Sabyasachi Mukherji J. - (1.) The subject matter of challenge in this application under Article 226 of the Constitution is determination of assessable value of certain chemicals under Central Excises and Salt Act, 1944.
(2.) The petitioner carries on the business in the manufacture and sale, inter alia of Rubber Processing Chemicals such as Accelerators and Antioxidants, which in turn are mainly used for the manufacture of rubber goods like automobile tyres and tubes footwear, belting poses etc. Some of the said Chemicals are also used by the petitioner for what is commonly known as captive consumption in the manufacture of other special accelerators and antioxidants. Approximately 90% of the sales of the said Chemicals are made in bulk by the petitioner directly to the consumers throughout India, namely, Dunlop India Limited, Firestone Tyre and Rubber Co. of India (Pvt.) Ltd., Ceat Tyre of India Ltd. Madras, Rubber Factory, Inchek Tyres Ltd., Premier Tyres Ltd., Goodyear India Ltd. and Bata Shee Co. Ltd. The remaining quantity is sold through a network of Stockists located in various parts of India having dealings with rubber goods manufacturers operating in smaller scale. The petitioner has no sole selling agent for the said Chemicals. The petitioner has, however, appointed three stockists in Bombay region and two each in Delhi, Calcutta and Madras regions. The petitioner has also regional selling offices at Bombay, Delhi, Calcutta and Madras. The petitioner maintains all India selling prices on a uniform scale being the petitioner's list prices in respect of the said chemicals. All sales made by the petitioner are at the list prices. The stockists, however, are allowed 2 1/2% commission and/or discount on the said prices. The cost of packing/freight/handling/service charges etc. upto the point of sales form the four regional selling offices are included in the selling prices. By virtue of the Finance Act, 1973, the said chemicals, namely, accelerators and antioxidants became excisable under Item 65 of the First Schedule of the Central Excises and Salt Act, 1944 with effect from the 1st April, 1973. The said chemicals were cleared by the petitioner under self removal procedure laid down in Chapter V1I-A of the Central Excise Rules, 1944. The petitioner was maintaining an account current commonly known as P.L.A., in which the amounts deposited are credited. The amounts are deposited in the Treasury from time to time in order to cover the Excise duty payable on the Chemicals. At the time of clearance of the said Chemicals the duty payable thereon is debited in the said account current. The petitioner has also been filing monthly returns in what is known as Form No. RT-12 in respect of clearance of the said Chemicals under which the petitioner was provisionally assessed. On or about the 30th March, 1973 the petitioner furnished a bond for Rs. 20,000/-guaranteed by the National and Grindlays Bank. According to the petitioner the said Chemicals are not sold at the factory gate of the petitioner at Rishra in the normal course of business. The nearest place of sale of the said Chemicals in Calcutta.
(3.) By its letter dated the 12th March, 1973 the petitioner submitted to the respondent No. 4 its price list in respect of the said Chemicals for approval as required under Rule 173C of the Central Excise Rules, 1944. By the said letter the petitioner slab indicated that it would clear the said Chemicals pending approval of the price list upon payment of the Excise duty on the assessable value of the said Chemicals as determined by the petitioner and shown in the enclosure thereto. The said enclosure has been annexed to the petition. It appears that in the said enclosure the p2titioner has indicated under column 5 ex-factory wholesale cash price excluding Central Excise duty. The petitioner has also given a chart to show how the assessable value has been computed. In that chart the petitioner has indicated the list price in Column A and under Column B the petitioner has indicated what according to the petitioner was the post manufacturing expenses as per actual (details being attached) which amounted to Rs. 55 lakhs and the petitioner calculated the average for India at the rate of 13.8% of the list price. Under Column C selling profit as per actuals has been indicated which has been averaged at 8% of the list prices and under Column D the assessable value has been computed in rupees after deducting from A both the figures mentioned at B and C. The petitioner has also indicated what according to the petitioner was the details of the post manufacturing expenses leased on 1971 and 1972 actuals. In the analysis of the said details, the petitioner has mentioned the expenses on account of realization, packing material, technical fee, freight, distribution and selling profit. The petitioner has also indicated the percentage of post manufacturing expenses to realization which the petitioner has computed at 13.87 and the percentage of selling profit to realization, which the petitioner has computed at 6.8%.;