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PETITIONER: THE COLLECTOR OF CENTRAL EXCISE,PATNA

       Vs.

RESPONDENT: TATA ENGINEERING ANDLOCOMOTIVE CO. JAMSHEDPUR

DATE OF JUDGMENT:       07/05/1997

BENCH: S.P. BHARUCHA, M. JAGANNADHA RAO

ACT:

HEADNOTE:

JUDGMENT:     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

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    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

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    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

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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.