Delhi High Court
Kelvinator Of India Ltd, New Delhi vs Collector Of Customs And Central Excise ... on 1 January, 1987
Author: Yogeshwar Dayal
Bench: Yogeshwar Dayal
JUDGMENT
1. The question involved in the Miscellaneous application (CM. No. 3754/86) is whether the value of service contract (alleged by the petitioners to be optional but denied by the respondents) for after sale service can be included in the assessable value for the purpose of Section 4(4)(d) of the Central Excises and Salt Act.
2. At one stage, in 1981, the Excise Authorities were taking a view that the same not includible in the assessable value. Thereafter, in 1983, a sort of instruction was issued inter-departmentally to the Collector (Appeals) to include the said value in the assessable value for the purpose of charge of excise duty.
3. It is asserted that the petitioners have been submitting their price lists from time to time and the same were being approved right till end of July, 1986, in these price lists the petitioner did not include the value of the aforesaid four-year service contract. At the same time, it appears, that the Excise department, in spite of the earlier instructions not to include the said value,e had been issuing show cause notices from time to time as to why such value should not be included. As many as 13 show cause notices were issued which ultimately culminated in the passing of the impugned order of the Assistant Collector demanding the excise duty on the said service contract as being includible in the assessable value under the aforesaid provisions. It is this order against which the appeal was filed before the Collector (Appeals).
4. It transpires that a similar question arose in the case of Refrigerators manufacturers - M/s. Hyderabad Allwyn where the Collector of Central Excsies, Madras took the view that the service contract charges cannot be included in the assessable value as per the aforesaid provisions.
5. The third manufacturer is M/s. Godrej & Boyce, from whom also a similar demand was made. They challenged the demand in the Bombay High Court. The Bombay High Court had inter alia directed from the deposit of excise duty for such service contracts with effect from 5th May, 1984 "under protest". Other directions were also given.
6. In these circumstances we had asked the learned Additional Solicitor General to file in affidavit to find out the correct position viz-a-viz the same manufacturers.]
7. The sum and substance of that affidavit filed on 16th January, 1987 is that so far as Hydrabad Allwyn are concerned, they are not depositing the excise duty on the basis of inclusion of value of charges towards service contract for four ye5rs. So far as Godrej and Boyce are concerned, they are depositing it by way of an interim arrangement made by the Bombay High Court "under protest". So far as the petitioner are concerned, they have challenged the very vises of instructions dated 27th October, 1983 followed by 14th April, 1986, before us.
8. It is conceded by learned Additional Solicitor General that such administrative instructions as were issued are not binding on quasi- judicial judicial Tribunals in the discharge of their quasi-judicial functions. Therefore before the Collector (Appeals), the appeal has to be decided without reference to the "Administrative Instructions", on the plain wording and scope of Section 4(4) of the aforesaid Act.
9. Learned Additional Solicitor General also placed reliance on the observations of the Supreme Court in the case reported as Union of India and others etc. etc. v. Bombay Tyre International Ltd. and etc. etc.
10. In that particular case, the Supreme Court was dealing with the case of Automotive Tyres. For automotive tyres the manufacturer provided a warranty for one year and surely there is no question of "after sale service contract". So the present case is different from the case of Bombay Tyre International Ltd. (supra)_ and it will be for the Appellate Authority of the Central Excise to determine it judicial.
11. However, the fact remains that right till 1986 on the one hand the price list of the petitioner was being approve and on the other hand show cause notices were pending deaccession. All the 18 show cause notices culminated in the passing of the impugned order which is subject is 17 crores. Even the amount calculated from 5th May, 1984 i.e. the period Godrej & Boyce have been called upon to deposit, the excise duty "under protest", excise duty payable by petitioners will be about 7 to 8 cores.
12. As noticed by us earlier there are principally three manufacturers of Refrigerators. One manufacturer under the orders of the Collector, who is a departmental officer, are not paying excise duty in the manner claimed. The other Godrej & Boyce, as a workable formula, paying under protest in pursuance of the order of the Bombay High Court from 5th May, 1984. They are collecting additional duty from the customers for the first time and then depositing it. The case of the petitioners is that they have not collected the Additional duty demanded from their customers till the orders of the Assistant Collector, which is under appeal, and thereafter the petitioners in view of the orders of the Assistant Collector are collecting from the consumers and depositing it with the excise authorities.
13. If at this stage the petitioners are called upon to pay the demand in pursuance of the orders of the Assistant Collector, which is subject matter of appeal before the Collector (Appeals), they will be called upon to, in fact, pay to the Central Excise Authorities an amount which they had not collected. Even the order which the Bombay High Court had passed calling upon Godrej and Boyce to deposit the excise duty on such service contract with effect from 5th May, 1984, was in view of the directions to the Godrej & Boyce to collect the amount of additional duty and the earlier demand had been stayed without condition.
14. So far as the petitioners are concerned they in fact were collecting and depositing after the orders of the Assistant Collector.
15. We asked the Solicitor General to suggest some via media of dealing with the present writ against the interim order of the Collector (Appeals) calling upon the petitioners to deposit the disputed amount before hearing the appeal. He could not suggest to us any via media except that the interest of both the revenue and petitioners be safeguarded.
16. It will be noticed that this case is not a case of any "unjust enrichment" of the petitioners by collecting the money from the consumers, and not depositing it with the Central Excise Authorities.
17. Though normally this Court does not interfere in the collection of excise duty at the interim stage but looking at the peculiar facts of the present case, we direct the Collector (Appeals) to hear and dispose of the appeal without insisting of the deposit of the sums as directes by the Assistant Collector by the impugned order dated 9th December, 1986.
18. Nothing stated herein should be treated b the authorities as expression of any opinion on the merits of the controversy. The ad interim order dated 18th December, 1986 is made absolute till disposal of the appeal by the Collector (Appeals).
19. Since this interim order itself decides the main writ petition, the writ petition itself is disposed of with the consent of learned counsel for the parties.
20. Mr. Nariman, learned counsel for the petitioners, states that his prayer for quashing of the Administrative Instructions will remain subject of challenge. In view of the concession given by the learned Solicitor General, that issue also does not survive.