TRAVANCORE ELECRO-CHEMICAL INDUSTRIES LIMITED Vs. ASSISTANT COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) IN view of the difficult but interesting questions that arise for determination in this Original Petition this case has been referred by a Division Bench for decision by the Full Bench. Section 4 of the Central Excises and Salt Act, 1944 as it stood at the relevant time provided that where any article is chargeable with duty at a rate dependent on the value of such article such value shall be deemed to be the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty. It may happen, as it has happened in the case before us, that sale in wholesale of substantial part of the goods produced may be effected to a customer at a price much less than the price at which the goods are sold to other customers in the usual course of business. That may be for reasons such as that such customer is a standing customer, who takes the bulk of the production or that a long standing agreement is in force in regard to supply to such customer. There may be no extra commercial considerations in effecting the sales to such custo - mer at a lower price. Could it be said that the wholesale price in respect of such sales should be based on the price at which goods were sold to such customer or should the higher price at which the goods were sold to other customers be the basis for determining the duty ? Had the case arisen for decision under Section 4, as it now stands substituted by Central Act 22 of 1973, which conceives of such a situation it would not have been difficult to decide it. The provision envisages taking into account the different normal prices at which the goods are sold in wholesale trade. But the said amendment having come into force only on 1 -10 -1975 that will have no relevance to thc - case before us, as the case relates to claim for duty for sales effected during an earlier period.

(2.) THE petitioner is a Public Limited Company, the Travancore Electro - Chemical Industries Limited, Chingavanam. The petitioner company manufactures Calcium Carbide in its factory at Chingavanam. The sales by the company are said to be effected on a wholesale basis to different purchasers and the goods are delivered at and removed from the factory. It is averred by the petitioner that it is the normal practice of the wholesale trade in Calcium Carbide produced in the factory to effect sales of Calcium Carbide even of the same sizes at different prices to different classes of buyers.

(3.) ON 28 -6 -1972, the Superintendent of Central Excise, Kottayam issued a show cause notice (copy of which is Ext. P 1) to the petitioner pointing out that there was short levy of excise duty in regard to 13918.6O5 metric tonnes of Calcium Carbide or various sizes as detailed in the work sheet attached thereto. The short levy according to the notice came to Rs. 251,684.85. This concerned the Calcium Carbide cleared from the factory between 1 -3 -1970 and 31 -5 -1972. Evidently the stand taken in Ext. PI was that it was not the price shown in the price lists that had to be adopted for assessment to duty but the highest price shown for each category of the goods mentioned in the price lists.