Full Judgment Text
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CASE NO.:
Appeal (civil) 7310-7312 of 2003
PETITIONER:
Escorts Ltd.
RESPONDENT:
Commissioner of Central Excise,Delhi - II
DATE OF JUDGMENT: 25/10/2004
BENCH:
ARIJIT PASAYAT & C.K. THAKKER
JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
Appellant calls in question legality of the judgment rendered by
the Customs, Excise & Gold (Control) Appellate Tribunal (in short the
’CEGAT’) in Appeal Nos. E/1574 & 3180/93\026A & E/1668/94-A. The factual
background in a nutshell is as follows:
Show cause notice was issued on 29.04.1993 to the appellant in
respect of the period 1.10.1992 to 11.3.1993 alleging contravention of
the various provisions of Central Excise Rules, 1944 (in short the
’Rules’) read with Section 4(1) of the Central Excise and Salt Act,
1944 (in short the ’Act’). A reference was made to Rule 6(b) of the
Central Excise Valuation Rules, 1975 (in short the ’Valuation Rules’)
and it was indicated that there was a short levy of duty amounting to
Rs.38,08,127.40/-. A reply to the said notice was furnished on
29.05.1993 by the noticee (hereinafter referred to as the ’Assessee’)
taking the stand that there was no contravention as alleged.
On consideration of the materials on record and the show cause
noticee’s reply the Collector of Central Excise, New Delhi, confirmed
the demand of the aforesaid amount. It was held that the stand taken
by the assessee in the reply was without substance.
The assessee preferred appeals before CEGAT which by its order
dated 5.10.1998 dismissed the appeals. The matter was brought before
this Court taking the stand that the appeals were disposed of without
grant of an opportunity being heard to the assessee. By order dated
24.8.2001 this Court set aside the order passed by the CEGAT and
remanded the matter for fresh consideration on merits without
expressing any view on the merits of the case. Thus the matter was
heard afresh by CEGAT.
According to the CEGAT the issue involved is one relating to
determination of the value of goods captively consumed by the assessee.
It took note of the fact that there was admittedly 2% direct sale in
the spare market though 98% of the production was being captively
consumed. It was noted that how the value of goods captively consumed
is to be ascertained has been settled by this Court in Ashok Leyland
Ltd. v. Collector of Central Excise, Madras (2002 (10) SCC 344) it was
noted that as per the said decision, since price is ascertainable by
way of direct sale, the question of applying Section 4(1)(b) of the
Act would not arise. The valuation of the goods captively consumed is
to be based on the market price of the goods directly sold. Therefore,
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the appeals filed by the assessee were dismissed, but that part of the
order passed by the Collector, which related to penalty, was set aside.
Mr. V. Lakshmi Kumaran, learned counsel appearing for appellant
submitted that the Tribunal was wrong in applying the decision in the
Ashok Leyland’s case (supra) as the factual position was different.
Department based its case on Rule 6 of the Valuation Rules which has
application only when prices are unascertainable. As the judgment in
that case can be applicable only in a situation where the goods sold in
the spare parts market are identical and complete in all respects to
the goods captively consumed, admittedly, since in the present case,
the goods captively consumed are different and not identical to the
goods sold in the spare parts market, the principles laid down in Ashok
Leyland’s case (supra) will not apply.
In response Mr. R. Mohan learned Additional Solicitor General,
appearing for the Revenue, submitted that the assessee did not bring
out any factual difference so far as the present case is concerned vis-
a-vis what was decided in Ashok Leyland’s case (Supra). Therefore, the
CEGAT’s decision does not warrant any interference.
In Ashok Leyland’s case (supra)it was, inter alia, held as
follows:
"In our view, the provisions of the Act are
very clear. Excise duty is payable on removal of
goods. As there may be no sale at the time of
removal, Section 4 of the Act lays down how the value
has to be determined for the purposes of charging of
excise duty. The main provision is Section 4(1)(a)
which provides that the value would be the normal
price thereof, that is, the price at which the goods
are ordinarily sold by the assessee to a buyer in the
course of a wholesale trade. Section 4(4)(e)
clarifies that a sale to a dealer would be deemed to
be wholesale trade. Therefore, the normal price
would be the price at which the goods are sold in the
marked in the wholesale trade. Generally speaking,
the normal price is the one at which goods are sold
to the public. Here the sale to the public is
through the dealers. So the normal price is the sale
price to the dealer. The proviso, which has been
relied upon by learned counsel, does not make any
exception to this normal rule. All that the proviso
provides is that if an assessee sells goods at
different prices to different classes of buyers, then
in respect of each such class of buyers, the normal
price would be the price at which the goods are sold
to that class. The proviso does not mean or provide
that merely because the assessee sells at different
prices to different classes of buyers, the price of
that commodity becomes an unascertainable price. The
price of that commodity will remain the normal price
at which those goods are ordinarily sold by the
assessee to the public, in other words, the price at
which they are sold in the market. The mere fact
that sale is also made to the Defence or to the Civil
Department of the Government at different prices
would not mean that the price becomes an
unascertainable price. In the case of the
appellants, a price is ascertainable. They admittedly
sell in the market at a particular price. Section
4(1)(b) would not come into play and would not apply
at all. Section 4(1)(b) of the Act would not apply
if the price cannot be ascertained. In this case, as
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indicated above, the price is ascertainable and,
therefore, the question of application of Section
4(1)(b)does not arise. If Section 4(1)(b) does not
apply, Rule 6 will also not apply."
Courts should not place reliance on decisions without discussing
as to how the factual situation fits in with the fact situation of the
decision on which reliance is placed. Observations of Courts are
neither to be read as Euclid’s theorems nor as provisions of the
statute and that too taken out of their context. These observations
must be read in the context in which they appear to have been stated.
Judgments of Courts are not to be construed as statutes. To interpret
words, phrases and provisions of a statute, it may become necessary
for judges to embark into lengthy discussions but the discussion is
meant to explain and not to define. Judges interpret statutes, they do
not interpret judgments. They interpret words of statutes; their words
are not to be interpreted as statutes. In London Graving Dock Co. Ltd.
V. Horton (1951 AC 737 at p.761), Lord Mac Dermot observed:
"The matter cannot, of course, be settled
merely by treating the ipsissima vertra of
Willes, J as though they were part of an Act of
Parliament and applying the rules of
interpretation appropriate thereto. This is not
to detract from the great weight to be given to
the language actually used by that most
distinguished judge."
In Home Office v. Dorset Yacht Co. (1970 (2) All ER 294) Lord
Reid said, "Lord Atkin’s speech.....is not to be treated as if it was a
statutory definition It will require qualification in new
circumstances." Megarry, J in (1971) 1 WLR 1062 observed: "One must
not, of course, construe even a reserved judgment of Russell L.J. as
if it were an Act of Parliament." And, in Herrington v. British
Railways Board (1972 (2) WLR 537) Lord Morris said:
"There is always peril in treating the
words of a speech or judgment as though they
are words in a legislative enactment, and it is
to be remembered that judicial utterances made
in the setting of the facts of a particular
case."
Circumstantial flexibility, one additional or different fact may
make a world of difference between conclusions in two cases. Disposal
of cases by blindly placing reliance on a decision is not proper.
The following words of Lord Denning in the matter of applying
precedents have become locus classicus:
"Each case depends on its own facts and a
close similarity between one case and another
is not enough because even a single
significant detail may alter the entire
aspect, in deciding such cases, one should
avoid the temptation to decide cases (as said
by Cordozo) by matching the colour of one case
against the colour of another. To decide
therefore, on which side of the line a case
falls, the broad resemblance to another case
is not at all decisive."
*
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"Precedent should be followed only so far
as it marks the path of justice, but you must
cut the dead wood and trim off the side
branches else you will find yourself lost in
thickets and branches. My plea is to keep the
path to justice clear of obstructions which
could impede it."
This aspect has been highlighted in Collector of Central Excise,
Calcutta v. M/s Alnoori Tobacco Products and Anr. (Civil
appeal nos. 4502-4503 of 1998 decided on 21.7.2004)
It is correct as contended by learned counsel for the assessee \026
appellant that the department’s case rested on Rule 6 of the Valuation
Rule. CEGAT did not consider the applicability of Ashok Leyland’s case
(supra) in the background of Rule 6 of the Valuation Rules though it
has substantial bearing on the dispute. In the aforesaid circumstances
without expressing any view on the merits we remit the matter to the
CEGAT for considering the factual aspect and the applicability of Ashok
Leyland’s case (supra) to the facts of the present case. The appeals
are allowed to the extent indicated above without any order as to
costs.