BAWA POTTERIES, NEW DELHI AND OTHERS Vs. UNION OF INDIA AND OTHERS

JUDGEMENT

(1.) An interesting question concerning the interpretation of Section 4 of the Central Excises and Salt Act of 1944 (hereinafter called the Act) arises in this writ petition. The petitioners are M/s. Bawa Potteries (Manufacturers of China and Porcelain ware at a factory at Qutab near Mehrauli, Union Territory of Delhi) and the other two petitioners are the previous and present proprietors of the said manufacturing firm. After manufacture, the goods are sent or despatched to the Central Depot of the petitioners at Fatehpuri, Delhi, from where they are sent or despatched to the various dealers in and outside Delhi. The petitioners have their own sales organisations at Fatehpuri, from where the goods are sold, the same price level of the manufactured goods is maintained throughout this country. The retailers' price list, therefore, is burdened with and comprises of various expenses such as establishments, advertisement, distribution, cartage, railway freight, special packing charges, if any, and insurance covering breakage. Accordance to the petitioners they have no price list showing the ex-factory prices or wholesale cash price of their goods since the goods are not sold ex-factory but only through their sales organisations at Fatehpuri. They are also no independent wholesale dealers who sell the petitoners' goods. The distributors and agents are paid remuneration in the form of discount, namely, trade and cash discounts.

(2.) The point that is involved in this petition is whether the petitioners are entitled to deduct anything more than five per cent for cartage and twenty five per cent for trade discount, making in all thirty per cent, in order to arrive at the wholesale value, which alone can be taken into account for the purposes of levying excise duty, the wholesale price being computed according to the principles set out in Section 4 of the Act. It is sufficient to notice at this stage that the further items which are claimed to be deducted from the prices mentioned in the retail price list over and above the two items allowed by the Excise Authorities are :- <FRM>JUDGEMENT_27_LAWS(DLH)5_1969(1).html</FRM>

(3.) I may also point out that in so far as the percentage claimed on the above said deductable item is concerned, there could be no serious Controversy, as a fact. because the petitioner company has been utilising the services of a Chartered Accountant of standing and the above figures have been worked out for the assessment period, namely 1962-63 in accordance with the figures mentioned by the Chartered Accountant and there is no evidence couta. There is no attack on the retail price list. What is seriously controversed in this writ petition by the revenue is the principle that is to be adopted in the matter of arriving at the wholesale figures, in terms of Section 4 or otherwise. It will also be material to note, in this connection, that previously the mode of assessment was different; the wholesale price was arrived at by working it out on the basis of the retail price.