TaxTMI 
TaxTMI 
1984 (9) TMI 282
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....the midnight of 28/29th May, 1971. With effect from 16-12-1977, these goods were exempted from duty, and there is no controversy from that date. 4. Appeal No. 239/79A before us relates to the period 29-5-1971 to 30-9-1975. Appeal No. 377/79A relates to the period from 1-5-1977 to 15-12-1977. 5. At the relevant time, the appellants carried on their operations under the name of Caltex Oil Refining (India) Ltd. The name was subsequently changed to Hindustan Petroleum Corporation Ltd. It will be convenient to refer to them in this order as "Hindustan Petroleum". 6. The basic facts as explained in the appeal No. 239/77 and orally before us by Shri Bhave, who appeared before us for the appellants, are that the appellants supplied duty-paid base oils or blended oils falling under Item 11B to Messrs Balmer Lawrie & Co., Bombay. The latter used these as raw materials and manufactured compounded lubricating greases. For this service Messrs Balmer Lawrie were being paid remuneration at an agreed rate. The manufacture took place in the bonded warehouse of Balmer Lawrie under their L-4 manufacturing licence. All excise formalities such as filing classification and price-....
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....for further manufacture. 8. The Assistant Collector referred to a decision of the Bombay High Court that the cost of packing material could not be included in the assessable value of a commodity. He however differentiated the present case on the ground that the cost of packing material in the other case was special packing whereas in this case the packing was of routine nature. 9. In the result, the Assistant Collector demanded differential duty on the cost of repacking of the goods in the premises of the appellants. He also directed that the differential duty be paid only on that part of the goods as was actually repacked into smaller containers. 10. The appellants filed an appeal to the Appellate Collector of Central Excise, Bombay. The Appellate Collector observed that the entire question of deciding whether Hindustan Petroleum or Balmer Lawrie were the manufacturers was a futile exercise. The relevant factor was the value at which the duty had to be paid on the goods manufactured by Balmer Lawrie. This value had to be determined under Section 4 of the Central Excises and Salt Act. He observed that the price of grease at which duty had been charged from B....
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....ntial duty merely on the ground that the goods were subsequently repacked in smaller containers in premises other than the petitioners' factory before they were sold. In this view the Government of India allowed the revision application. 13. Shri Bhave pointed out that Balmer Lawrie had filed a price-list for the goods. It was clearly stated therein that the goods were "sold by Caltex as the product is manufactured for them". The price-list was duly approved by the Assistant Collector. Shri Bhave submitted that the value declared by Balmer Lawrie in the price-list was the price as fixed by the Government of India and therefore it was also the value at which any other person including the present appellants could sell the goods. Therefore, the assessable value was the proper and correct one. The levy of duty was also at the correct stage, namely at the stage of clearance after manufacture by Balmer Lawrie. This had also been recognised in the Order-in-Appeal. 14. In the case covered by Appeal No. 377/79A, the issues were similar but the facts were slightly different. This case related to lubricating greases manufactured for the appellants from their base greases by B....
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....er Lawrie were clearly manufacturing the goods only for the appellants who therefore should be regarded as the manufacturer. Shri Jain referred to the decision of the Gujarat High Court in the case of Jamnadas Chhotalal Desai and Others v. C.L. Nangia and Others (AIR 1965 Gujarat 215) wherein it had been held that the definition of "manufacturer" in Section 2(f) of the Central Excises and Salt Act would include a person who does not himself employ labour but engages himself in the production or manufacture of goods through an independent contractor. According to him, in the present case Hindustan Petroleum was the manufacturer and Balmer Lawrie was an independent contractor, and the duty paid by Balmer Lawrie was on behalf of Hindustan Petroleum. 18. Shri Jain also referred to the judgment of the Supreme Court in the case of Messrs Shree Agencies v. S.K. Bhattacharjee and Others (Cencus 1976 page 94D). That was a case where Messrs Shree Agencies used to supply yarn to various weavers described to be factory owners and an attempt was made to give this deal a complicated shape so as to make it look like two independent and unconnected transactions of sale of yarn by Shree Age....
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....product. According to him, the repacking which was done by Hindustan Petroleum came within this description. This clearly showed that further levy of duty in such a case was permissible. In support of this proposition Shri Jain cited a judgment of the Andhra Pradesh High Court in the case of Bhadrachalam Paper Boards Ltd. v. Collector of Central Excise and Customs, Hyderabad 1984 ECR 1627 A.P. - 1984 (18) E.L.T. 229 (A.P.)]. In that case the argument that double incidence of excise duty was illegal was repelled by the High Court on the ground that an assessee could not resort to Rule 56A, which applies only where there is a question of double levy of excise duty, and at the same time argue that the double levy is illegal. The Bench drew the attention of Shri Jain to the very recent judgment of the Supreme Court in the case of Union of India and Others v. Duphar Interfran Ltd. (1984 ECR 1443 S.C.). In that case the Supreme Court upheld the decision of the High Court that the cost of additional packing which was provided in the duty-paid warehouse of the manufacturers after the goods had been cleared on payment of duty could not be included in the assessable value. To this, Shri Mahe....
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.... the repacking by them constituted manufacture. No authority had, however, held that Hindustan Petroleum should be deemed to be manufacturers of the goods as repacked and should pay duty accordingly. Only the differential duty on the added value had been demanded. 27. Referring to the judgment of the Gujarat High Court in the case of Jamnadas Chhotalal Desai vide paragraph 17 above, Shri Bhave submitted that this could only be applied with reference to the question of Hindustan Petroleum being the manufacturers in terms of Section 2(f) of the Central Excises and Salt Act. Even if it was held that Hindustan Petroleum was the manufacturer, the manufacture was complete in the factory of Balmer Lawrie. Hindustan Petroleum might be the manufacturer qua the goods at Balmer Lawrie gate, but they were not the manufacturer qua the goods at their own gate. 28. As regards the earlier orders of the Government of India in their own case (vide paragraph 12 above), and the submission of Shri Mahesh Kumar that it could be distinguished from the present cases, Shri Bhave submitted that the cases were identical and that the decision of the Government of India in the earlier case was ....
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....leum, it was Hindustan Petroleum who should be deemed to be the manufacturer of the goods. Shri Jain had also relied on certain judgments in this regard. 33. We have already drawn attention (vide paragraph 10 above,) to the Appellate Collector's observations in the case covered by Appeal No. 239/79A. According to the Appellate Collector, the question of deciding whether Hindustan Petroleum or Balmer Lawrie were the manufacturers was a futile exercise, and the relevant factor was the value at which the duty had to be paid on the goods manufactured by Balmer Lawrie (emphasis added). He further observed that if Balmer Lawrie had declared the sale price (as charged by Hindustan Petroleum) instead of declaring a computed price, the problem would not have arisen. It is seen from the above that one point the Appellate Collector tried to skirt the issue as to who should be deemed to be the manufacturer in this case, but later on he had tacitly accepted that Balmer Lawrie was in fact the manufacturer and that duty was rightly recovered from them, only not on the correct assessable value. It appears to us that in this respect the Appellate Collector's order was correct, and that duty....
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....eviable at the time of their removal from the premises of Balmer Lawrie. 36A. In the case covered by Appeal No. 377/79A, the position is slightly different, in that the goods were repacked after clearance on payment of duty from the premises of Hindustan Petroleum. However, the conclusion would remain the same, particularly in the light of the Supreme Court judgment in the case of Union of India v. Duphar Intergfan Ltd. (vide para 22 supra). 37. The next question is the value at which the duty was leviable. The answer to this is quite simple. It has been submitted by the appellants, and not controverted by the respondent, that the Government of India had fixed the sale prices of the compounded greases in question, taking into account also the packing. The prices applicable were the same irrespective of who was the seller. Therefore, in respect of the goods removed from the factory of Balmer Lawrie, the prices fixed by Government for such goods, in such packings, were the assessable values. 38. The next question is whether, in the case of the goods which were repacked in the factory of Hindustan Petroleum, duty could again be leviable. It has been strenuously....