MANU/SC/0403/1991Equivalent Citation: AIR1991SC1784, 1991ECR289(SC), 1992(60)ELT671(S.C.), JT1991(3)SC108, 1991(2)SCALE58, (1991)3SCC467, 2SCR960, 1991(2)UJ260IN THE SUPREME COURT OF INDIACivil Appeal No. 3401 of 1988Decided On: 16.07.1991Appellants:M/s. Burn Standard Company Ltd. and another Vs.
Respondent: Union of India and othersHon'ble Judges/Coram:
K. N. Singh and Kuldip Singh, JJ.Counsels:
For Appellant/Petitioner/Plaintiff: Shankar Ghosh, Naresh Bakshi and K.D. Prasad, AdvsFor Respondents/Defendant: Ashok H. Desai, P. Parmeshwaran and A. Subba Rao, Advs.Subject: ExciseCatch WordsMentioned INActs/Rules/Orders: Central Excises and Salt Act, 1944 - Section 2, Central Excises and Salt Act, 1944 - Section 3, Central Excises and Salt Act, 1944 - Section 4;Constitution of India - Article 226Cases Referred: Empire Industries Ltd. and Ors. v. Union of India and Ors. MANU/SC/0186/1985; Ujagar Prints and Ors. v. Union of India and Ors.MANU/SC/0305/1986Prior History: From the Judgment and Order dated 2.2.1988 of the Calcutta High Court in Original Order Tender No. (F.M.A.T.) No. 181 of 1987Case Note:
Excise - duty - Sections 2, 3 and 4 of Central Excise and Salt Act, 1944 - whether excise duty under Sections 3 and 4 to be charged on invoice-value of wagon or on value of completed wagon including that of 'free supply items' - without fixing free supply items production and manufacture of wagon would not be effectively completed - value of manufactured goods must be determined at factory gate at stage when wagons leave factory with manufactured goods - value of 'free supply items' should be included in assessable value of wagons manufactured by appellant.Citing Reference:
Dissented 2ORDERKuldip Singh, J.1. M/s. Burn Standard Company Limited, the appellant before us, is one of the leading manufacturer of wagons. The wagons manufactured and produced by the appellant are primarily supplied to the Railway Board. The wagons are manufactured in accordance with the specifications, terms and conditions contained in the agreements entered between the appellant and the Railway Board from time to time. It is the admitted case of the parties that the Railway Board supplies wheel-sets, axle boxes and various other finished components of wagons to the appellant which are termed as "free supply items". These items are not manufactured by the appellant. The readymade "free supply items" are made available to the appellant by the Railway Board without charging any price. These items are fitted in the wagons manufactured by the appellant and are ultimately supplied to the Railway Board. The invoice-value of the wagon charged by the appellant from the Railway Board does not include the value of the "free supply items".2. On the above facts, the short question for our determination is whether the excise duty under Sections 3 and 4 of the Central Excises and Salt Act, 1944 (hereinafter called 'the Act') is to be charged on the invoice-value of the wagon or on the value of completed wagon including that of the "free supply items".3. The central excise authorities issued various show cause notices in respect of different transactions calling upon the appellant to show cause as to why the excise duty be not computed and charged on the value of the completed wagon including that of the "free supply items". The appellant challenged the show cause notices by way of writ petition under Article 226 of the Constitution of India before the Calcutta High Court which was heard by a learned Single Judge who allowed the writ petition and quashed the demand raised by the central excise authorities. The learned Judge came to the conclusion that the excise duty could only be charged on the basis of the invoice-value under the contract. The learned Judge based his conclusions on the following reasoning:There is no dispute that certain items of finished components are supplied by the Railway Board to the petitioner. The value of these...