TMI Blog1980 (6) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... gross price-lists. According to the petitioners, these price-lists were approved by the Superintendent of Central Excise, Assessment Group, Aurangabad Division, who allowed a deduction of excise duty and trade discount offered by the petitioners to their consumers. In the revised pricelists submitted for the period 1st April, 1976 onwards, the petitioners showed a deduction of 36 to 46 per cent made out of the selling costs and selling profits which, according to the petitioners, they had incurred after the manufacture of their product and before the actual sale to their consumers in the course of the whole-sale trade. These price-lists were, however, returned by the Superintendent of Central Excise on the ground that the price-lists did not disclose the normal prices of the goods manufactured by the petitioners. The petitioners re-submitted the price lists and claimed a deduction of the selling costs, selling profits and the excise duty elements from the normal price. The Superintendent, however, returned these price-lists again taking the view that the selling costs and selling-profits were not admissible for deduction under the amended Section 4 of the Act. 3. The petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, where the buyer is not a related person and the price is the sole consideration for the sale : Provided that.........." We are not concerned with the other provisions made in the proviso and sub-clause (b) and sub-section (2) which deal with how in certain specific circumstances the normal price has to be determined. 6. Now what is contended on behalf of the assessee by the learned Counsel for the petitioners is that notwithstanding the new provisions made in Section 4 of the Act, the Parliament has not thought it fit to bring about any change in the charging provision of Section 3 of the Act and, therefore, according to the learned Counsel, the basic concept of excise duty continues to remain the same as propounded by the Supreme Court in various decisions, namely, that excise duty is primarily a duty on the production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses of treatment of the goods which were necessary to make them marketable. It is also contended before us that "if profits or what are called manufacturing profits, i.e., the sums added after the goods are manufactured are treated as chargeable, then by the same logic other expenses required to make the goods marketable must also be treated as chargeable." 8. Now we must make it clear at the outset that the Act is an All India statute and in the interest of certainty of the law, it is, therefore, desirable that there is uniformity of construction of the taxing provisions contained in Section 3 and the machinery provisions contained in Section 4. Therefore, unless we are satisfied that there are compelling reasons to take the view different from the considered view taken by other High Courts, we would be reluctant to embark on an elaborate discussion with regard to the construction of the amended provisions of Section 4 of the Act. 9. It is clear that though Section 4 has been amended, the charging provision in Section 3 of the Act has been left untouched by the Parliament when the amendment to Section 4 was made by Act 22 of 1973. It is not necessary to refer to the several d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of levy of excise duty, has undergone a change by the introduction of the concept of normal price. If Section 4 is a machinery provision and is intended to carry out the effect of the charging provision and if, as pointed out by the Supreme Court excise duty levied can be taken into account only on the manufacturing costs and manufacturing profits, anything said in Section 4 cannot affect the basic concept of excise levy which has now been clearly propounded by the Supreme Court as pointed out in Voltas Ltd.'s case. 11. Section 4 in the amended form introduces, the concept of normal price and provides that where excise duty is chargeable with reference to value, such value shall, subject to the provisions made in the same Section, be deemed to be the normal price of the excisable goods. In clause (a) of Section 4(1) normal price is stated to be the price at which the 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 where the buyer is not a related person and the price is the sole consideration for the sale. There is a proviso to Section 4(1)(a) and the three clauses of the proviso control the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutional concept of excise duty which cannot be altered by an amendment in the Excise Act and, therefore, its scope will have to be restricted only to the permissibility of the levy of excise duty with reference to the manufacturing costs and the manufacturing profits. The other alternative is to give a literal construction to the provisions of Section 4. Section 4 if thus construed literally will have to be read as not working out the concept of levy of excise duty as contemplated by Section 3 of the Act, but the levy will amount tax on sales which will expressly fall within the competence of the State Legislature under Entry 54 of List II of Schedule VII of the Constitution. If the latter be the approach adopted for construction of Section 4, it may have to be held bad on the ground of legislative competence because admittedly sales-tax is not a subject in List I of Schedule VII to the Constitution. If two constructions are possible, then it is a well-known canon of construction that one which upholds the validity of the statutory provision must be upheld by the Court. It is this approach which has appealed to and accepted by the several High Courts before whom the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or expenses which are unrelated to the manufacture or production, the price must be relieved of such loading arriving out of the inclusion of post-manufacturing expenses and costs for the purpose of determining the assessable value, the Division Bench in paragraph 44 of the Judgment observed as follows : "For the purpose of determining the assessable value under Section of the Act, as it stood prior to 1-10-1975, the 'wholesale cash price' was to be ascertained. After the amendment from 1-10-1975, the 'normal price' is to be ascertained. Section 3 of the Act authorising the levy of excise duty on the manufacture and production of goods, it may be noted, is left intact and has not been amended by the Amending Act of 1973. What is more, the concept of 'Factory Gate Sale' which was the basis for determination of the assessable value under Section 4 of the Act, as it stood prior to the amendment is re-affirmed in the amended section and in the definition of 'normal price-contained in the amended Section 4, the element of place of the removal has been preserved. The basis of excise duty, therefore, continues to be the manufacturing cost and manufacturing profit and the amendment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of post-manufacturing expenses would indicate a levy of something other than a duty of excise. 17. The Delhi High Court has also taken the same view in Madras Rubber Factory Limited v. Union of India and others, 1979 E.L.T. (J 173), when the learned Judge of that Court held that the value of the goods for the purposes of excise could take into consideration only the manufacturing costs and the manufacturing profits without being loaded with post-manufacturing costs or profits from the post-manufacturing operation. 18. Amended Section 4 was also considered by the Madras High Court in Nagpal Petro-Chem. Limited v. Assistant Collector of Central Excise, Madras 1979 E.L.T. (J 117), and the learned Judge held that under Section 3 of the Act excise is a tax on the production and manufacture of goods and, therefore post-manufacturing expenses and profits must be excluded. 19. All these decisions were also considered by the learned Single Judge of this Court in Bombay Tyres International Ltd. v. Union of India and others, 1979 E.L.T. (J 625). The learned Judge has in that case held that the decisions of the various High Courts referred to earlier bring out in hold relief that th ..... 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