I T C LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This Writ Petition is filed by India Tobacco Company Limited (a company duly incorporated and registered under the Indian Companies Act, 1956), and by one of its shareholders. The Petitioners herein shall be referred to as the Company in the course of this order for convenience. The respondents are the Union of India represented by the Ministry of Finance (Department of Revenue and Insurance) (hereinafter referred to as the Revenue), the Superintendent of Central Excise, Concurrent Assessment and Inspection Group having his office in the Company's factory at Bangalore, the Assistant Collector of Central Excise, III Division, having his office at Bangalore City and the Appellate Collector of Central Excise at Madras having his office at Madras.

(2.) The Company is a manufacturer of tobacco products. The company has several factories in different parts of India. One of its factories is situated at Bangalore and tobacco products like cigarettes, tobacco and other tobacco products manufactured at Bangalore factory are subjected to excise duty under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) within the jurisdiction of respondents 2 and 3.

(3.) The Company opted for what is known as 'self-removal procedure' after the same was introduced in or about 1968. By this procedure, the Company is permitted to remove its manufactured goods outside the factory premises after the 2nd respondent has approved the price-list submitted by the Company and the duty on the sum total of such price-list has been worked out and paid by the Company. Prior to February 27, 1973, the Company on the basis of the selfremoval procedure was paying to the respondents, on the formula that the whole-sale price which is subjected to excise duty under Section 4(a) of the Act was inclusive of not only the cost of raw-materials, cost of manufacture, manufacturer's profits and the price charged to the wholesaler; but also the commission paid by the first wholesale dealer to his secondary wholesaler. However, it has been asserted in the pleadings, in this Writ Petition, that the transaction of the Company is only with the wholesalers on a principal to principal basis and that the secondary wholesalers and the other retail out-lets both of whom number several thousands spread over the country do not have any privity of contact with the Company.