A.L. Bahri, J. - (1.) M /s. Bata India Limited, a Company constituted under the Companies Act, a manufacturer of footwear in India, claims mandamus in this petition filed under Article 226 of the Constitution commanding the respondents to withdraw, cancel or rescind notice dated November 7, 1988 and proceedings initiated thereon and to direct the respondents to deduct amount of duty at the scheduled rate under the provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act') while applying Notification No. 49/86 -C.E., as amended by Notification No. 89/87 -C.E. The petitioner -Company has three manufacturing units in India. One of the units is situated at Faridabad in the State of Haryana. Prior to February 28, 1986 the duty was leviable as and at the rates set forth in the First Schedule to the Act. After February 28, 1986 such duty is leviable as and at the rates set forth in the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as 'the 1985 Act') - By virtue of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944 (hereinafter called 'the 1944 Rules'), the Central Government has been issuing notifications from time to time exempting from the payment of excise duty on all footwears value whereof did not exceed the specified amount. By notification dated July 24,1967, the aforesaid value was not to exceed Rs. 5/ - per pair of footwear to claim exemption from whole of the duty of excise. The aforesaid limit was subsequently increased to Rs. 15/ - on March 16, 1979, Rs. 30/ - on February 28, 1982, Rs. 45/ - on February 12, 1986 and Rs. 60/ - by Notification No. 89/87 -C.E., dated March 1,1987.
(2.) IN implementation of Notification No. 171/67 -C.E., dated July 24, 1967, the Assessing Authorities took the view that while determining value of the footwears for the purposes of granting exemption from the wholesale price indicated the amount of excise duty was not to be deducted and in this manner the value determined would be more than the minimum value mentioned in the notification and the assessee would not be entitled to claim exemption. This led the petitioner -Company to file three separate writ petitions in different High Courts. The Calcutta High Court accepted the contention of the Central Excise Authorities. Punjab and Haryana High Court dismissed the petition in limine. The Patna High Court allowed the writ petition accepting the contentions of the assessee, the present petitioner. The matter ultimately went to the Supreme Court in Bata Shoe Co. (P) Ltd. v. Collector of Central Excise and Ors. : A.I.R. 1985 Supreme Court 1070 : 1985 (21) E.L.T. 9 (S.C.). The petitioner Company had filed the appeals against the decisions of Punjab and Calcutta High Courts whereas the Department challenged the decision of the Patna High Court. The decision of the Patna High Court was affirmed holding that the value of the footwears in question calculated in accordance with the provisions of Section 4 of the Act did not exceed Rs. 5/ - per pair, the articles in question were exempted from the charge to duty of excise under the notification dated July 24,1967. It may be noticed that at that stage the duty involved related to the years 1967 and 1968 and provisions of Section 4 of the Act 1944 as it then existed were so interpreted. It was observed that before determining the question of availability of the exemption under the notification dated July 24, 1967, the first essential step was to determine the value of the article in the manner prescribed in Section 4 of the Act. The fact that on such a computation the article may ultimately be found to be exempted from excise duty does not have any bearing on the question of applicability of Section 4 of the Act for determining the value for purposes of duty. The expression "for the purposes" of duty occurring in Section 4 has a wide import. It was observed that : - "For all purposes connected with the determination of chargeability and levy of duty the provisions of the section are to be applied for computation of the 'value' of the article. Under the Explanation to Section 4, it is mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as payable on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in clause (a) are to be deducted from such wholesale price." It was after the decision of the Supreme Court aforesaid that the matter was again taken up by the Assistant Collector of Central Excise by issuing the impugned notice dated November 7, 1988, raising demand of excise duty on such like footwears with respect to applicability of Notification No. 49/86 -C.E., as amended by Notification No. 89/87 -C.E., dated February 12, 1986 and March 1,1987, respectively fixing value of the footwears at Rs. 45/ - and Rs. 60/ - respectively for the purposes of claiming exemption from excise duty.
(3.) THE contention of the learned counsel for the petitioner is that in view of the decision of the Supreme Court in Bata Shoe Co. (P) Ltd. v. Collector of Central Excise, Patna and Ors. : A.I.R. 1985 Supreme Court 1070 : 1985 (21) E.L.T. 9 (S.C.) for the purposes of determining value of the footwears manufactured by the petitioner in order to see whether the same are exempted from excise duty under the relevant notification, the petitioner -assessee is entitled to deduct from the wholesale price of the footwear chargeable at the time of the footwears being delivered at factory gate (i) trade discount, (ii) excise duty, (iii) packing charges and (iv) transport expenses. It is only such deemed value which is to be considered for the purposes of granting exemption. The stand of the department in the show cause notice and in the proposed assessment is that after amendment of Section 4 of the Act of 1944 only trade discount and excise duty is to be excluded in respect of such category of footwears whose price is ascertainable at the time of their leaving the factory gate.;