TMI Blog1996 (5) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... n". If the amount of duty calculated according to the Schedule became smaller by virtue of the notification, then the only way to give full and complete effect to the notification is to take only the smaller amount in reckoning for the purpose of determination of value in Section 4(4)(d)(ii). Whatever may have been the position before the amendment of the Act, in view of the Explanation to clause (d) (ii), the `value' in Section 4(4)(d)(ii) can no longer be computed by reference only to the Act and the Schedule without taking into consideration the exemption notification. - 1121 of 1992 - - - Dated:- 7-5-1996 - A.M. Ahmadi, CJI, B.L. Hansaria and Suhas C. Sen, JJ. [Judgment per : Suhas C. Sen, J.]. - This appeal raises the question as to the scope and effect of the Explanation to Section 4(4)((d)(ii) of the Central Excises and Salt Act, 1944 (hereinafter referred to as `the Act'). The Explanation was added to clarify what would be the amount of duty which had to be deducted from the wholesale price for arriving at the assessable value of goods. The Delhi High Court in the case of I.T.C. Limited Anr. v. Union of India, 1987 (30) E.L.T. 321, took the view that by virtue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Bata (India) Limited v. Union of India, 1985 (21) E.L.T. 9 (SC) = (1985) 3 SCC 97. 4.After these cases were decided, major changes have been brought about in the Central Excise Act. The controversy about the quantum of deduction of duty from wholsesale price for the purpose of computation of value under Section 4 of the Act has been set at rest specifically by the Explanation added to Section 4(4)(d)(ii) by the Finance Act, 1982 with retrospective effect from 1-10-1975. Section 4(4)(d)(ii) with the added Explanation now stands as under :- (d) "Value in relation to any excisable goods - (i)*** (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; "Explanation : For the purpose of this sub-clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of : (a) the effective duty of excise payable on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly leviable in accordance with the rates prescribed in the Schedule. The newly added Explanation makes it clear that for the purpose of Section 4(4)(d)(ii), the calculation of "the amount of duty of excise, if any, payable on such goods" will not be on the basis of the rate given in the Schedule only, but also after taking into account any notification or order providing for exemption from the duty of excise under the Act. The ad valorem duty leviable by the Central Excise Act will have to be calculated according to the rate prescribed in the Schedule for the specified goods. But the amount so calculated is not payable as duty but will have to be reduced in terms of the notification in order to give full and complete effect to the notification. By virtue of Rule 8 of the Central Excise Rules, the Central Government has been empowered to exempt any excisable goods from the whole or any part of duty leviable on such goods. 7.The contention of Mr. Salve is that this notification granted relief from `so much of the duty of excise leviable thereon... as is in excess of seventy five per cent of such duty'. The notification envisaged ascertainment of the base year of clearance. What was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1944, the Central Government hereby exempts the excisable goods of the description specified in column (3) of the Table hereto annexed (hereinafter referred to as the specified goods) and falling under such Item Number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as are specified in the corresponding entry in column (2) of the said Table and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer, from so much of the duty of excise leviable thereon under the said Item as is in excess of seventy five per cent of such duty, .... " 10.Section 4(4)(d)(ii) provides that `value' in relation to any excisable goods will not include the amount of duty of excise, if any, payable on such goods. The duty payable on such goods must be the actual amount of duty the assessee has to pay and not any hypothetical figure. The Explanation has put this beyond doubt by specifically providing that if there is a notification providing for any exemption from the duty of excise under the Central Excise Act, then the amount of the duty of excise payable under sub-clause (ii) of clause (d) will be the amount computed with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her v. Union of India Others - 1987 (30) E.L.T. 321 (Delhi) at p. 339, it was abserved, and in our opinion rightly :- "At the time of the earlier decisions, the Act and the notification were in two watertight compartments the Act was first applied and, from the duty computed, an exemption was granted. This involved three stages: One, the determination of the assessable value; the computation of the amount of duty payable under the Act; and three, the calculation of the amount of exemption. Once the exemption operated the duty payable in effect became smaller and this may have an impact on the assessable value if it could be redetermined but there was no statutory language which authorised the authorities to go back again to redetermine the assessable value and that had been determined already. The statute and notification operated successfully in three different stages of calculation and the High Court could find no reason to intertwine them into one another so as to make such a redetermination of the assessable value possible or necessary. The amendment has altered the position by expressly integrating and incorporating the effect of the notification in the statute. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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