Supreme Court of India
Vip Industries Ltd. vs Commissioner Of Cus. & C. Ex., ... on 2 April, 2003
Equivalent citations: 2003(88)ECC232, 2003(155)ELT8(SC), (2003)5SCC507
Bench: S.N. Variava, Brijesh Kumar
ORDER
1. Both these appeals are against the Judgment of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 28th March, 2002.
2. In Civil Appeal No. 3641 of 2002, the question as to whether the extended period of limitation under Section 11-A of the Central Excise Act, 1944 can be invoked also arises. In the view we are taking, it is not necessary to decide that point.
3. The question for consideration in both these appeals is whether in cases where a manufacturer includes equalized freight in the price of the goods and sells the goods all over the country at a uniform price, the Department is entitled to compute value by including the cost of transportation from the factory to the depot. This question was decided by this Court in the case of Union of India and Ors. Etc. Etc. v. Bombay Tyre International Limited Etc. Etc. reported in 1983 (14) E.L.T. 1896 (S.C.). It was thereafter confirmed in the case of Government of India v. Madras Rubber Factory Limited .
4. Thereafter with effect from 28th February, 1996, amendments were brought about in Section 4 of the Central Excise Act, 1944. The amended Section reads as follows :-
"Section 4. Valuation of excisable goods for purposes of charging of duty of excise - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section 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 :
Provided that -
(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in Clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers ;
(ia) where the price at which such goods are ordinarily sold by the assessee is different for different places of removal, each such price shall, subject to the existence of other circumstances specified in Clause (a), be deemed to be the normal price of such goods in relation to each such place of removal ;
(ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in Clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof ;
(iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail;
(b) where the normal price of such goods is not ascertainable for the reasons, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed.
(2) Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price.
(3) The provisions of this Section shall not apply in respect of any excisable goods for which a tariff value has been fixed under Sub-section (2) of Section 3.
(4) For the purpose of this section, - (a) 'assessee' means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods ; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty ; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, from where such goods are removed.
(ba) "time of removal", in respect of goods removed from the place of removal referred to in Sub-clause (iii) of Clause (b), shall be deemed to be the time at which such goods are cleared from the factory;
(c)-(e) xxx xxx xxx xxx".
5. After the amendment, the Department sought to include in the value the cost of transport from factory to the depot, even in case where the manufacturer sold the goods at a uniform price all over the country by including the element of equalized freight. The Tribunal has upheld the view of the Department on the reasoning that by this amendment the definition of the term "Place of removal" has been extended to include the depot. The Tribunal has also held that Section 2(2) which excluded the cost of transportation from the place of removal to the place of delivery was not amended when the definition of the term "Place of removal" was extended. According to the Tribunal the result was that only the transport charges from the place of removal to the place of delivery were to be excluded from the value.
6. We have heard the parties at length. In our view, Section 4 has to be read as a whole. Under Section 4(1)(a), the normal price is the price at which goods are ordinarily sold by the assessee to a buyer in course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and price is the sole consideration for sale. Therefore, the normal price is the price at the "time of delivery" and "at the place of removal". Before the amendment, the place of removal was only the factory or any other place or premises where the excisable goods were produced or manufactured or a warehouse or any other place or premises where any excisable goods have been permitted to be deposited without payment of duty. Thus, the price would be the price at that place. By the amendment Section 4(ia) has been added. Under Section 4(ia) where the price of the goods is different for different places of removal, each such price was deemed to be the normal price of such goods in relation to "such place of removal". Thus, if the place of removal was the factory, then the price would be normal price at the factory. If place of removal was some other place like a depot or the premises of a consignment agent and the price was different then that different price would be the price. It is because newly added Section 4(ia) was now providing for different prices at different places of removal that the definition of the term "place of Removal" had to be enlarged. Thus the amendment was not negativing the judgments of this Court. If that had been the intention it would have been specifically provided that even where price was the same/uniform all over the country, the cost of transportation was to be added.
7. Thus, in cases where the price remains uniform or constant all over the country, it does not follow that value for purpose of excise changes merely because the definition of the term "place of removal" is extended. The normal price remains the price at the time of delivery and at the place of removal. In cases of "equalized freight it remains the same as per the judgments of this Court set out herein above.
8. In our view, the amendments have made no difference to earlier position as settled by this Court. In this view of the matter, we are unable to uphold the judgments of the Tribunal. They are accordingly set aside. The appeals are allowed with consequential relief. There shall be no order as to costs.