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Bombay High CourtIndian Cases

National Radio & Electronics Co. Ltd. vs Union Of India And Another on 26 October 1982

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Bombay High Court
National Radio & Electronics Co. Ltd. vs Union Of India And Another on 26 October, 1982
Equivalent citations: 1983ECR77D(BOMBAY), 1983(12)ELT214(BOM)
Author: S.P. Bharucha
Bench: S.P. Bharucha
JUDGMENT
1. The petition challenges an order of the second respondent dated 1st July, 1981 disallowing the deduction claimed by the petitioners for post-manufacturing expenses in arriving at the assessable value of their products for the purposes of excise duty. It also challenges orders refusing refunds of excise duty collected upon a value which took post-manufacturing expenses into account.

2. It is not disputed by Mr. R. L. Dalal, learned counsel for the respondents, that the orders are invalid, having regard to several decisions of this court. Such details as are now set out are with reference to the suo motu contempt notice I propose to issue against the second respondent.

3. The second respondent’s order dated 1st July, 1981, was passed after he had been apprised of the law relating to post-manufacturing expenses as laid down by this court. Yet the order says this :-

“It is observed that the goods in question are sold by M/s. NELCO in the course of wholesale trade for delivery at the time and place of removal i.e. factory gate. Since the normal prices under Section 4 is ascertainable. The same would form the basis for the purpose of assessment of Excise Duty. As per Section 4 only deduction allowed from the wholesale price is on account of taxes and the trade discounts (such discount not being refundable on any account and allowed the grants with the normal practice of the wholesale trade at the time of removal). As such, the deduction on account of “post-manufacturing Expenses” as claimed by the party cannot be allowed. As far as party’s contention regarding various High Courts cases concerned, it may be mentioned that there have been differing High Court’s decisions on the subject.”
4. When the petition came up for admission Mr. M. I. Sethna, learned counsel then appearing for the respondents, explained that since appeals had been filed in the Supreme Court by the respondents against the said judgments of this court respondents were unable to take what he described as a contrary view. In the affidavit filed on behalf of the respondents in reply to the petition it is, however, admitted that the respondents are bound by the law as laid down by this court in respect of post-manufacturing expenses.

5. The second respondent, when he passed the impugned orders has been made aware of what the law was as laid down by this court in respect of post-manufacturing expenses. He was bound to follow that law. He did not do so. He is, prima facie, in contempt.

6. The petition is made absolute in terms of prayer (a). The respondents shall within 4 weeks from today determine what deductions the petitioners are entitled to on account of post-manufacturing expenses and shall refund to the petitioners the amount of excise duty collected by the respondents thereon within a further 2 weeks. The petitioners shall be permitted to clear their products until it is determined what deductions on account of post-manufacturing expenses they are entitled to upon the basis of their statements as to post-manufacturing expenses. The respondents shall pay to the petitioners the costs of the petition. Rule accordingly.

7. Notice shall issue to the second respondent to show cause why he should not be proceeded against for contempt of the court in that he knowingly failed to follow the law laid down by this Court when he passed the orders impugned herein.