost and the manufacturing profit. 31. This is what the Supreme Court observed in A.K Roy v. Voltas Limited, AIR 1973 SC 225-1977 E.L.T. (J177) : "Excise is a tax on the production and manufacture of goods (see Union of India v. Delhi Cloth and Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 3 of the First Schedule which deals with 'Tea", specifically provides that tea may be sold in bulk and would be assessed to excise duty at a particular rate. But sub-clause (2) of Item No. 3 refers to "Package tea, that is to say, tea packed in any kind of container not more than 27 kgs. net of tea" as being excisable goods within the meaning of Section 2(d). Thus, in the case of loose tea there is one rate per kilogram and in the case of package tea there is a different rate. 36. Now, Item No. 13, which deals with, vegetable product, does not mention any packaging at all and it follows that the only article on which duty can be levied is the vegetable product or the hydrogenated vegetable oil which constitutes excisable goods and not the container. 37. Mr. Nain has also referred to Section 2(f) of the Act of 1944 which define "manufacture" and has shown to us that where it was intended that packaging should be included as a process of manufacturing, the Legislature has said so. In sub-clause (iii) to Section 2(f) there is a provision that in relation to patent or proprietary medicines as defined in Item No. 14-E as also in relation to cosmetics and toilet preparations as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge to the maintainability of the suit on the ground that such a suit is barred because the respondents have not availed of the remedies provided by the Act of 1944 itself in form of an appeal under Section 35 and revision under Section 36 of the Act of 1944 as well as by Section 40 of the Act of 1944, which, according to the learned Assistant Government Pleader, bars the filing of a suit in matters arising under the Act of 1944. 45. Section 35 of the Act of 1944 provides that any person deeming himself aggrieved by any person deeming himself aggrieved by any decision or order passed by a Central Excise Officer under the Act may file an appeal as therein provided and that every such order passed in appeal under Section 35 shall, subject to the power of revision conferred by Section 36, be final. 46. Section 36, of course, provides for a revision by the Central Government. These two sections obviously come into play when an order has been passed under the Act and any person is aggrieved by any such decision or order. 47. Section 40 of the Act of 1944 as it stood before 1973 provided for "bar of suits and limitation of suits and other legal proceedings" and its specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result f the inquiry may be decisive. In the latter case it is necessary to see if the statute creates 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." ***** "(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies. ***** "(7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply." 51. Now, in the case before us we have held that imposition of central excise duty on the tin-container and on freight was not warranted by any of the provisions of the Act of 1944. Thus any levy of central excise duty on the value of the tin-container and the cost of freight was wholly outside the law and it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's previous notice in writing of the intended proceeding and of the cause thereof or after the expiration of three months from the accrual of such case." 54. It is significant that the new phraseology itself suggests that this provision like the former section was not intended to bar a remedy by way of a suit. Indeed, the sub-heading has been changed from "Bar of suits" to "Protection of action under the Act." 55. The amendment is not only of a clarificatory nature but some further protection to the Government and its officers (who act in good faith and under the Act) is provided for, in the form of a previous notice in relation to the proposed prosecution or legal proceedings other than a suit and the period of limitation has been shortened. 56. It is, therefore, clear that Section 40 as it stood before the amendment and even as it stands now, does not bar the jurisdiction of Civil or Criminal Courts. 57. The contention of the Assistant Government Pleader that the Civil Court had no jurisdiction to try the suit, fails. 58. In the result the decree of the trial Court is a affirmed and this appeal dismissed with costs throughout. - - TaxTMI - TMITax - Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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