TMI Blog1980 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 7th September, 1973, Ex. C to the Petition, passed by the Assistant Collector of Central Excise, Bombay, holding that there was a short levy of Rs. 1145.10 as per the notice to show cause dated 18th March, 1970, Ex. B to the Petition. The second prayer is for a writ of mandamus seeking the withdrawal and cancellation of the said three orders and the refund to the petitioners of the said amount of Rs. 1145.10. The circumstances giving rise to the present petition are these : 3. The petitioners have been manufacturing vegetable products known as "Pakav" admixing therein indigenous cotton seed oil. The distribution and sale of vegetable products at all material times was controlled by the Vegetable Oil Products Controller who fixed the prices statutorily under the Vegetable Control Order, 1947. These prices were fixed by the Controller exclusive of any tax in the past, but during the period from 1st March, 1969 to 24th December, 1969, the prices so fixed by the said Controller were inclusive of the element of duty payable thereon. The petitioners' case is that on the use of cotton seed oil in the manufacture of vegetable products, they were entitled to claim rebate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od adopted by them was correct. The Asstt. Collector of Central Excise by order dated 7th Sept. 1975, Ex. C to the Petition, confirmed the show cause notice as, according to him, only that much amount can be deducted as duty from the gross price which is actually payable on the goods in question, since Section 4 of the Central Excises and Salt Act, 1944, permits deduction of the amount of duty payable at the time of removal of goods. In the case of vegetable product containing cotton seed oil, the duty actually payable is the one arrived at after adjusting the rebate in duty on account of cotton seed oil content permissible under Notification No. 6/62. 5. Being aggrieved by the said order, the petitioners filed an appeal before the Appellate Collector of Central Excise, Ex. E to the Petition, who confirmed the order of the Asstt. Collector. The reasoning and the method adopted by the Appellate Collector for arriving at the assessable value was on the same lines as that of the Assistant Collector. Against this order, the petitioners filed a revision application. The revision application was rejected by the 1st respondent by order dated 10th December, 1976, Ex. G to the Petition, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of Shri Joshi, learned Counsel appearing for the petitioners, was that the Department is entirely wrong in arriving at the assessable value. The Department is deducting only Rs. 00.43 after taking into consideration the rebate allowable under the exemption notification. Thus the amount of Rs. 00.06 is being loaded in the manufacturing cost and manufacturing profit which is not permissible. Reliance was placed on (1) A.K. Roy v. Voltas Limited, 1977 (1) E.L.T. (J 177), (2) Atic Industries Ltd. v. H.H. Dave, Asstt. Collector, 1978 E.L.T. J. 444, (3) Madras Rubber Factory Ltd. v. Union of India, 1979 E.L.T. J 173, (4) Modi Rubber v. Union of India 1978 E.L T. J 127 and J 132, (5) Indian Tobacco Co. Ltd. v. Union of India, 1979 E.L.T. J 476, (6) Bombay Tyres International Ltd. v Union of India, 1979 E.L.T. J 625, and (7) Union Carbide (India) Ltd. v. Union of India, 1979 E.L.T. J 633. Thursday, 24th July, 1980. 9. Shri Dalal, learned Counsel appearing for the respondents, contended that in the present case, the excise duty is on the basis of ad valorem value under Section 4 of the Act. The wholesale cash price is equal to the price fixed under the Vegetable Oil Products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext, but the fact that the Legislature has also used the word "abatement" is suggestive of the emphasis on not allowing any deduction save and except in respect of trade discount and the amount of duty payable. Beyond these two items, as I said earlier, there was a kind of an interdict because no other element in determining the price of any article chargeable with duty could be taken into account. Shri Joshi has referred to several cases of which reference is given before. What Shri Joshi wanted to cull out from these decisions was that excise duty was leviable only on the amount representing manufacturing costs and manufacturing profits and costs relating to and profits arising from post-manufacturing operations should be excluded. Shri Joshi forcefully submitted that you cannot add to or load to the manufacturing cost and the manufacturing profit which are the sole basis for considering the value of an excisable article. 11. In the instant case, according to the petitioners, the method to be adopted in calculating the duty is the wholesale price less 5% excise duty, namely, wholesale cash price of Rs. 10.28 minus Rs. 0.49 = Rs. 9.79. Thus the petitioners work out Rs. 9.79 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into the exemption notification that it is meant to be given by way of benefit to a manufacturer. Shri Joshi also suggested that this exemption is by way of an encouragement to a manufacturer to make use of cotton seeds in indigenous cotton seed oil in the manufacture of vegetable product. This approach of offering encouragement to a manufacturer also cannot be spelt out from the exemption notification. The reason as to why a manufacturer should receive this encouragement or benefit is not stated in the petition, nor such a stand was taken before the Assistant Collector who heard and decided the show cause notice nor before the Appellate Collector who decided the appeal of the petitioners. This stand was also not taken before the Government of India when the revision application was made to it. These factors are sought to be introduced in the affidavit in rejoinder as indicated above. In this connection, on an enquiry being made during the course of the judgment, Shri Joshi pointed out that these factors are not in dispute. though they might not have been mentioned before the Excise authorities at the three stages at which the matter was geared by them. I am unable to agree that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of windfall for the manufacturer but on account of the use of cotton seed oil, and if that be so, then the manufacturer could not retain 6 paise but the same had to be deducted from 49 paise in order to arrive at the actual amount of duty payable, viz. 43 paise. 13. Shri Joshi placed reliance on the judgment of a learned Single Judge of the Andhra Pradesh High Court in the case of Andhra Pradesh Paper Mills Ltd., Rajahmundry v. Assistant Collector of Central Excise, 1980 (6) E.L.T. 210, and in particular on the following passage at page 216 :- "Duty is levied by Section 3 of the Act read with the Tariff Schedule. The exemption notification issued under Rule 8 does not take away the levy. It only grants exemption from the levy in specified circumstances and the specified extent. In other words, because of the exemption the levy of duty is not erased. The object of the notification is to confer certain benefit upon the manufacturer or the buyer/consumer through the manufacturer, as the case may be. In other words, a part of the duty is passed on to the manufacturer or the buyer/consumer, as the case may be, as an incentive, either with a view to encourage production or the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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