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The Collector Of Central Excise, Patna Vs. Tata Engineering and Locomotive Co. Jamshedpur [1997] INSC 525 (7 May 1997)

S.P. BHARUCHA, M. JAGANNADHA RAO

ACT:

HEADNOTE:

WITH

CIVIL APPEAL NO. 95 OF 1988 JU D G ME N T S.P. BHARUCHA, J.

The Revenue assails the correctness of thejudgment and order of the Customs,Excise and Gold (Control) Appellate Tribunal. The appeals involve the interpretation of Section 9 of the Industries (Development and Regulation) Act, 1951, the notification dated 28th December, 1983, issued thereunder andRules 2 and 3 of the Automobile Cess Rules, 1984. The relevant provisions are reproduced:- The Industries(Development & Regulation) Act, 1951:

"S.9.- Imposition of cess on scheduled industries in certain cases: (1) There may be levied and collectedas acess for the purposes of this Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government bynotified order a duty of excise at such rate asmay be specified in thenotified order a duty of excise at such rate asmay be specified in thenotified order, and different rates may be specified for different rates may bespecified for differentgoods or different classes of goods:

Provided thatno suchrate shall in any case exceed two annas per cent of value of the goods:

Explanation: In this sub-section, the expression "value" inrelation toany goods shall be deemed to be the wholesale cash price for which such goods of the like kind and quality are sold or are capable of being sold for delivery at the place of manufacture and at the time of their removal therefrom, without any abatement or deduction whatever except trade discount and the amountof dutythen payable.

(2) The cess shall be payable at such manner as may be prescribed, and in such manner as may be prescribed, and any rules made in this behalf may providefor the grant of a rebate for prompt payment ofthe cess.

(3) The said cessmay be recovered inthe same manner as an arrear of land revenue.

(4) TheCentral Government may handover the proceeds ofthe cess collectedunder this section in respect of the goods manufactured or produced by any scheduled industry or group of scheduled industries to the Development council established for that industry or group of industries, and whereit does so, utilise the said proceed:- (a) to promotescientific and industrialresearch with reference tothe scheduled industryor group ofscheduled industries in respect ofwhich the Development Council is established;

(b) to promoteimprovements in design and quality with reference tothe products ofsuch industry or group of industries;

(c) to provide for the training of technicians andlabourin such industry or group of industries;

(d) to meet suchexpenses in the exercise of its functions and its administrative expenses as may be prescribed." Notification No. S.O. 932 (E) dated 28.12.1983 "In exercise of the powers conferredby sub-section (1) of Section 9 ofthe Industries (Development andRegulation) Act, 1951 (65of 1951), the Central Government hereby specifies the classes of goodsmanufactured or produced in the scheduleindustry oftransportationas mentioned in column (1) of the Table below on which a duty of excise shall he levied and collected as acess for the purpose of the said Act with effect from 1st January, 1984 at the rate specified in the corresponding entry in column 5 (2) ofthe said Table.

T A BL E ----------------------------------- Description of Rate of duty class of goods of excise ----------------------------------- (1) (2) ----------------------------------- Motor cars, buses1/8 percent trucks, jeep-typead valorem vehicles, vans, scooters, Motor- cycles, mopeds and all other automobiles.

The Automobile Cess Rules,1984: - "R.2- Definitions. In these rules, unless the context otherwise requires,- (c) "Cess" means the cess levied and collectedin terms of Notification No. S.O. 932 (E), dated 28.12.1983 of Department of Heavy Industry issued under sub- section (1) of Section 9 of the Act;

(f) Words and expression used herein and not defined but defined inthe Central Excises and Salt Act, 1944( 1 to 1944) or the rules made thereunder, shall have the meaning respectivelyassigned tothem inthe Act or theRules.

R.3.- Application of Central Excise and Salt Act andthe Rules made thereunder: Save as otherwise provided in these Rules, the provisionsof Central Excises and Salt Act,1944 (1to 1944) and the rules made thereunder including those relating torefundof duty, shall, sofar as may, apply in relation to the levy and collection of the cess as they apply in relation to the levy and collection of the dutyof excise on manufacture of automobiles under the Act and the Rules." Itis contended bylearnedcounselfor theRevenuethat the cess must be levied at 1/8per cent of thevalue of the motor vehicle,the value being computed as explained in Section9(1). In other words, the valueof the motor vehicle for this purpose mustbe deemed to be the wholesalecash price for which it isor is capableof being sold for delivery at the place of its manufacture and at the time of its removal therefrom "without any abatementor deduction whatever except trade discount and the amountof dutythen payable".

Learned counsel for the assessee submits that the value of themotor vehicle for thepurposes of the levy of the cess has to be calculated inthe manner laid down in the CentralExcises and Salt Act,1944, for which purpose he places relianceupon Rule 3 of the Automobile Cess Rules.

The Tribunal in the order underappeal accepted the contention of the assessee and we are inclined to agree.

Section 9(1) of the Industries (Development & Regulation) Act, 1951, empowersthe levy and collectionof a cess on goodsmanufactured or produced ina scheduled industry at such rateas maybe specified by the Central Government, different rates being permissible for different goods or different classesof goods. The provision contemplates the exercise by the Central Government of the function of fixing the rate of the cess. The legislature, by the proviso to Section 9(1), has laid down the limits of the CentralGovernment discretion in fixing such rate, namely, that such rateshall not exceed two annas per cent of the value of the goods. It is for this purpose that the Explanation inSection9(1) defines the expression "value" and states that it shall be deemed to be the wholesalecash price for which such goods of the likekind and quality are sold orare capable of being sold for delivery at the place of manufactureand atthe time of their removal therefrom withoutany abatement or deduction whatever,except trade discount and the amount of duty thenpayable. The opening words of the Explanation makeit clear that it defines the expression "value" thus only for thepurposes of Section 9(1).

The definition of the expression "value" for the specific purpose of Section 9(]) does not, therefore, apply to thevaluation of goods tobe made for the purposes of computation ofthe cess underthe said notification. In other words, in calculating 1/8 per cent advalorem, the value of the goods is not to bedetermined as set out in the Explanation toSection9(1). For this purpose, what is relevant is Rule 3 of the Automobile Cess Rules, 1984, which states that the provisions ofthe Central Excises andSalt Act shall applyso far as may be in relation tothe levy and collection of the cess. The calculation of 1/8 per cent ad valoremof themotor vehicle for thepurposes of thelevy and collection of the cess must, therefore, be made as if it was excise duty that was being calculated andapplying the provisions of the Central Excises and Salt Act for the purpose.

Accordingly, the appeals fail and are dismissed,with no order as to costs.

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