Customs, Excise and Gold Tribunal - Delhi
Indo British Garments Pvt. Ltd. vs C.C.E. on 31 March, 2004
Equivalent citations: 2004(94)ECC567, 2004(173)ELT84(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The appellants M/s Indo British Garments Pvt. Ltd. manufacture articles of apparel. The dispute in these appeals relate to dutiability of uniforms manufactured by them. The uniforms are made to order according to the specification given by the buyers. The buyers are generally security agencies. The uniforms are for security guards. It is not being disputed that these uniforms figure for Central Excise duty under Tariff Headings 6201/6202.
2. Despite this, the appellants took up a contention before the Central Excise authorities that no excise duty is payable on these items in view of Notification No. 81/01-CE (NT) dated 01.03.01 and Notification No.20/01-CE dated 30th April 2001 whereunder tariff values were fixed for apparels. It is being pointed out that under the notifications, tariff value was fixed in respect of "goods bearing a registered brand name or sold under registered brand name" and the tariff value fixed was "60% of the retail sale price. It is further pointed out that retail sale price had been defined in the notification as "maximum price at which the said goods may be sold to the ultimate consumers". The appellant has submitted that since uniforms manufactured by them are not sold in retail at all, the tariff value notification did not cover their goods and since the tariff value had been fixed as the measure for taxation of all goods, in the absence of tariff value (measure) for the appellant's goods, they remain exempt. The appellants have also relied on the decision of the Apex Court in the case of Nalinikant Ambalal Modi vs. SAL Narayan Row - CIT 61 ITR 428 (SC) in support of their contention that in the absence of a measure for computing taxation, no duty was payable. Central Excise authorities did not accept this contention. They took the view that the absence of tariff value for the appellant's goods only meant that those goods were required to be valued under normal valuation provision in law (Section 4) and subjected to duty. The present appeals challenge that finding.
3. We have perused the record and considered the submissions made by the both sides. The substance of the appellant's contention is that since central excise duty has to be levied and collected" in such manner as may be prescribed" (Section 3(1) of Central Excise Tariff Act, 1944 and tariff value notifications prescribed the manner (the value) in respect of certain goods, in case there is omission in prescribing tariff values for some of those goods, no duty can be collected on such omitted goods in the absence of any measure. During the hearing of the appeals, learned Senior counsel appearing for the appellant has pointed out that it is settled rule of construction for any fiscal statute that, the Court cannot make goods the deficiency in the statute and that courts shall interpret a statute as it stands and in case of doubt, it shall interpret it in a manner favourable to tax payers (AIR 1961 (SC) 609 & 612. Relying on the judgment in Nalinikant Ambalal Modi Vs. SAL Narayan Row - CIT 61 ITR 428 (SC), learned senior Counsel submitted that just as income falling under a head can to be charged only if it is chargeable under the corresponding computing section, in the case of Central Excise, if the valuation provision did not provide a measure for valuation of the goods to be assessed, there could be no levy or collection of duty. similarly, relying on the judgment in CIT, Bangalore vs. B.C. Srinivasa Setty - 1981 2 Supreme Court Cases 460, the learned senior Counsel pointed out that charging section is not attracted when the corresponding computing section is inapplicable. Learned Senior Counsel emphasised that in the case of apparel falling under heading 6201 and 6202, measure value for "all goods" was to be found in the tariff value notifications and since the uniforms manufactured by the appellants fell outside the scope of the method of computation (60% of the retail sale price) there could be no computation of value and levy of duty.
4. Learned SDR stoutly contested the proposition advanced on behalf of the appellants. He has submitted that it is the scheme of Central excise law that goods leviable to duty and the rate of duty applicable to each are to be found in the First Schedule to the Central Excise Tariff Act, 1985. In the case of the appellant's goods, the Schedule mentions the rate of levy at 16% Learned SDR has therefore, submitted that measure of levy is in the tariff schedule itself. As regards the scope of tariff value notifications, learned SDR emphasised that those notifications covered only the goods specified in the notifications and if any goods fell outside those notifications, they would be valued under the other relevant provisions in the statute. He further explained that Central Excise Act contained mainly three provisions relating to valuation of goods for the purpose of central excise duty. Section 3(2) - being the provision for fixing of tariff value by the Central Government, Section 4 being the provision for valuation of excisable goods in general and Section 4A being the provision for specified goods which are liable to be valued based on their maximum retail price. Learned SDR has pointed out that in case any of the excisable goods did not fall within the tariff value notification, if followed that those goods should be subjected to duty after valuing in terms of the general provision (Section 4). Learned SDR emphasised that in this statutory scheme, the effect of the apparel manufactured by the appellants not coming within the scope of tariff value notifications is that they would be valued under Section 4, and not that those goods were exempt.
5. We may begin with our conclusion that we find no merit in the submissions made by the appellants. Central Excise Act, 1944 contains different methods of valuation for excisable goods, as rightly pointed out by the learned SDR. Sub-Section (2) of Section 3 confers power upon the Central Government to fix tariff values of any articles enumerated in the First and Second Schedule to the CETA, 1985. That provision reads as under:
"3(2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values on any articles enumerated, either specifically or under general headings, in the First Schedule and the Second schedule to the CETA, 1985 (5 of 1986) as chargeable with duty ad valorem and may alter any tariff values for the time being in force."
Further, Sub-section (3) of Section 3 provides for fixing different Tariff values. That sub-section reads:
"(3) Different tariff values may be fixed
(a) for different classes or descriptions of the same excisable goods; or
(b) for excisable goods of the same class or description -
(i) produced or manufactured by different class of producers or manufacturers;
or
(ii) sold to different classes of buyers:
Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause (i) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case may be, the normal practice of the wholesale trade in such goods"
Section 4 contains the general provision for valuation of Central Excise goods for the purpose of charging of duty of excise. Sub-section (3) of that Section makes it clear that the provisions of Section 4 shall not apply "in respect of any excisable goods for which tariff value has been fixed under Sub-section (2) of Section 3". Section 4A provides for valuation of specified excisable goods with reference to their retail sale price. Sub-Section (2) of that Section states that where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, "notwithstanding anything contained in Section 4", such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement. Thus, each of the three provisions for valuation under Central Excise Act is exclusive and is specific to the goods covered by a particular provision and would not apply to the goods the valuation of which is covered by other provisions. It is the uncontested position here that the uniforms manufactured by the appellant did not come within the tariff value fixed under the notifications. That is to say, that no tariff value has been fixed for the goods manufactured by the appellants. It is also not in dispute that uniforms in question are not specified under Section 4A. Therefore, the provisions of Sections 3(2) and 4A are not applicable to the appellant's goods. This clearly brings the appellant's goods within the valuation provisions of Section 4 inasmuch as goods that are excluded under sub-section (3) of Section 3 are "excisable goods for which tariff value has been fixed under sub-section (2) of Section 3". Since, admittedly, no Tariff value had been fixed for uniforms in question, they are not excluded from valuation under Section 4 and levy of duty. Revenue authorities have done preciously that. That action was in accordance with the provisions of law.
6. We find that the decisions of the Apex court which have been relied upon by the appellant have no application to the issue arising in the present case. Those decisions related to the scheme of taxation under Income Tax Act as noted in para 10 in the judgment in the case of CIT vs. B.C. Srinivas Shetty (supra) that the general arrangement of the provisions of the Income Tax Act is that, under each Head of income, the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. when there is a case to which the computation provisions cannot apply at all. It is evident that such a case was not intended to fall within the charging section. The position is very different under Central Excise Law. The charge is specified for goods covered by each Heading in the tariff. Different provisions are also available under the law for the valuation of the goods which are liable to central excise duty. Where one method of valuation did not cover a particular product, the other provisions are attracted. In the present case, the absence of tariff value under the Notifications cannot be construed as exemption in favour of the goods not covered by the tariff value notifications. It only meant that the excluded goods would be valued under other provisions contained in the Excise Act.
7. The appellants have raised yet another contention. That their sale price for the goods should be treated as retail sale price and 60% of that price should be taken as tariff value. We find no merit in this contention. This goes against the grain of the appellant's first submission that their goods did not come within the notifications. Admittedly, the goods are sold in wholesale at agreed wholesale prices. They are not resold in retail. The apparels are only issued as uniforms to the guards who do not pay for the goods. Thus. clearly, there was no retail sale or retail price. There was only wholesale price. This wholesale price for the goods can not be treated as retail sale price. Such an action goes completely contrary to the scheme of the Notifications. The question of allowing rebate for determining the assessable value can arise only in the case of retail price. Giving deduction from ex-factory wholesale price-would be contrary to the basic scheme of the Central Excise Valuation, which is to treat ex-factory normal price as the assessable value.
8. In the light of what is stated above, the appeals stand rejected.