M C THAKUR Vs. EXTRUSION PROCESSORS PVT LTD

JUDGEMENT

(1.) THIS is an appeal preferred by the Government of India to challenge legality of judgment dated July 23, 1987 delivered by learned Single Judge in Writ Petition No. 1539 of 1981. By the impugned judgment, the learned Judge declared that the amendments to Section 2 (f) and to tariff Item No. 27 in the First Schedule to the Central Excises and Salt Act, 1944 made by the finance Act, 1980 and also Tariff Item 8313. 11 in Schedule to the Central Excise Tariff Act, 1985 to the extent to which it purports to authorise the levy of excise duty on the process of lacquering and printing of aluminium containers, and also Chapter Note 2 at the beginning of chapter 83 of the Schedule to the Central Excise Tariff Act are unconstitutional, ultra vires, null and void. The learned Judge, as a consequence of the declaration, directed the appellants to refund the duty collected to the respondents within three months. The facts giving rise to the passing of this order are required to be stated to appreciate the grievance of the appellants.

(2.) THE respondent No. 1 is a Private Limited Co. engaged in the manufacture of aluminium collapsible tubes and rigid cans in the factory situated at Malad (West), Bombay. The Plain aluminium collapsible tubes and rigid cans are prepared by feeding aluminium slugs into an impact Extrusion Press. The aluminium collapsible tubes and rigid cans are thereafter processed and finished on the training machine where tube is subject to the process of threading, greeving, etc. After the manufacture of aluminium collapsible tubes, the further process of printing and lacquering is resorted to. According to the respondents, the process of printing and lacquering the aluminium collapsible tubes is a post-manufacturing process and is undertaking only for the purpose of facilitating the sale of the product and in accordance with the instructions of the customers.

(3.) THE extruded tubes manufactured by the respondents were liable for excise duty under Tariff item 27 of the First Schedule and prior to April 1, 1970, the excise duty was imposed on tariff value determined by the Government. With effect from April 1, 1970, the method of charging excise duty was altered and ad valorem excise duty was imposed on the value of aluminium extruded tubes. The respondents complained that the Excise authorities purported to include in the assessable value of such aluminium tubes, the cost of charges of coating and printing and that was not permissible. The respondents claimed that excise duty under Tariff Item 27 (e) and the value of the article for the purpose of duty has to be the value assessable under the provisions of section 4 of the Central Excise Act. The respondents claimed that it was not permissible to take into consideration the value of any post-extrusion operations while determining the value of aluminium extruded tubes. The contention raised by the respondents was not accepted by the excise authorities.