S. Ranganathan, J. - (1.) The petitioner, M/s. Electric Construction & Equipment Co. Ltd. has a registered office at Delhi and has a factory at Sonepat (Haryana) where the petitioner manufactures, inter alia, electric bulbs, and tube -lights. The question raised in this writ petition is regarding the determination of the assessable value of the aforesaid goods manufactured by the petitioner under Sec. 4 of the Central Excises and Salt Act, 1944 (hereinafter referred as "the Act) as it stood prior to its amendment by Act 22 of 1973 but with effect from 1.10.1975.
(2.) As stated earlier, the petitioner manufactures bulbs and tube -lights at Sonepat in Haryana. On 31.1.74 the petitioner filed with the Excise Authorities a price list as required under Rule 173 -C of the rules made under the Act. It may be mentioned by way of illustration, that according to this price -list, the estimated manufacturing cost of electric bulbs of 100 watts worked out of Re. 0.91 per piece and that of tube -lights of 40 watts worked out to Rs. 5.38 per piece. It was claimed in a covering letter that the assessable value had been estimated on the basis of manufacturing cost by a practicing cost accountant to which had been added an ad -hoc 10% as manufacturing profit. A certificate of the cost accountant was also enclosed.
(3.) It may be mentioned here that the petitioner not only manufactured the above goods but also marketed them to a considerable extent directly. The sales were affected by the Central Marketing Division (CMD) of the petitioner to independent wholesale buyers. Such sales by the CMD were in respect of 97.5% of the goods. The Assistant Collector of Central Excise while scrutinising the price -list filed by the petitioner came to know that the good manufactured by the petitioner were being sold by the CMD at much higher prices. For instance to 100 watt bulbs were sold at Rs. 3.10 per piece add the tube -lights were sold at Rs. 15 per piece. The petitioner was giving a general discount of 17 1/2%, a special discount of 7 1/2% and a cash discount of 1% and thus the rates on discount were also different. He was of opinion that under Sec. 4(b) of the Act the assessable value of the goods should be fixed on the basis of the wholesale prices at which the CMD were selling the goods in their turn after allowing only the trade discount giving uniformly. The petitioner gave a reply on 31.10.1974 explaining that this price -list had been based on the principles of the decision of the Supreme Court in the case of A.K. Roy v/s. Voltas Ltd. : 1973ECR60(SC) according to which the assessable value could only include cost of manufacturing and the manufacturing profit. It was also pointed out that though about 97.5% of the sale were effected through the CMD, the petitioner had also sold 2.5% of the goods approximately to two independent wholesale dealers, namely, Cosmopolitan Agencies and Bajaj Electronic. The petitioner annexed to the letter the details of the sales expenditure incurred by it up to 31 8.1974 under various heads. On 27.3.1974, the petitioner had also filed a detailed statement in respect of some of the items of manufacture giving the $ale price, the discount and the selling expenses which worked to 47.94%. It was, Therefore, claimed that the wholesale cash price at which CMD marketed the goods included not only the manufacturing cost and the manufacturing profit but also a good part of the selling cost and selling expenses and it was urged that the price list which took note of these factors and excluded the selling cost and selling profit should be approved After this letter was written there was also an oral hearing by the Assistant Collector who ultimately passed an order on 7.5.1975 approving of the price list submitted by the petitioner and accepting the assessable value as declared by it. The letter specifically stated that this approval bad been given for a period of one year and that it had been given after taking into consideration all the evidence put up by the party including the certificate of the cost accountant and the judgment in the Voltas case. The approval thus granted was effective for the period 1.2.1974 to 31.1.1975.;