CIBATUL LIMITED Vs. UNION OF INDIA AND ORS

JUDGEMENT

(1.) This is a petition by a Company incorporated under the Companies Act, 1956, challenging the issuance of a trade notice, Annexure G to the petition issued by the Collector of Central Excise, Baroda on 25-6-1974 under which he directed the petitioner, the manufacturers of resins inter alia to declare the assessable value for paying Central Excise Duty "equal to the value charged by the brand-name owners to the wholesale market".

(2.) The short facts are that the five per cent equity share capital of the petitioner company is owned by one Ciba-Geigy of India Ltd., formerly known as Ciba of India Ltd. On or about 24-3-71, the agreement Annexure A, was entered into by the petitioner company with the said company Ciba-Geigy of India Limited under which the petitioners agreed to sell to the said buyers certain Urea formaldehyde resins and certain Melamine formaldehyde resins in accordance with the programme drawn by the seller and the buyer and the petitioners had agreed to supply and sell the same to the said buyers. Thereafter on or about 7-12-71, an agreement was entered into between the petitioners on one hand, one Swiss Company on the other and the aforesaid Ciba-Geigy of India Limited on the third under which the petitioners were authorised to affix on the resins supplied by them to the said buyer company, certain trade .marks of which the said Swiss Company were the registered proprietors in India and of which the said buyers were registered or licenced users in India. The said agreement is Annexure B to the petitions. The department then issued the trade notice, Annexure G, calling upon the petitioners, the manufacturers, to get the name plate of the customers "registered and approved" by the Collector, to declare the assessable value for paying central excise duty "equal to the value charged by the brand-name owners to the wholesale market" and to undertake to make good the difference, if any, in duty resulting, from any change in price already effected by the customers but not known to the licensees at the time of clearance. A further direction, being direction No. 3 is also there in Annexure G, but it being meant for the customers or brand-name owners' under whose orders the goods are manufactured need not detain us because the said customer company namely, the Ciba-Geigy of India Limited, is not before us making any grievance about the said direction.

(3.) The grievance in the contention of the petitioners is that as per Sections 3 and 4 of the Central Excises and Salt Act, 1944 (the sections being what they were prior to their being recast as per the Act of 1975), the value to be determined is to be wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery at a place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists. Mr. Gandhi, the learn ed advocate appearing for the petitioners contended that by the impugned trade notice, an attempt was made by the department to fix the value for the purpose of central excise duty on a new standard different from the one laid down in the above mentioned Sections 3 and 4 of the Act and See. 4 in particular. In other words, Mr. Gandhi urged, there was an attempt to levy central excise duty not as per the real sale value, but according to the sale value enhanced by the value charged by the brand-name owners to the wholesale market. Direction No. 2 in the impugned trade notice Annexure G was contrary to the law as interpreted by the Supreme Court in the case of Atic Industries Ltd. v. H.H. Dave, 1975 AIR(SC) 1960 in that case decided 01 14-2-1975, the Supreme Court has reiterated its decision in A.K. Roy v. Voltas Ltd., 1973 2 SCR 1089 and laid down the law on the point in very clear and lucid language in the following terms : -