Markfed Vanaspati and Vs. Union of India (Uoi) and anr. - Court Judgment

Excerpt:

held: valuation (excise) - vanaspati--packing--containers--tins & polypacks--whether cea: section 4 is ultra vires--the issues raised in this petition are no longer res integra. the supreme court has held, in the case of uoi and ors. v. atic industries ltd. 1984 ecr 1437 (sc) : ecr c 710 sc, that the provisions of sub-section (4) of cea: section 4 are valid and not outside the legislative competence of parliament. hence the challenge to the vires of section 4 fails. the question of whether the value of the container and the packing are to be included in the assessable value of the goods is covered by the supreme court judgment in the case of uoi and ors. v. bombay tyre international ltd. etc. 1983 ecr 1627 d (sc) : ecr c 663 sc, where it has been held that packing being necessary in order to render the product marketable, the value of such packing has to be included in the assessable value of the goods. therefore the value of tins and polypacks used for packing vanaspati cannot be excluded from its assessable value. cea: section 4(4)(d)(i).;petition dismissed. - .....of vanaspati are liable to excise duty under the central excises and salt act, 1944 (hereinafter referred to as the act).2. the petitioner is a manufacturer of vanaspati which is a vegetable product classified under item no. 13 of the first schedule to the act. vanaspati is packed either in tins or polypacks. the cost of the tins and packing charges are included in the cost of the product. therefore, the authorities under the act demanded the excise duty from the petitioner on the cost of the containers and also on packing charges. the said action of the authorities has been challenged in this writ petition. challenge to section 4 of the act was also made in this writ petition.3. the points covered in this petition are no longer res integra. it has been held in union of india and ors. v. atic industries ltd. : 1984(17)elt323(sc) that the provisions of sub-section (4) of section 4 are valid and they are not outside the legislative competency of parliament under article 246 of the constitution read with entry 84 in the union list. therefore, the challenge to sub-section (4) of section 4 of the act cannot be sustained.4. the question whether the cost of the container and the.....

Judgment:

ORDER

T.H.B. Chalapathi, J.

1. The controversy in this writ petition is whether the cost and expenses of packing and handling of vanaspati are liable to excise duty under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act).

2. The petitioner is a manufacturer of vanaspati which is a vegetable product classified under Item No. 13 of the First Schedule to the Act. Vanaspati is packed either in tins or polypacks. The cost of the tins and packing charges are included in the cost of the product. Therefore, the authorities under the Act demanded the excise duty from the petitioner on the cost of the containers and also on packing charges. The said action of the authorities has been challenged in this writ petition. Challenge to Section 4 of the Act was also made in this writ petition.

3. The points covered in this petition are no longer res integra. It has been held in Union of India and Ors. v. Atic Industries Ltd. : 1984(17)ELT323(SC) that the provisions of Sub-section (4) of Section 4 are valid and they are not outside the legislative competency of Parliament under Article 246 of the Constitution read with Entry 84 in the Union List. Therefore, the challenge to Sub-section (4) of Section 4 of the Act cannot be sustained.

4. The question whether the cost of the container and the packing are liable to excise duty is also covered by the decision of the Supreme Court in Union of India and Ors. v. Bombay Tyre International Ltd. and etc. : 1983ECR653D(SC) . It has been held therein that the expression 'manufacturer' is related to the taxable event and refers to a process which enters into the character of the article while 'packing' has been defined by Section 4(4)(d)(i) in relation to the value of the article. It has also been observed that packing is also necessary to make the excisable article marketable and that the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself, and for the secondary packing, it is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market for the purpose of excise levy. Therefore, the Supreme Court held that the cost of secondary packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate. In view of the decision of the Supreme Court, the writ petition is liable to be dismissed.

5. The writ petition is accordingly dismissed. However, there will be no order as to costs.