MAHINDRA AND MAHINDRA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition filed under Article 226 of the Constitution of India, the petitioners are challenging the order dated November 27, 1980 passed by the Assistant Collector, Central Excise, Bombay Division 'R' rejecting the claim for refund of Rs. 3,29,446.90 and Rs. 6,19,223.40.

(2.) The facts which gave rise to this petition are required to be stated to appreciate the grievance of the petitioners against the impugned order. The International Tractor Company of India Limited was engaged in the manufacture of tractors at their factory at Kandivli, Bombay. The maximum retail sale prices of the tractors were controlled by the Central Government under the orders issued under the Essential Commodities Act, 1955. The Company entered into a distributorship agreement with Voltas Limited (hereinafter referred to as the 'Voltas') on March 17, 1970 and under the said agreement Voltas were appointed the sole distributors of the tractors manufactured by the Company. It is required to be stated that no excise duty was leviable on tractors manufactured by the Company prior to May 29, 1971 when for the first time Item 34A(3) was inserted providing excise duty 10% ad valorem on the manufacture of the tractors. The agreement between the Company and the Voltas was to remain in operation for a period of five years from February 26, 1970. The International Tractor Company was merged with the petitioner Company with effect from November 1, 1977 under an order dated March 9, 1978 passed by this Court and the entire assets and liabilities as well as entire undertaking of the Company has vested in the petitioners.

(3.) The petitioners initially paid excise duty on the tractors manufactured by them on the basis that the price charged by the Company to Voltas was the assessable value. The Department, however, claimed that the price charged by Voltas to their dealers was the assessable value and demanded a sum of Rs. 35,855.70 as duty short-levied for the months of June and July 1971. The duty was paid by the petitioners under protest. On October 3, 1971, the petitioners filed a new price list with the Superintendent of Central Excise and the assessable value declared was on the basis of the price charged by Voltas to their dealers. The petitioners claim that such value was given due to an error arising out of the stand taken by the excise authorities for the period of June and July 1971. The price list filed by the petitioner Company was approved on December 15, 1971. The maximum retail prices of tractors were fixed by the Government of India under the Tractors (Price Control) Order, 1967 and all the tractor manufacturers in India were informed of the price fixed. The price accepted by the Government in the case of tractors manufactured by the Company was Rs. 20,005/- per unit and the excise duty payable was Rs. 1,905/- per unit and the total price was Rs. 22,890/-. On the basis of the letter issued by the Government, the petitioners submitted a price list to the Superintendent of Central Excise on November 13, 1971 and also claimed that the excess excise duty has been paid in respect of tractors and the petitioners were entitled to claim a refund.