TMI Blog1984 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to carry on business, inter alia, of manufacture of cigarettes and/or smoking mixtures. Central excise duty under said Act on the manufacture of cigarettes/smoking mixtures was leviable ad valorem. 3. It is the case of the petitioner that at all material times, the petitioner used to sell its own brand of cigarettes/smoking mixtures in wholesale quantities to the various stockists and/or distributors throughout the country. The prices charged from all such stockists and/or distributors were uniform throughout the country. It is alleged that the petitioner used to sell its products to the stockists and/or distributors on principal to principal basis and on the basis of the agreements entered into at arms's length and in its usual course of business. The stockists/distributors, after purchasing the goods from the petitioner, used to sell the same to their dealers who in their turn used to sell to the retailers. The petitioner never used to receive the price charged by the stockists/distributors from their buyers. The difference between the price at which the petitioner used to sell to its stockists/distributors and the price at which the stockists/distributors used to sell to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh price for the purpose of Section 4(a) of the Act if the agreements were made at arm's length and in the usual course of business. 7. It is the case of the petitioner that after the said decision was rendered by the Supreme Court, the petitioner learnt and discovered that the assessable value of the good's manufactured by it could not be determined on the basis of the prices at which its stockists and/or distributors sold the goods to their buyers and that such assessable value could only be determined on the basis of wholesale prices at which goods were sold by the petitioner to its stockists and/or distributors. 8. The petitioner, thereafter, filed several refund applications before the Central Excise authorities for the period from 20th January, 1972 to 19th January, 1973, claiming refund of the excess excise duty realised from the petitioner by reason of determining the assessable value on the basis of the prices charged by the stockists/distributors from their dealers and not on the basis of the prices charged by the petitioner from its stockists/distributors. In the said refund applications an aggregate sum of Rs. 17,75,564.40 was claimed as and by way of refund. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tends that the Supreme Court has reaffirmed the principles laid down in the case of A.K. Roy v. Voltas Ltd. - 1977 E.L.T. (J177)=AIR 1973 SC 225 that the value of an 'excisable article for the purpose of excise levy should be taken at the price at which excisable le article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place of removal. 11. On the other hand, Mr. Surathi Mohan Sanyal, learned Advocate appearing for the respondents, has submitted that the impugned notice cannot be said to be without jurisdiction. Whether the principles laid down in the several decisions of the Supreme Court as relied on by the Counsel for the petitioner would be applicable to the facts of the case have to be determined by the Board. It is absolutely necessary to investigate the facts. It is the contention of Mr. Sanyal that the Assistant Collector did not have any jurisdiction to grant the refund and accordingly the Board was within its competence to review the order granting the refund. He has also submitted that this Court cannot find out the facts which are necessary for the purpose of determining the question with regard to the entitlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble or not. If the grounds fail, so also the notice. The grounds ex facie are untenable. Where there is a conflict in judicial decisions concerning the interpretation of the provisions of the Central Excises and Salt Act, the excise authorities may, in a proper case, adopt one interpretation or the other so long as the controversy is not finally settled by the Supreme Court. But where a section of the Act has been construed by the Supreme Court and the Supreme Court has laid down the law in no uncertain terms, even then if a statutory authority issues a notice containing the grounds on a misreading and misinterpretation of the law laid down by the Supreme Court, it cannot be said that it is a mere misapplication of the section and the revenue authorities have the right to decide either way. It goes to the root. The impugned notice is based on an erroneous interpretation of statutory provision and on a clear disregard of the principles laid down by the Supreme Court in the case of A.K. Roy v. Voltas Ltd. - 1977 E.L.T. (J 177) = A1R 1973 SC 225 as well. It is a case where the revenue authorities are proceeding without jurisdiction or upon an erroneous decision on jurisdictional fact. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the articles being sold on a wholesale basis. So, even if there was no market in the physical sense of the term at or near the place of manufacture where the articles of a like kind and quality are or could be sold, that would not in any way affect the existence of market in the proper sense of the term provided the articles themselves could be sold wholesale to traders, even though the articles are sold to them on the basis of agreements which confer certain commercial advantages upon them." 17. At page 230, the Supreme Court observed thus : "We do not think that these decisions in so far as they held that the price of sales to wholesale dealers would not represent the wholesale cash price" for the purpose of Section 4(a) of the Act merely because the manufacturer has entered into agreements with them stipulating for commercial advantages, are correct. If a manufacturer were to enter into agreements with dealers for wholesale sales of the articles manufactured on certain terms and conditions, it would not follow from that alone that the price for those sales would not be the `wholesale cash price' for the purpose of Section 4(a) of the Act if the agreements were made at arm's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the principles of law laid down by the Supreme Court in the case of A.K. Roy - 1977 E.L.T. (J 177) = AIR 1973 SC 225 are applicable to the facts of this case. No materials have been placed before me contradicting any of the facts which formed the basis of the claim of the petitioner to the refund. This then was the position when the impugned notice was issued by the Board. If that be the position, the Board acted without jurisdiction in issuing the impugned notice seeking to revise the order of refund. The principles laid down by the Supreme Court in the case of A.K. Roy-1977 E.L.T. (J 177) = AIR 1973 SC 225 have been reiterated in the subsequent decisions of the Supreme Court in! the case of Atic Industries Limited - 1978 E.L.T. (J 444) = AIR 1975 SC 960, of: Supreme Court held at page 968 of the Reports as follows : "There can, therefore, be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to dealer at arm's length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise. That would be the wholesal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts manufactured by the petitioner could only be determined on the basis of the prices charged by the petitioner to its stockists/ distributors. It has not been alleged in the impugned notice that the principles laid down by the Supreme Court are not applicable, to the facts of this case. The basis of the determination of the assessable value was only changed without there being any change in facts which were already there on records. This ground, therefore, fails. 25. The next allegation in the impugned notice is that the said order of refund was without jurisdiction as the successor Assistant Collector was not competent to reopen and revise the assessable value, which stood settled and finalised already by his predecessor-in-office and grant refund based on a decision which he was not competent to take. Mr. Sanyal has supported the said ground and submitted that the successor Assistant Collector had no jurisdiction to entertain the application for refund of the petitioner. It is his contention that once the assessable value has been determined by the Assistant Collector it cannot be revised on any ground by his successor. It can only be done by his superior officer. I am unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le value as earlier determined. This ground again has no legs to stand. It is the case of the petitioner that after the judgment was rendered by the Supreme Court in the case of A.K. Roy-1977 E.L.T. (J 177)=AIR 1973 S.C. 225, in January, 1973, the petitioner for the first time realised that the assessable value of the goods manufactured by the petitioner was determined by the excise authority erroneously. The new fact is that in view of the principles laid down by the Supreme Court in the case of A.K. Roy - 1977 E.L.T. (J 177) = AIR 1973 S.C. 225, the basis of the determination of the assessable value was changed and as such the assessments made so long by the excise authorities were erroneous. This is the reason why the petitioner claimed for refund. The claim of refund was made only in respect of excess duty realised by the excise authorities determining the assessable value on the prices at which the petitioner's stockists/distributors sold to their dealers. 27. Another ground in the impugned notice is that the Assistant Collector did not enquire whether or not the transactions on which the petitioner claimed assessment and consequential refund were really at arm's length. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and monthly returns and that the petitioner adduced no reasons for change of the assessable value nor the Assistant Collector had given any reason as to how he decided that the assessable value earlier approved was not correct and the assessable value claimed by the petitioner for the purpose of refund was the correct assessable value. This ground, in my opinion, is wholly untenable. As indicated earlier, the reason for claiming the refund was that the basis of the determination of the assessable value was changed in view of the principles enunciated by the Supreme Court in the case of A.K. Roy-WI E.L.T. (J 177)=AIR 1973 S.C. 225. The refund claim was only in respect of the excess duty realised by the excise authorities by determining the assessable value on the prices at which the petitioner's stockists/distributors sold to their dealers and not on the prices at which the petitioner sold goods to its stockists/distributors. All the facts and figures relating to the said prices were contained in the price lists approved by the excise authorities. In the refund applications, the petitioner specifically mentioned the ground on which the refund was being claimed by it. The Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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