VOLTAS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) BOTH these petitions filed under Article 226 of the Constitution of India can be conveniently disposed of by common judgment as the issues raised in these two petitions are identical. The facts giving rise to the filing of these two petitions are as follows :

(2.) THE petitioner No. 1 is the Company registered under the provisions of the Companies Act, 1956 and is engaged in the manufacture of Air-conditioners, water coolers and refrigerators. The company manufactures various models of air-conditioners, water coolers and domestic refrigerators at their factory at Thane and the manufactured goods are delivered to the customers. The manufactured goods of the Company are liable to payment of excise duty under Item No. 29a of the First Schedule to the Central Excises and Salt Act, 1944 and the rate of duty is ad valorem. Prior to the year 1980, the Company removed the goods manufactured on the basis of the prices which included the post-manufacturing costs and expenses. In view of the decisions recorded by this Court and the Supreme Court, the Company filed new price lists on May 15, 1980 and sought exclusion in respect of post-manufacturing expenses. By show cause notice dated September 1, 1980, the Assistant Collector of Central Excise called upon the Company to explain why the assessable value of the articles should not be determined on the basis of manufacturing costs plus manufacturing profits and selling costs plus nnjhjselling profits and why the exclusion claimed on account of post-manufacturing expenses should not be disallowed. The Company gave reply to the show case notice and filed fresh price lists with effect from october 7, 1980 and December 2, 1980 in which the assessable value of the goods excluding the post-manufacturing expenses was set out. The Assistant Collector gave a personal hearing in pursuance of the show cause notice and then approved the price lists without allowing any deduction on account of post-manufacturing expenses. The Assistant Collector passed the order approving the price lists on February 3, 1981. The petitioners preferred Writ Petition No. 189 of 1981 to challenge the legality of order passed by the Assistant Collector declining to exclude the deduction on account of post-manufacturing expenses from the assessable value.

(3.) THE Company was served with show cause notice dated January 20, 1981 by Superintendent, central Excise demanding Rs. 26,97,937. 83 towards excise duty short levied on the clearances made during May 19, 1980 to January 2, 1981. The Company paid the amount of Rs. 6,05,800. 84 under protest upto January 31, 1981. The Company then filed Writ Petition No. 211 of 1981 in this Court for quashing show cause notice dated January 20, 1981 and for a declaration that the post-manufacturing expenses cannot be included while determining the assessable value of the manufactured goods. The Company also sought refund of Rs. 6,05,800. 84 paid in pursuance of the show cause notice. The petition was admitted on March 9, 1981 and certain interim order was passed.