Full Judgment Text
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CASE NO.:
Appeal (civil) 3783 of 2000
PETITIONER:
COMMISSIONER OF CENTRAL EXCISE, DELHI
RESPONDENT:
MARUTI UDYOG LTD.
DATE OF JUDGMENT: 27/02/2002
BENCH:
B.N. KIRPAL & SHIVARAJ V. PATIL & BISHESHWAR PRASAD SINGH
JUDGMENT:
JUDGMENT
2002 (2) SCR 99
The following Orders of the Court was delivered :
The respondent is manufacturing motor vehicles and it had availed of MODVAT
credit of the duty paid on inputs under Rule 57A of the Central Excise
Rules. As it had not paid any exicse duty on the raw material, it became
liable to pay excise duty on the waste and scrap of aluminium and iron and
steel which scrap had been sold by the respondent.
The Collector raised a demand of excise duty on the waste and scrap which
was sold. The demand was challenged by the respondent who contended that
exicse duty was not payable. Having been unsuccessful before the Collector,
an appeal was filed before the Customs, Excise and Gold (Control) Appellate
Tribunal. The Tribunal by the impugned order came to the conclusion that
excise duty was payable on the scrap sold by the respondent. It further
came to the conclusion that the price on which the waste and scrap had been
sold should be considered to be cum-duty price and the assessable value
should be determined after deducting the element of excise duty. It is this
part of the decision of the Tribunal which is sought to be challenged by
the Revenue in this appeal.
The respondent had sold the scrap and according to it the purchaser was not
liable to pay any amount in addition thereto and it is for this reason the
Tribunal regarded this transaction as being one of cum-duty price.
Section 4 of the Central Excises and Salt Act, 1944 provides for valuation
of excisable goods for purposes of charging of duty of excise. Under
Section 4(1), the duty of excise is chargeable on any excisable goods with
reference to the value which is deemed to be the price at which such goods
are ordinarily sold by the assessee to a buyer in the course of wholesale
trade where the buyer is not a related person and the price is the sole
consideration for the sale. Section 4(4)(d)(ii) states that value in
relation to any excisable goods does not include the amount of duty of
excise, sales tax and other taxes, if any, payable on such goods and,
subject to such rules as may be made, the trade discount, etc., is also to
be allowed as a deduction.
A reading of the aforesaid Section clearly indicates that the wholesale
price which a charged is deemed to be the value for the purpose of levy of
excise duty, but the element of excise duty, sales tax or other taxes which
is included in the wholesale price is to be excluded in arriving at the
excisable value. This Section has been so construed by this Court in Asstt.
Collector of Central Excise and Ors. v. Bata India Ltd., [1996] 4 SCC 563,
and it is thus clear that when cum-duty price is charged, then in arriving
at the excisable value of the goods the element of duty which is payable
has to be excluded. The Tribunal has, therefore, rightly prceeded on the
basis that the amount realised by the respondent from the sale of scrap has
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to be regarded as a normal wholesale price and in determining the value on
which excise duty is payable the element of excise duty which must be
regarded as having been incorporated in the sale price, must be excluded.
There is nothing to show that once the demand was raised by the Department,
the respondent sought to recover the same from the purchaser of scrap. The
facts indicate that after the sale transaction was completed, the purchaser
was under no obligation to pay any extra amount to the seller, namely, the
respondent. In such a transaction, it is the seller who takes on the
obligation of paying all taxes on the goods sold and in such a case the
said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii)
and this is precisely what has been directed by the Tribunal. There is also
nothing to show that the sale price was not cum-duty.
It will be useful here to refer to the observations of this Court in
Hindustan Sugar Mills v. State of Rajasthan and Ors., [1978] 4 SCC 271, at
page 280, as follows:
"Take for example, excise duty payable by a dealer who is a manufacturer.
When he sells goods manufactured by him, he always passes on the excise
duty to the purchaser. Ordinarily it is not shown as a separate item in the
bill, but it is included in the price charged by him. The ’sale price’ in
such a case could be the entire price inclusive of excise duty because that
would be the consideration payable by the purchaser for the sale of the
goods. True, the excise duty component of the price would not be an
addition to the coffers of the dealer, as it would go to re-imburse him in
respect of the excise duty already paid by him on the manufacture of the
goods. But even so, it would be part of the ’sale price’ because it forms a
component of the consideration payable by the purchaser to the dealer. It
is only as part of the consideration for the sale of the goods that the
amount representing excise duty would be payable by the purchase:. There is
no other manner of liability, statutory or otherwise, under which the
purchaser would be liable to pay the amount of excise duty to the dealer.
And, on this reasoning, it would make no difference whether the amount of
excise duty is included in the price charged by the dealer or is shown as a
separate item in the bill. In either case, it would be part of the ’sale
price’.........."
The example given in the aforesaid decision is clearly applicable in the
present case. The sale price realised by the respondent has to be regarded
as the entire price inclusive of excise duty because it is the respondent
who has, by necessary implication, taken on the liability to pay all taxes
on the goods sold and has not sought to realise any sum in addition to the
price obtained by it from the purchaser. The purchaser was under no
obligation to pay any amount in excess of what had already been paid as the
price of the scarp.
Under the circumstances, the Tribunal was right in directing that the
respondent is entitled to the benefit of Section 4(4)(d)(ii) of the Central
Excises & Salt Act.
For the aforesaid reasons, this appeal is dismissed. No costs.
C.A. Nos. 660, 3841, 5867-5868/2000, 4082, 4455, 6072, 8455/2001 and
92/2002
For the reasons stated in our order passed today in Civil Appeal No. 3783
of 2000 entitled Commissioner of Central Excise, Delhi v. M/s. Maruti Udyog
Ltd., these appeals are dismissed.
Civil Appeal No. 3913/2001
After hearing the learned counsel for the parties, we see no reason to
interfere with the decision of the Tribunal. Hence, the civil appeal is
dismissed.
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