K. S. SIDHU J. - (1.) THE three writ petitions listed above raise a common question of law, and may therefore be disposed of by a common judgment. THE question of law requiring decision is whether the definition of "value", as given in Sec. 4 (4) (d) of the Central Excises and Salt Act, 1944, which makes the cost of packing of excisable goods, deliverable at the factory gate, except the cost of packing which is of a durable nature and is returnable by the buyer to the assessee, includible in the value of such goods for purposes of levy of duty of excise thereon, in ultra vires the Constitution and also contravenes section 3 of the said Act. It has arisen in the following circumstances.
(2.) THE Central Excises and Salt Act, 1944, (hereinafter to be referred to as the Act) which consolidated and amended the law relating to Central duties of excise and to salt came into force on February 28, 1944. Section 3 of the Act which makes provision for levy of duties of excise lays down that such duties shall be levied and collected on all excisable goods other than salt produced or manufactured in India in such manner as may be prescribed and at the rate set forth in the First Schedule. "vegetable product" is one of excisable goods specified as such in item 13 of the First Schedule. "vegetable product" as defined therein means any vegetable oil or fat which has, by hydro-genation or by any other process, been hardened for human consumption. "vegetable product" is chargeable with duty at the rate of ten per cent ad valorem. Section 4 of the Act which deals with valuation of excisable goods for purposes of charging duty of excise was amended with effect from October 1, 1975. THE amended section lays down, inter alia, that where duty of excise is chargeable with reference to value, such value shall, subject to other provisions of the section, be deemed to be the normal price thereof, that is to say, the price at which goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the factory gate. Section 4 (4) (d) defines "value" as under:- 4 (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, seal or warp 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. The petitioner, M/s. Ramnugar Cane and Sugar Company Ltd. is a manufacturer of vegetable products having its factory in Jhotwara, Jaipur The vegetable products are marketed by the petitioner in tin containers under the brand names of "maharaja", "veena", "raman", and "ladla". The petitioner has been paying duty of excise on those products on a valuation including the cost of containers. Its case is that such payments were made erroneously, and that, in law, cost of packing is not includible in the value of excisable goods for purposes of charging duty of excise. It filed writ petition (D. B. Civil Writ Petition No. 460 of 1981) challenging the constitutionality and legality of the definition of "value" given in section 4 (4) (d) and reproduced above. The petitioner avers that section 4 (4) (d) of the Act, especially its sub clause (i) is "ultra vires the Constitution of India and in contravention of the said Act (i. e. the Central Excises and Salt Act, 1944)". It further avers that according to section 3 of the Act, which it referred to as 'charging section", read with item 13 of the First Schedule, duty of excise is chargeable on "vegetable product", and that since tin containers in which the vegetable product is marked are not the same thing as vegetable product, no duty is chargeable on the tin containers under section 3. Section 4 (4) (d) which is described by the petitioner as the "machinery section" and which makes provision for the cost of packing to be included in the value of excisable goods is challenged on the ground that it contravenes the charging section i. e. sec. 3. Another ground of challenge to this section is that if allowed to stand it would be tantamount to allowing Parliament to levy tax on the sale or purchase of tin containers, for, it is further alleged, the petitioner does not manufacture the tin containers and instead purchases them from the market for filling them with vegetable product and marketing such product in that manner. It is contended that since the petitioners, does not manufacture the tin containers, the duty levied on the cost of such containers cannot legitimately be described as duty of excise within the ambit of entry 84 List I Seventh Schedule of the Constitution. It is further contended that the real character of such duty is no different from a tax on sale or purchase of such containers which is a subject exclusively reserved by entry 54, List II, Seventh Schedule of the Constitution for legislation by a State Legislature. It is on these averments that the petitioner prays in this writ petition (No. 460 of 1981) for a declaration to the effect that section 4 (4) (d) (i) of the Act which widens the concept of value of excisable goods so as to include the cost of packing is ultra vires the Constitution and the Act, for injunction restraining the respondents from levying and collecting duty of excise on cost of packing of vegetable product to be marketed by the petitioner and for refund of the amount already levied and collected in that behalf since October 1, l975. The petitioner filed another writ petition (D. B. Civil Writ Petition No. 1415 of 1981) a few months after the institution of the aforementioned writ petition in respect of the same subject matter. The occasion to file the second writ petition arose because, according to the petitioner the excise authorities refused to exclude the cost of containers from the value of its vegetable products for purpose of charging duty of excise notwithstanding the fact that the petitioner began to market such product, with effect from June 16, 1981, on the condition that the containers are of a durable nature and returnable by the buyer to the petitioner. The third writ petition on hand (D. B. Civil Writ Petition No. 236 of 1982) was filed by M/s Rohtas Industries Ltd. on February 8, 1982. The petitioner, M/s Rohtas Industries Ltd. is also a public limited company, incorporated under the Indian Companies Act, 1956. One of the factories of the petitioner, situate at Durgapura, Jaipur, manufactures vegetable products (vanas-pati) which are marketed by the petitioner under registered trade marks Ashoka' 'hanuman' and Lagan', in tin containers of the capacity of 16. 5 kg , 4 kg. and 2 kg, and polythene containers of the capacity of 4 kg, 2 kg and 1 kg. Having regard to the fluctuations in the market price of vegetable products, the Collector, Central Excise Jaipur, allowed the petitioner to declare the price of the goods transacted on the gate pass, and to determine the duty payable on such goods on the basis of the declared price, in accordance with the provisions of rule 173-C, Central Excise Rules, 1944. Till October, 1979, the petitioner kept including the cost of tin and polythene containers in the declared price of its vegetable products, and paying duty on that basis. On October 5, 1979 the petitioner made a representation (Annexure 1) to the Assistant Collector, Central Excise. Jaipur, stating that according to recent rulings of some of the High Courts in the country cost of packing is not includible in the value of excisable goods for determining the duty payable on such goods and that therefore the petitioner Would stop including such cost in the value of the vegetable products to be declared in the gate pass with effect from October 9, 1979. The excise authorities did not accept the contention of the petitioner and advised it to continue including the cost of containers in the value of its vegetable products as it had been doing in the past. The petitioner stuck to its earlier position, but continued to pay, under protest, the requisite duty on its vegetable products inclusive of the cost of containers as before. The matter came to ahead on January 5. 1982, when the petitioner began to exclude the cost of containers from the declared price in the gate-pass, and thus refused to pay duty on the cost-of-packing component of its vegetable products. The Assistant Collector Central Excise, Jaipur, visited the petitioner's factory on January 27, 1982, and made a direction in writing requiring the petitioner to pay duty on its vegetable products including the cost of containers. The petitioner again paid such duty under protest and filed the present writ petition claiming a refund of the entire amount, paid by him from time to time since October 1, 1975, as duty on the cost-of packing component of the value of its vegetable products and further praying for an injunction restraining the Collectorate of Central Excise Jaipur and the Union of India from levying and collecting duty in future on the cost-of packing component of the vegetable products to be manufactured and marketed by it. The grounds on which the levy of duty of excise on containers lis challenged by the petitioner are similar to the grounds on which such levy is challenged in the two connected petitions The said grounds have already been stated above and need not therefore be repeated here.
(3.) THE petitioner also made a relatively minor grievance in respect of the alleged demand on it by the excise authorities to pay excise duty on the freight and distribution expenses of its vegetable products. Mr. Dave, learned counsel for the respondents however stated that duty of excise will be charged to the petitioner only on the value of its vegetable products including the cost of packing and that all costs incurred by the petitioner after the goods leave its factory gate, like freight and distribution expenses, have not been charged in the post, and will not be charged in future, with excise duty. We need not therefore dilate on the petitioners' grievance regarding the alleged demand of the respondents for payment of duty on freight and distribution expenses. Another controversy of a minor nature relates to the contention, raised in all the three petitions, to the effect that tin containers in which their respective vegetable products are marketed by the petitioners are of a durable nature and are returnable by the buyers to the petitioners and that, therefore, even according to section 4 (4) (d) (i) of the Act, assuming the same is constitutional and valid, cost of such containers is not includible in the valuation of the vegetable products delivered to the wholesale buyers at the factory gate. The question whether tin containers any polythene containers of the capacities ranging between 1 kg and 16. 5 kg. are of a durable nature and are returnable by the buyer to the petitioners is obviously a question of fact which should be left open to be decided by the Central Excise authorities under the Act after hearing both sides We would however like to observe that ordinarily tin containers and polythene containers of small capacities like 1 kg. , 2 kg. 4 kg. and 16. 5 kg. are not by their very nature durable and are seldom returnable by the buyer to the manufacturer. Such small sized containers are prima facie intended to serve diverse functions like facilitating ready measurements, labelling of brand names, printing or inscribing sale-promotion material on the label or the containers themselves, prevention of physical deterioration, theft, adulteration or substitution in transit till the vegetable product reaches the consumers. If the vegetable product were to be sent out from the factories contained in big galvanised-steel drums, one should normally be willing to accept that such drums are of a durable nature and if they are returnable by the wholesale buyers to the manufacturer their cost cannot be included in the value of the vegetable product for purpose of charging duty of excise. There is however, all the difference between big galvanised-steel drums on one side and small polythene containers and tin containers on the other. Having said all this, we would once again utter the caveat that the question whether the containers involved in these writ petitions are of a durable nature and returnable should be decided by the Central authorities concerned on the basis of evidence produced before them and without letting our tentative observations influence their judgment. This brings us to the main question which falls for determination in these writ petitions. As already stated, the question is whether the definition of "value", as given in section 4 (4) (d) of the Act, which makes the cost of packing of excisable goods deliverable at the factory gate, except the cost of packing which is of a durable nature and is returnable by the buyer to the assessee, includible in the value of such goods for purposes of levy of excise duty thereon, is ultra vires the Constitution and also contravene section 3 of the Act. It will be convenient to first deal with the argument to the effect that the definition is void inasmuch as it contravene the provisions of section 3 of the Act. The argument in a nut-shell is that section 3 which, according to counsel is the "charging section" read with item 13 of the First Schedule provides for levy of duty of excise on "vegetable products" at the rate of 10 per cent ad valorem and that section 4 (4) (d) which is said to be the "machinery section" cannot be so read as to treat an article like containers as part and parcel of 'vegetable products" for valuation of such products for purposes of levy of duty of excise It is contended that according to section 3 read with item 13 of First Schedule, it is only "vegetable products" which are subject to duty of excise at the rate of 10 per cent ad valorem and not their packing and that therefore it would amount to a contravention of section 3 if "packing" were to be subjected to such duty by including the cost of packing in the value of the vegetable product. ;