ALEMBIC GLASS INDUSTRIES LIMITED Vs. UNION OF INDIA
HIGH COURT OF GUJARAT
ALEMBIC GLASS INDUSTRIES LIMITED
UNION OF INDIA
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(1.) Alembic Glass Industries Limited is the petitioner. The petitioner is manufacturing glass and glassware which fall under Tariff Item No. 23A in the First Schedule to the Central Excises and Salt Act 1944 The petitioner has got a factory at Baroda in the State of Gujarat. The glass and glassware produced by the petitioner-Company are purchased by wholesale buyers. Anyone can buy the petitionerCompanys products in wholesale. Amongst the buyers of the excisable goods produced by the petitioner-Company are manufacturers of medicines producers of oil manufacturers of chemicals and milk dairies. It is the case of the petitioner-Company that it is not necessary that glass and glassware manufactured by it should be sold in packed condition. According to them they can be sold in naked condition. The petitioners next contend that in some cases their buyers supply the packing material and sometimes they purchase the packing material from the market pack the goods in it and sell them to their wholesale buyers. The petitionerCompanys buyers sometimes require a particular kind of packing as for example in cartons or in corrugated sheets. Others are satisfied with ordinary packing consisting of hay or straw padding in gunny bags. The petitioner further contends that under Tariff Item 17 in First Schedule to the Central Excises and Salt Act 1944 excise duty is leviable on packing materials themselves. It is further alleged that the cost of packing material is borne by the buyer and that the petitioner shows the price of the excisable goods and the price of packing material separately in its pricelist. It is next alleged that price of packing material is not identifiable with the value of the excisable goods and that therefore excise duty cannot be levied on the composite price of the excisable goods as well as the packing material. Next the petitioner allege that packing material is not a part of the manufacturing process. In other words according to them it is not incidental to manufacture. The petitioner further avers that packing is done for the safety of the goods during transportation and that no further manufacturing process is applied to packing material. After amended sec. 4 of the Central Excises and Salt Act 1944 came into force on October 1 1975 the Central Excise authorities started assessing the excise duty on the composite price of excisable goods as well as packing material and did not approve the pricelist submitted by the petitioner showing the prices of excisable goods alone.
(2.) The petitioner therefore filed this petition in which two reliefs are claimed :-
(1) Definition of the expression value given in clause (d) of subsec. (4) of sec. 4 of the Central Excises and Salt Act 1944 is beyond the legislative competence of Parliament under Art. 246 of the Constitution read with Entry 84 in the Union List; and
(2) any collection of excise duty on the basis of this definition is without authority and bad in law and is hit by Art. 265 and Art. 31.
(3.) In order to examine the first contention which has been raised on behalf of the petitioner it is necessary to reproduce the definition of value given in sec. 4(4)(d) of the Central Excises and Salt Act. It is in the following terms :-
"(d) 'value' in relation to any excisable goods- (i) where the goods are delivered at the time of removal in a packed condition includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation :-In this sub-clause packing means the wrapper container bobbin pirn spool reel or warp beam or any other thing in which or on which the excisable goods are wrapped contained or wound;
(ii) does not include the amount of the 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 (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale;"
Let us now analyse this definition. This definition in terms excludes from the value of excisable goods the cost of packing which is of a durable nature and which is returnable by the buyer to the assessee. The expression returnable used in the definition suggests that actual return of the packing material of a durable nature by the buyer is not of any great consequence. In other words what is excluded from the value of the excisable goods is the cost of packing which is of a durable nature and which can be returned by the buyer to the assessee irrespective of whether he returns it or not. Excluding such cost of packing the cost of other packing is required to be included in the value of the excisable goods in order to find out its assessable value for the purpose of collecting excise duty.;
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