D.M. Chandrashekhar, J. - (1.) IN these petitions under Article 226 of the Constitution the short question that arises for determination is whether the cost of packing dry cell batteries should be treated as a part of the assessable value of those goods for the purpose of levy of Central Excise duty.
(2.) THE petitioner is common in these three petitions. It is a public limited company engaged in manufacture, inter alia, of dry cell batteries. While approving the wholesale price list of the petitioner, the Assistant Collector had accepted the claim of the petitioner that the cost of packing materials in which dry cell batteries are packed, should be excluded in determining the assessable value of those goods for levy of excise duty. But, later he initiated proceedings under Rule 10 of the Central Excise Rules, 1944, to recover extra excise duty representing the cost of packing dry cell batteries and raised additional demands on the petitioner. His decision was affirmed by the Deputy Collector, Central Excise, Allahabad, and the Appellate Collector Central Excise, New Delhi, in the appeals preferred by the petitioner. The revision applications preferred by the petitioner against the above orders were also dismissed by the Government of India. In these petitions the petitioner has impugned the orders of the Central Excise authorities. These three petitions relate to three different periods, 4 -2 -1969 to 18 -9 -1969, 1 -10 -1969 to 30 -4 -1970 and 1 -5 -1970 to 17 -6 -1971. The petitioner's case is briefly as follows : The finished dry cell batteries are packed in card -board boxes or cartons, each box or carton containing about two dozen cells. About a dozen boxes or cartons are then packed in a wooden case, lined inside with water proof paper to protect dry cells from damage by water, moisture, rain etc., in the course of transport or storage. The wooden cases are nailed, strapped and sealed for convenient handling to provide adequate safeguard against pilferage or breakage in transit. Although dry cell batteries are thus sent to dealers in cartons or boxes, ultimately they are sold by dealers to consumers after testing the potency of the cells in the presence of consumers. The petitioner's wholesale price of batteries includes, inter alia, the cost of packing materials which on an average worked out to 4.5 per cent of such wholesale selling price. In determining the assessable value of these goods for levy of excise duty, such cost of packing should be deducted from the petitioner's wholesale price. In the counter -affidavit filed on behalf of the Central Excise authorities, the case of the authorities is briefly as follows: Excise duty is not levied on the cost of manufacturing only. On completion of manufacturing processes, the goods do not become marketable until they are in a packed form. Hence the cost of packing should be included in the price at which the goods are sold in the wholesale market. The packing preserves the dry cell batteries and make them marketable. They are sold in the wholesale market only in a properly packed form and not in a loose form. The assessable value of goods for the purpose of levy of central excise duty is the price charged by the manufacturers for the sale of goods in wholesale market. We shall now set out the relevant provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) and the rules thereunder. Clause (f) of Section 2 of the Act defines "manufacture" as including "any process incidental or ancillary to the completion of a manufactured product". Separate definitions of "manufacture" in sub -clauses (i) to (iv) of that clause with reference to certain goods like tobacco, salt and patent or proprietary medicines, have no application to the article with which we are concerned.
(3.) SUB -Section (1) of Section 3 of the Act provides, inter alia, that duties of Excise shall be levied and collected on all excisable goods produced or manufactured in India in such manner as may be prescribed and at the rates set forth in the First Schedule to the Act. Sub -section (2) of Section 3 provides that such duties of excise may be specific or ad valorem.;