MADRAS RUBBER FACTORY LTD. Vs. ASSISTANT COLLECTOR OF CENTRAL EXCISE AND ORS.

JUDGEMENT

(1.) THE appellant, The Madras Rubber Factory Ltd., Madras, is a company registered under the Companies Act with its registered office in Madras. It is engaged in the manufacture of automobile tubes, tread rubber both with and without cushion, and other rubber products sold under the name and style of 'Mansfield'. Its factory is located at Vadavathoor in Kottayam District in this State. It started its manufacture of rubber products from the financial year 1969 -70. Its products are supplied to its depots at various places throughout the country. In so doing, it has incurred expenses of storage, transportation, insurance, etc. In the matter of costing rubber, the practice seems to have been to strike the average price called the 'billing price' after taking into account all these heads of expenses, and to transfer to the depots the stock at the said billing price. The depots in their turn sell to the dealers or consumers.

(2.) THE question agitated in this petition is regarding the levy of excise duty on the articles produced and sold by the petitioner. In brief, the excise duty was sought to be levied on the value of the goods calculated after taking into account not only the post -manufacturing profit but also the post -manufacturing cost. The post -manufacturing costs and expenses taken into account comprise, as indicated, such items as freight, transportation charges, interest charges, travelling expenses of agents, insurance etc. The petitioner has 32 depots throughout the country. There are no factory gate sales but the sales are only through depots to dealers and consumers. The dealer is entitled to 7 1/2% commission from the consumer. Section 3 of the Central Excises and Salt Act, 1944 (referred to for convenience, where necessary, as the Act) provides for the levy of excise duty on excisable goods produced or manufactured in India at the rates set forth in the I Schedule. The Schedule I classifies the commodities and fixes the rates based on' the number, area, length, quantity or value. For instance, item 16 is "tyres", and, in the case of tyres, the excise duty is 40% ad valorem plus special duty at 20%.

(3.) SECTIONS 3 and 4 of the Central Excises and Salt Act as they stood prior to the amendment by Act 22 of 1973, read as follows :