TMI Blog1981 (4) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... anced the assessable value of the goods as shown by the company giving effect to his own interpretation of the provisions of the said Notification. Subsequently he passed an adjudication order dated 2-2-1972, in which he justified and confirmed the enhancement made by him in the assessable value. The Company filed an appeal before the Appellate Collector of Central Excise against the order of the Superintendent. He allowed the appeal holding that the said Notification was meant to benefit certain manufacturers, that there was no warrant for including the financial benefit arising from the exemption for getting more duty from the company thereby neutralising to some extent the benefit of the exemption notification and that the decisions of the Madras High Court in M/s. Madras Rubber Factory case and the judgment of the Patna High Court in Bata Shoe Co. case, applied to the case before him. Subsequently the Central Government issued a show cause notice as to why the order of the Appellate Collector should not be set aside and the order of the Superintendent of Central Excise dated 2-2-1972, should not be restored. The Company replied to the show cause notice by their letter dated 2-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of the two exemption notifications referred to above. 4. The exemption notification relating to aluminium products is set out below : Government of India Ministry of Finance (Department of Revenue and Insurance) New Delhi, the 24th May,, 1971 3rd Jaishta, 1893 (Saka) Notification (Central Excise) In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts aluminium falling under sub-items (a) and (b) of item No. 27 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty leviable thereon as is equivalent to the duty calculated on a value of one thousand two hundred and fifty seven rupees per tonne, subject to the conditions that- (i) such aluminium is manufactured by its manufacturer from bauxite or from alumina or from both; and' @2.5x4.5=(ii) total clearance of all aluminium falling under item No. 27 of the said First Schedule by, the said manufacturer or by any person on behalf of the said manufacturer from one or more factories during the financial year preceding the financial year in which assessment is made did not exceed 13500 tonnes. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem. Under sub-section (3) different tariff values may be fixed for different classes or descriptions of the same excisable goods or for excisable goods of the same class or description produced or manufactured by different classes of producers or manufacturers or sold to different classes of buyers. Section 4 deals with valuation of excisable goods, for the purpose of charging of duty of excise. Section 4(1) says that where the duty of excise is chargeable on any excisable goods with reference to value, such value shall 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, and where the normal price of such goods is not ascertainable for the reason that each goods are not sold or for any other reasons the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. Sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the goods are being removed from the warehouses by following the self-assessment procedure contemplated in Rule 173-C. 6. There is no dispute that the respondents in the writ appeal are manufacturers of aluminium on which duty is leviable under Item 27(a) of the Central Excise Tariff. Under the Aluminium Control Order the sale price of , aluminium is fixed by the Government of India from time to time. Such a sale price is inclusive of the basis and special excise duties chargeable on the said goods. The Government of India by their Notification No. 53/A/21 dated 24- 5-1971 granted exemption to certain manufacturers from payment of so much of excise duty leviable thereon as is equivalent to the duty calculated on a value of Rs. 1257 per metric tonne subject to certain conditions. There is no dispute that the appellants became entitled to avail such an exemption in terms of the said notification Subsequently on 13-12-1971, the Government of India imposed a regulatory duty at the rate of 25 per cent B.E.D. on aluminium. The sale price fixed earlier on 24-5-1971 under the Aluminium Control Order did not include the regulatory duty. But the Government of India informed the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to themselves. A revision to the Central Government having been dismissed on 12-11-1975, the company filed W.P. No. 1302 of 1974 for quashing the said revisional order dated 2-11-1975 on the ground that the regulatory duty is part and parcel of the excise duty, and therefore,'the exemption notification applies not only to basic excise duty but also to the regulatory duty which is levied and collected as part of excise duty. Thus the two questions that arise for consideration in these cases are-(l) whether the exemption notification applies to the regulatory duty as well (J) and (2) how the exemption granted under the .notification is to be worked out. 7. On the first question, the learned counsel for the appellant relies on |the decision in C.I.T. v. K. Srinivasari, 83 ITR 346, wherein the Supreme Court |has ruled that the term 'income-tax' occurring in Section 2 of the Finance Act, 1964 . included surcharge, special surcharge and additional surcharge wherever provided as they form part of the income tax. Under the Finance Act of 1963 I income-tax was increased by a special; surcharge and additional surcharge while super tax was increased by a surcharge and a special surcharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty at 30% 1437 972.90 6. Exemption 377 Nil 7. Duly payable 1060 972.90 The question is which of the two calculations accords with the true intent ' and object of the exemption notification. 9. The ex-factory price which is the price fixed under the Aluminium Control Order is Rs. 5850. Since the ex-factory price includes excise duty also, excise duty has to be separated to find out the assessable value, we have held already, duty includes regulatory duty of 25 per cent and the increased regulatory duty of 20 per cent thereof. Thus overall duty is 30 per cent. The assessable value can be determined by multiplying ex-factory price fixed under the Aluminium Control Order by 100/130. This gives us a sum of Rs. 4800 and the duty payable thereon comes to Rs. 1350. The exemption provided in the notification is in respect of the duty payable on Rs. 1257. This works out to 1257 x 30/100 = Rs. 377.10. After excluding the duty exempted the net duty payable by the Company is Rs. 1350-377.10= Rs. 972.90. This is the calculation made by the company. The calculation made by the Revenue (appellant) is somewhat confusing and is a round a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of the notification. 11. Similarly Tata Oil Mills Co. Ltd., who are the petitioners in W.P. 4147 of 1976 and 1530 and 4151 of 1978 are questioning the method of calculation of the duty exempted under notification No. 25, dated 1-3-1975. The Mills have calculated the duty payable by them as follows after applying the I exemption notification dated 1-3-1975 exempting soap falling under Item 15(1) from so much of the duty leviable thereon as is equivalent to the amount of duty calculated at the rate of three rupees and fifty paise per metric tonne of : such soap for each additional percentage point increase in the use of indigenous rice bran oil which is in excess of 25 per cent of the total oils used in the g manufacture of such soap : List price Rs. 4,992.72 per M.T Less discount 3% 150.36 Price including excise duty of 5% Assessable value x 100 105 4,849.36 4,618.26 Excise duty price x 5/105 231.00 Actual user of indigenous rice bran oil Deduct 82.33% Excess user 25.00% Amount of duty exempted 58.33xRs. 3.50=204.15 58.33% Balance of excise duty payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the notification is to be followed which is as follows :- "For the purpose of determining the basic period, where the clearance of all specified goods are compared in terms of value as specified in column (4) of the said table, such value shall be the value as determined under Section 4 of the Central Excises and Salt Act, 1944 .....as adjusted with reference to the average index number of wholesale prices in India for manufacturers." There also the excise authorities had taken the view that since the benefit of exemption had to go to the consumer, the manufacturer was not entitled to the benefit of adjusting the actual money value of the goods in terms of the normal wholesale price with the index number for wholesale price manufacturer current for the relevant years in India. The stand of the excise authorities was questioned in a writ petition before the High Court. The manufacturer contended that the benefit of paragraph 2(l)(b) of the notification requiring the actual value of the goods manufactured by the manufacturer under Section 4 modified by adjustment with the index under the wholesale price manufactures for the relevant years under paragraph 2(2)(b) was not in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed on the selling price of the goods. This is demonstrated by the fact that it may be imposed only on the weight or volume or number irrespective of either the selling price or the tariff value. Further, it is quite open to the Government to grant an exemption subject to conditions. If the object of the Government in granting an exemption is to benefit the consumer by the reduction of the selling price of the goods, then the Government notification granting the exemption should itself say so. For instance, notification GSR 1089, dated 29th April, 1969 expressly stated that the benefit of the exemption was to be available only to those manufacturers who produce the proof to the satisfaction of the Collector that such benefit has been passed on by them to whom they have sold the goods. Such a condition has to be a part of the exemption notification. For, the notification is 'law'. But, after enacting the law, such Ea condition cannot be imposed by administrative directions, guidelines or press note. These administrative acts cannot go contrary to the statutory notification." On the question as to how the exemption provided for in the notification has to be worked out, the Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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