S.S. Chadha, J.
1. This writ petition under Article 226 of the Constitution of India seeks a writ of certiorari for quashing the order F. 11/32/77-CE/2216 dated, February 20, 1978 of the Assistant Collector of Central Excise, Goa rejecting the applications of the petitioner for the refund of Central Excise duty amounting to Rs. 11,51,380.77.
2. M/s. Madras Rubber Factory Ltd., petitioner herein, with their registered office at Madras have two units manufacturing automotive tyres and tubes, one at Madras and the other at Goa. Both the factories have been granted separate Central Excise licenses under Rule 174 of the Central Excise Rules, 1944 by the Competent Authorities in whose jurisdiction the factories are situated. The duty of excise is livable on tyres and tubes under Tariff Item No. 16 of the First Schedule of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). Under sub-item (1) of Tariff Item 16, Excise duty is livable on tyres at the rate of 60% ad valorem. The Central Government, under a Notification dated August 1, 1974 being Notification No. 123. of 1974 C.E., in exercise of powers under Rule 8 of the Central Excise and Salt Rules, 1944, exempted the tyres and tubes for motor vehicles falling under sub-item (1) of Item 16 of the First Schedule to the Act from so much of the duty of excise livable thereon as is in excess of 55% ad valorem. As such the 'excise duty leviable' on tyres and tubes is 55% ad valorem. By notification dated 16 of June , 1976, issued under Rule 8 of the said Rules, being Notification No. 198/76, the Central Government granted further relief in respect of the 'Excise Duty Leviable'. This notification was issued in pursuance of the declared intention of the Central Government to give relief of excise duty in respect of certain specified commodities in order to encourage higher production and to give incentive to new units. Tyres are granted 25% relief in excise duty livable on goods produced in excess of production in a selected base year subject to the conditions laid down therein. A further notification was issued on 8th of February, 1977 adding an Explanationn to the said notification dated 16 of June, 1976 under which the Collector of Central Excise on a representation could delinked one factory from another when specified goods are cleared by or on behalf of the manufacturer from more than one factory. As already pointed out the petitioner had two factories engaged in the manufacture of the tyres and tubes; one at Madras and the other at Goa. For certain reasons disclosed in the representation, the petitioner asked in his representation dated 11th of February, 1977 to delinked its Madras factory with reference to the said notification dated 8th of February, 1977. The Collector of Central Excise by its order dated 15th of April, 1977 directed the delinking of the petitioner's Madras factory from its Goa factory.
3. In the meantime the petitioner had paid certain amount of excise duty till the end of financial year 1976-77 and made three claims for refund of the excise duty for the period commencing from 8th of February, 1977 to 31st of March, 1977 in respect of clearance made from the petitioner's Goa factory from 8th of February, 1977. By the impugned order dated February 20, 1978 the claim has been rejected only on the ground that the refund is not admissible since the amount of relief obtained has' not been passed on to the consumer. This decision was on the basis of the press note dated February 19, 1977 issued by the Central Government.
4. Several grounds have been raised in the writ petition. Identical questions relating to the interpretation of the said notification dated June 16, 1976, read with the notification dated 8th of February, 1977, in the light of press note dated 19th February, 1977, issued by the Central Government, came up for consideration before a Division Bench of this Court in Modi Rubber Ltd. v. Board of Central Excise and Customs and Ors. 1978 E.L.T. (J 146). The main defense in that writ petition was that under Section 4 of the Act, the specific method of determination of assessable value for purposes of payment of Central Excise duty provides that the assessable value has to be so assessed but the benefit of the relief has to be passed on to the consumers, that admittedly the petitioner there had not passed on any such relief neither in part or in whole to the consumers and that the petitioner there would not be entitled to the benefit of the rebate as it would not reduce the price appropriately to the reduction of excise duty, so as to pass on the benefit of the reduction of the duty to the purchasers of the tyres and tubes. For the reasons recorded in the judgment of the Division Bench dated Februarys, 1978 with which I am in respectful agreement, it is not understandable why the benefit of the rebate in the duty is required to be passed on to the consumers and which could form the foundation of the rejection of the claim of the petitioner for the refund of the duty, when there is no specific condition to that effect laid down in the statutory notification. It is not open to the Board in its administrative capacity to issue directives to various subordinate authorities exercising quasi-judicial functions to interpret excise notifications in a particular manner and to restrict relief there under. Since the impugned order gives effect to the direction of the Board, the same is illegal and void. The impugned order is, thereforee, untitled to be quashed.
5. One additional argument which has been addressed by Shri K.N. Kataria, learned counsel for the petitioner is the basis of assessing the value of excisable goods for purposes of charging of duty of excise. He invited my attention to Section 4(4)(d)(2) of the Act. He contends that the value in relation to any excisable goods does not include the amount of the duty of the excise, sales-tax and other taxes, if any, payable on such goods. He submits that the amount of duty on excise payable on the goods is only to be excluded and not by reference to the relief which has been granted. Excise duty is a duty on the manufacture of goods and is chargeable on the value of goods manufactured. It is thereforee, necessary to determine the value of the goods manufactured. The value of the goods for purpose of excise is to take into account only the manufacturing costs and the manufacturing profit and it is not to be loaded with post-manufacturing cost or profit arising from post-manufacturing operation. In Atic Industries Ltd. v. H H. Dave. Assistant Collector of Central Excise and Ors. : 1978(2)ELT444(SC) , their Lordships of the Supreme Court held :
'In the first place, as pointed out by Mathew J. in Voltas' case (Supra), 'excise is a tax on the production and manufacture of goods - Section 4 of the Act thereforee provides that the real value should be found after deducting the selling cost and selling profit and that the real value can include only ... the manufacturing profit. 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 the profit arising from post-manufacturing operation, namely, selling profit'. The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post-manufacturing cost or profit arising from post-manufacturing operation.'
6. For the above reasons the writ petition is allowed and the impugned order dated February 20, 1978 is quashed. The Assistant Collector of Central Excise, Goa will determine afresh the refund claims of the petitioner for Rs. 11,51,380.77 for the period from 8th of February, 1977 to 31st of March, 1977 in accordance with the observations made in C.W. Petition No. 411 of 1977 and those contained in this short judgment. The Assistant Collector of Central Excise, Goa will determine the application of the petitioner expeditiously, in any case, within two months.
7. On the facts and circumstances of the case, I make no order as to costs.