Indirect Taxes

Excise & Customs – Case Law Update

1. New Swadeshi Sugar Mills vs. Commissioner of Central Excise, Patna {2007 (212) ELT 294 (S.C.)
   
   In the present case the appellants had filed an appeal against the order of the CESTAT under section 35L of the Central Excise Act, 1944. The appellant-assessee during the relevant year sold sugar molasses at the rate of Re. 1/- per quintal. According to the Department, during the relevant year, the Bihar Government had statutorily fixed the price of the said commodity at Rs. 15/- per quintal and therefore the assessable value ought to have been calculated at the rate of Rs. 15/- per quintal which was a statutorily fixed price under the Bihar Molasses (Control) Act, 1947. Sugar is an essential commodity under the Essential Commodities Act. The Appellants contended that under the Bihar Molasses (Control) Act, 1947, it was stipulated that no owner, manager or occupier of a factory shall sell molasses at a price exceeding those prescribed in Schedule A and Schedule B. In these Schedules and the Act, an outer ceiling limit was prescribed and the appellant-assessee was free to sell molasses at a price within the range of Rs. 1/- to Rs. 15/- per quintal. As such the appellant-assessee contended that the proviso (ii) to section 4(1) (a) of the Central Excise Act was not applicable to the facts of the case. The Hon’ble Supreme Court held that the Bihar Molasses (Control) Act, 1947 was a regulatory measure enacted in order to regulate the supply, storage and pricing of molasses produced by factories in the State of Bihar. The relevant provision of the Act which dealt with the price of molasses had not fixed a particular price. It had merely fixed a range/ceiling within which the factory was entitled to charge the price of molasses. The Apex Court held that in the above circumstances, proviso (ii) to section 4(1) (a) of the Central Excise Act was not applicable to the facts of the present case and the appellant-assessee’s appeal was allowed. The appellant-assessee was also awarded refund subject to them complying with the provisions of section11B of the Central Excise Act.
    

2. General Engineering Works vs. Commissioner of Central Excise, Jaipur {2007 (212) ELT 295 (S.C.)
   
   The issue in the present case is regarding the valuation of points and crossings manufactured by the appellants on job work basis on behalf of the Railways. The waste and scrap arising in the manufacturing process was not returned to the Railways but sold off by the appellants. The appellants contract with the Railways clearly indicated that the price (conversion charges) had been worked out on the basis that 5% wastage would be available to the appellants. This indicated that the price had been affected by the sale of scrap. The Hon’ble Apex Court hence held that in computing the value of points and crossings the value of scrap sold has to be taken into account. The Apex Court upheld the order of the Hon’ble Tribunal and dismissed the appeals filed by the appellants.
    

3. Wheels India Limited vs. Commissioner of Central Excise, Chennai {2007 (212) ELT 298 (S.C.)}
   
   The issue in the present case is that the appellants were clearing ‘Rim Assembly’ without payment of duty since 1st April, 1998. It was alleged that ‘Rim Assembly’ had been cleared at nil rate of duty on the assumption that the appellants were entitled to the benefit of Notification No. 76 of 1986 as parts of Animal Driven Vehicle (ADV). The Department had alleged in the Show Cause Notice that without disc there is no wheel in case of ADV hence the appellants were not entitled to the benefit of the Notification meant for Rim Assembly. There was no reply given to this particular aspect by the appellants. The Apex Court hence dismissed the appeal on the ground that there was absence of plea taken by the appellants in their reply to the Show Cause Notice. The Apex Court however did not go into the larger question of principles in case of the appeal.
    

4. Union of India vs. Mulder India (Private) Limited {2007 (212) ELT 219}
   
   In the present case the respondent-assessee had availed the benefit of Small Scale Industry in terms of the Notification No. 1/1993 dated 28th February, 1993. The Deputy Commissioner of Central Excise issued a show cause notice, denying the benefit of Small Scale Industry in terms of the Notification No. 1/1993 dated 28th February, 1993 and demanded the respondent-assessee to pay the appropriate duty. The same was confirmed in terms of the order dated 14th August, 1997. The respondent-assessee paid the same under protest. The respondent preferred an appeal against this order. The appeal was allowed. The appellate authority ordered consequential benefit in terms of the order dated 23rd October, 1999. In the light of the order of the appellate authority, the respondent filed an application seeking for refund of duty amount. The Hon’ble High Court rejected the Department’s Appeal on the ground that there was no unjust enrichment and refund was rightly claimed by the appellants.