Law: Central Excise Act, (I of 1944)

Section:

  Central Excises and Salt Act (1 of 1944), S. 4-Value for purpose of assessmentWholesale cash price of goods sold for delivery at place of manufacture and at time of their removal therefrom less trade discount-Manufacturer introducing goods into market through distributors-Cannot be assessed on basis of amount actually received from distributors plus trade discount allowed by them to such distributors.   The assessee, a manufacturer of cigarettes sold their cigarettes for cash price to distributors. The distributors in their turn sold them to the wholesale dealers and the wholesale dealers passed them on to the market. From the cash price which the distributor had to pay when he received goods from the factory there was deducted a discount, part of which the distributor retained for himself, the other part being intended for the wholesale dealer to whom be sold the goods. The assessees were originally assessed on the basis of the amount which they actually received from the distributors, that is, the price fixed by them for the goods less the discount allowed. Subsequently the Inspector of Central Excise directed them to include the discount in the amount on the basis of which excise duty was assessed. In the writ petition filed by the assessees the Government was called upon to state the reasons for the demand of including the discount in the amount on which duty was to be assessed. The Government in reply stated that the distributor was not a wholesale dealer and the deduction permitted by section 4 of the Central Excises and Salt Act, 1944 is only the trade discount intended for such dealer and in the alternative it was contended that only that part of the discount should be allowed which was intended for the wholesale dealer.   Held, that the demand for additional duty made by the Excise Department was unjustified. The intention of the law is that excise duty should be paid by the manufacturers on the amount which they actually receive and it is on such amount that excise duty is to be levied. Section 4 of the Central Excises and Salt Act, 1944 does not speak of the wholesale dealer but only of the wholesale cash price and even where the…