PERFECT CIRCLE VICTOR LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Special leave granted. Heard counsel for the parties.

(2.) The Assistant Collector of Central Excise, Nasik, vide his order dated 19th, March, 1981 rejected the appellant's contention that. post manufacturing expenses of 14.4% on Gaskets and 6% on Piston Rings was deductible it, arriving at the assessable value of the goods covered under Tariff Item No. 34A on the basis of the Price Lists 89 and 90 both dated 16th May, 1980. The Assistant Collector was of the view that the value for the purposes of collection of Central Excise Duty under the amended Section 4 of the Central Excises and Salt Act, 1944 was "the normal price at which the goods are normally sold in the course of wholesale trade for delivery at the time and place of removal." According to him the only deductions that are permissible under the said provision are the trade discounts, elements of taxes and packing charges of durable and returnable containers. The appellant challenged this decision of the Assistant Collector by a writ petition No. 368 of 1982 in the High Court of Bombay. The High Court, relying on the decision of this Court in Union of India v. Bombay Tyres International Ltd., (1983) 14 ELT 869 : AIR 1984 SC 420, concluded that administrative expenses, selling expenses and profit could not be treated as post manufacturing expenses and dismissed the petition with costs. Aggrieved by the said decision the appellant has approached this Court under Article 136 of the constitution of India.

(3.) After the decision of this Court in Bombay Tyres International Ltd. (supra.) a clarificatory order was made by this Court in the same case, (1984) 17 ELT 329 (SC to the effect that discounts allowed in the trade (by whatever name called) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, the allowance and nature of discount being known at or prior to the removal of the goods. It was held that such trade discounts should not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. It was further held that taxes and cost of insurance for carrying the goods from the factory gate to the place of delivery would also be deductible. After the said pronouncements certain format orders were passed in pending cases. In accordance with such format orders price lists were amended and fresh orders were passed by the concerned authorities. One such format order became the subject-matter of the decision in Union of India v. Madras Rubber Factory Ltd., AIR 1987 SC 701, whereby this Court expanded the list of deductible post manufacturing expense. It is significant to note that after the aforesaid decisions, in subsequent cases, the Assistant Collector himself has, by his orders dated 30th September, 1985 and 20/2 1 st July. 1988, allowed deduction of various items of post manufacturing expenses from the assessable value in the appellant's own case. In these circumstances the decision of the High Court cannot be allowed to stand as it is.