QUEENS CHEMISTS MFG DEPARTMENT Vs. G KORUTHU

JUDGEMENT

(1.) THIS petition has been filed under Article 226 of the Constitution to challenge the validity of an order passed by the Collector of Central Excise Bombay, who is the first respondent to this petition, under the Central Excises and Salt Act, 1944. The petitioners are a firm engaged in the manufacture of pharmaceutical products, including an ointment known as 'grams Cutter' and a balm known as 'queen's balm'. Their factory is situated at Tardeo in Bombay. By the Finance Act of 1961 an item was included in the First Schedule to the Central Excises and Salt Act. 1944. by which an valorem duty of 10 per cent, was imposed on certain types of patent and proprietary medicinal preparations. It is not disputed that the petitioner's said products, viz. Germs cutter and Queen's balm, were thus subjected to an ad valorem duty of 10 per cent. under the Central Excises and Salt Act 1944. The manner in which the value of the products is to be ascertained for the determination of the duty is laid down in S. 4 of the said Act, and the dispute raised by the petitioners arises on the interpretation of some of the terms of that section. That section is in the following terms:

(2.) I will first deal with the petitioners' contention that the assessment of excise duty should have been made on the basis of the prices charged by them to their Distributors. It will be noticed that S. 4 (a) provides that for the purpose of assessing excise duty the value of the article shall be deemed to be "the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold". The other clauses of S. 4 (a) provide that the wholesale cash price is to be ascertained with reference to the time at which the dutiable article is to be removed from the factory or any other premises of manufacture or production, and with reference to the place of manufacture or production if a wholesale market exists there, and in other cases the nearest place where such a market exists. Section 4 (b) applies where the wholesale cash price is not capable of being ascertained in the manner provided by S. 4 (a ). In that case, the price of the article is to be deemed to be the price at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer or producer, or his agent.

(3.) IN support of the first contention of the petitioners mentioned above, Mr. Sorabjee argued that the provision applicable to the determination of the value of the petitioners' products was S. 4 (b), and not S. 4 (a) as held by the first respondent. Mr. Sorabjee argued that the petitioners' products in question are patented pharmaceutical preparations, and their value cannot be determined with reference to the wholesale price of any other article. "of the like kind and quality". According to Mr. Sorabjee, these products are suigeneris, and their value must be determined under S. 4 (b) by ascertaining the price at which the petitioners sell these products, as it cannot be determined by ascertaining the wholesale price of articles "of the like kind and quality" as provided by S. 4 (a ). This argument is fallacious, because the expression "an article of the like kind and quality" occurs both in S. 4 (a) as well as in S. 4 (b ). That expression must b deemed to include an article of the same kind and quality as the dutiable article, as well as an article of similar kind and quality. It is clear from the findings of the first respondent that the wholesale cash price of the petitioners' said products was capable of being ascertained at the time when the articles liable to duty were manufactured by the petitioners and were to be removed from the petitioners' factory. The first respondent was, therefore, right in determining the value of the articles under S. 4 (a), and not under S. 4 (b ).