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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