TOSHIBA ANAND LAMPS LTD. Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) THE two original petitions by the same petitioner challenge the levy of excise duty under the Central Excise Act ('The Act') and have come before us on a reference made by a learned Judge on account of the importance of the questions raised by them. The circumstances under which the levy involved in the two cases came to be assessed are substantially similar but they require to be separately recited, for while in O.P. 3446 of 1976 the challenge is direct, in O.P. 5971 of 1975 the challenge is indirect as the petitioner's statutory remedy became barred by limitation before the filing of the petition. We shall start with the facts that are common to the two cases and indicate in sequence the special facts and questions involved in each.

(2.) PETITIONER is a Public Limited Company with its registered office in Cochin and its factory at Athani near Angamali where it manufactures electric lighting bulbs and fluorescent lighting tubes. These articles are excisable goods falling under Tariff Classification No. 32 (i) and (ii) of the 1st Schedule to the Act. The petitioner sells its products for delivery at the factory gate and also at its several sales depots situated all over India. The price for which the goods are sold to the dealers at the depots include the post -manufaturing expenses such as distribution expense, freight and selling profits. The, sale price which is called the list price is uniform all over India, notwithstanding the fact that the selling expenses incurred by way of freight, insurance etc. differ widely depending upon the distance of the sale point from the factory gate which is the place of removal. Before starting commercial production the petitioner assessed the market for electric lamps and tubes and felt that it would be difficult to market its entire production itself. On 6 -11 -1967 the petitioner entered into an agreement with Messrs, Crompton Greaves Limited ('Cromptons') for sale to them of 80%+10% of the petitioner's products for a period of 5 years The agreement has been produced as Ext. P1 in O.P. 3446. Under this agreement Cromptous were to deposit sum of Rs. five lakhs with the petitioner which was subsequently increased to Rs. 15 lakhs. On the deposit the petitioner has to pay interest at 3% above the bank rate. The petitioner allowed Cromptons a trade discount of 35% to 40% of the list price. The balance products were sold by the petitiouer to other wholesale dealers through its own sales organisation in different places all over India. In June 1970 the petitioner introduced what it has called quantity discounts. It approached Cromptons by its letter Ex. P2 dated 31 -5 -1970 to agree to this scheme and to terminate the obligations to sell or purchase 80%+10% of the production. Ext. P2 details the different rates of quantity discount proposed by the petitioner. By its letter Ext. P3 dated 3 -6 -1970 Cromptons accepted the variation. The quantity discount scheme was introduced with effect from 1 -7 -1970. Quantity discount was allowed to other wholesale dealers as well.

(3.) O .P. 5971 is concerned with the quantitative discount disallowed by the authorities for the period 1 -7 -1970 to 31 -3 -1971. In the petition besides the terms of the agreement with Cromptons the petitioner has set out the rates of quantity discount allowed to other wholesale purchasersdeduction of the discount allowed to the purchasers. The first respondent however approved only 25% in the case of bulbs and 30% on decoration lamps, Ext. P9 dated 28 -6 -1971 is his order. From this order the petitioner preferred an appeal which was dismissed by the third respondent under Ext. P3 -dated 28 -10 -1974 on the ground that it was barred by limitation. The petitioner preferred an unsuccessful revision before the Government of India challenging the appellate order on the merits and praying for condonation of the delay in filing the appeal. Ext. P6 dated 29 -8 -1975/11 -9 -1975 is the order in the revision. The . petitioner challenges those orders on the tame grounds as in the other original petition and asserts that despite the fact that the appeal was statute barred it is nevertheless entitled to challenge them in the original petition.