S.S. Sharma, J.
1. This petition under Articles 226 and 227 of the Constitution of India has been filed challenging the levy, assessment and recovery of the excise duty by the respondents on Coca-cola, Fanta-Orange and Fanta-Soda. In the alternative, the challenge is to the inclusion of transportation charges at the rate of Rs. 1.54 per crate in the assessable value of Coca-cola, Fanta-Orange and Fanta-Soda. A consequent prayer about the refund of the excise duty has also been made.
2. At the time of the hearing of this petition, learned Counsel for the petitioner confined his challenge only to the inclusion of transportation charges in the assessable value of those items and abandoned other grounds of challenge We would, therefore, deal only with that question.
3. The case of the petitioner relevant for the disposal of this petition is as follows:-
The petitioner, a limited Company, carries on business in manufacture, bottling and sale of aerated water having brands viz., (i) Coca-cola, (ii) Fanta-Orange and (iii) Fanta Soda The manufacture and bottling are carried on at factory of the petitioner which is situated at Agra-Bombay Road, within Indore Municipal Corporation limits. The petitioner claims to be the exclusive manufacturers and bottlers of the aforesaid three varieties of aerated water for the territories of Madhya Pradesh, part of Rajasthan and part of Maharashtra by virtue of some agreement with their principals.
4. According to the petitioner, the wholesale cash price of the three varieties of aerated water at the time of their removal from the factory and premises of manufacture and production were and have at all material times been as follows: -
Coca-cola Rs. 6.00 per crate of 24 bottles.
Fanta-Orange Rs. 6 00 per crate of 24 bottles.
Fanta-Soda Rs. 2.25 per crate of 24 bottles.
As has been stated, the unit of wholesale by the petitioner consists and at all times consisted of one wooden crate containing 24 bottles.
5. The assertion of the petitioner is that the wholesale market for them is at their factory and no other place within their territorial limits can be called wholesale market for the said varieties of aerated water. What is further said is that 'the customers of the petitioners may and sometimes do purchase the aerated water at the factory of the petitioner. In such cases, the petitioners charge price at the rates' mentioned in para 4 above'. These rates have been reproduced above. What is further said is that those customers who avail of the transport facilities of the petitioner pay extra transport charges in addition to the price mentioned above.
* * * *
8. The petitioner claims that after 29-12-1970 they filed as they state 'the correct price lists (Annexure D-l, D-2 and D-3) for the different quarters showing Rs. 6.00 and Rs. 2-25 as the ex-factory wholesale price per unit of Coca-cola, Fanta-Orange and Fanta-Soda respectively. The respondent No. 1, however, passed orders thereon that 'the assessee is charging Rs. 1.54 per unit as transport or service charges in the case of all consignments in the invoices and is not included by him to the units'. He, therefore, ordered for the inclusion of Rs. 1 54 per unit in the price. The petitioners have between 1-3-1970 to 31-1-1972, deposited a total amount of Rs. 9,71,179.13 p. (Annexure P) which includes an excess payment of Rs. 1,94,733.09 on 12,64,500 crates 8.10% of Rs. 1.54 per crate. Thus the challenge is in respect of this excess amount on the ground that Rs. 1.54 per crate were the transportation charges on which no excise duty was leviable
9. The respondent in their return, denied the wholesale price of the three varieties of aerated water being at all times Rs. 6.00, Rs. 600 and Rs. 2.25. They relied on the price lists submitted by the petitioner for approval to the Departmental Officers till 31-3-1971. Annexure B-l is the price list for the quarter ending 31-3-71. The respondents have also admitted Annexure R-3 dated 8-10-1970 and Annexure B-4 for the quarter ending 31-3-71. The respondents have also admitted a letter dated 21-7-1972 (Annexure B-5) seat by the petitioner stating that during 1-3-1970 to 31-12-1971 total number of cases sold was 12,70,089 out of which only 60,742 cases were sold at the factory gate. Subsequently by letter dated 26-7-72 (Annexure B-6) thepetitioner corrected the sale at the factory gate, reducing the number of crates to 57.919. According to the respondents, these sales allegedly at the factory gate were 'isolated transactions' in view of the total number of crates sold and so such transactions would not constitute wholesale market at the factory gate because the larger sales were at the place of business of the customers of Indore and in other cities.
10. They also alleged that the transport and delivery charges that were being recovered by the petitioner were uniform to all the purchasers of Indore city which are included in the price list submitted by the petitioner up to 31-3-1971 (Annexure B-l and B-2) irrespective of distance from the factory. The contention, therefore, is that the transport charges are not independent of sale considerations and they are integral part of the sale price of the goods. Yet, another ground put forth is that the goods are sent by the petitioner in its own vehicles to the customers in bulk. The persons in whose names the gate passes are issued when the goods are being removed from the factory premises are mostly employees of the petitioner, which is evident from Annexure B-7. Thus according to the respondent the property in the goods passes to the customers when they are delivered at various places of business of the customers and not of the ex-factory.
11. The respondents, in their return, have further alleged that 'the petitioner has been adding delivery charges and freight to the price of tense goods not because of any erroneous assumption on its part up to 31-3-1971 but because of the fact that, that was the wholesale cash price of the goods sold in the nearest wholesale market which was liable to Central Excise duty under the Central Excises and Salt Act, 1944'. As regards the non-acceptance of the price list submitted by the petitioner showing Rs 600, Rs. 6.00 and Rs. 2.25 to be the price of the three brands of aerated water (Annexure D-l and D-3) the respondents have stated that it did not show the actual wholesale cash price at which the, commodity was sold in the nearest wholesale market of Indore city and that for this reason respondent No. 1 revised the return of price list which was. submitted by the petitioner.
* * * *
20. Learned Counsel for the petitioner, relying on the decisions of their Lordships of the Supreme Court in A.K. Roy v. Voltas Ltd. AIR 1973 SC 225 and Atic Industries v. Assistance Collector, Central Excise, AIR 1975 SC 960 urged that the transport and delivery charges could not be included while determining the value for purposes of duty under Section 4 of the Act. These decisions are complete guide as to the meaning of 'wholesale market' and wholesale cash price which are required to be considered for purposes of Section 4 of the Act. Their Lordships in the case of Voltas Ltd. (Supra) have laid down as follows : -
'The section makes it clear that excise is levied only on the amount representing the manufacturing cost plus the manufacturing profit and excludes post-manufacturing cost and profit arising from post-manufacturing operation, namely selling profit. The section postulates that the wholesale price should be taken on the basis of cash payment thus eliminating the interest involved in wholesale price which gives credit to the wholesale . buyers for a period pf time and that the price has to be fixed for delivery at the Factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles. As already stated it is not necessary for attracting the operation of Section 4(a) that there should be large number of the wholesale sales. The quantum of goods sold by manufacturer on wholesale basis is entirely irrelevant. The mere fact that such sales may be few or scanty does not alter the true position.'.
That being so, the inclusion of the transport and delivery charges, beyond | the assessable value that may be determined in accordance with the principles I laid down by their lordships in the two aforesaid decisions is wholly illegal.
21. From the facts that have been stated above, it is clear that the true position was not before the assessing authorities. There was no proper determination of value for purposes of the duty. Even before us the picture that emerges, after the production of the bills, affidavits and counter-affidavits, is not clear in as much as the break-up of the amount charged in the bill, which is excluding the transport and delivery charges, is disputed. That apart, according to the petitioner, the amount as mentioned in the bills is inclusive of certain taxes. There is no challenge to that part in the present petition. The contention of the learned counsel for the petitioner that there was no dispute between the parties about the ex-factory wholesale price being Rs 6/- per unit in the case of Coca-cola and Fanta-Orange and Rs. 2.25 in the case of Fanta-Soda is of no consequence for the simple reason that para 4 of the Return the averments in that behalf of the petitioner have been denied besides the clear denial admittedly made in later counter affidavit. The factual position in respect to the orders on (petitioner's Annexure D-l, D-2 and D-3) passed by the assessing authority, has already been dealt with above.
22. Consequently, this petition is partly allowed. The assessments for the period in question i.e. from 1-3-1970 to 31-1-1972 including the orders of respondent No. 1 on Annexure B-l, B-2 and B-3 are quashed The ' respondent No. 1 shall proceed to make fresh assessments and determine the petitioner's liability about the excise duty in the light of the principles that down by their Lordships of the Supreme Court in the aforesaid two decisions and the observations made by us above. The amount so determined might have paid as duty for the period in question; and if thereafter any balance is found to be due in favour of the petitioner, the same shall be refunded. However if the amount that has already been paid by the petitioner for the period in question falls short of the amount of duty which is so determined, then the respondents shall proceed to recover that amount in the event of the failure of the petitioner to deposit that amount. In view of this the question of refund of the amount paid towards duty does not arise. Under the circumstances of the case, the parties , will bear their own costs of this petition. The security amount shall be refunded to the petitioner.