2. Messers The Calcutta Chemicals Company Limited are manufacturers of cosmetics and toilet preparations on which a duty of Central Excise is leviable on ad valorem basis under item 14 of the 1st Schedule to the Central Excises and Salt Act, 1944. For the purpose of determining the assessable value of the various products manufactured by them the company were furnishing to the Department from time to time price lists as required under Rule 173-C of the Central Excise Rules and assessments were made on the basis of the prices so declared and approved by the proper officer. On 19-1-1974 the Company submitted a fresh price list in supersession of all their previous price lists contending that the same was based on the principles enunciated in Supreme Court's Judgment in the Case of A.K. Roy v. Voltas Ltd., A.l.R, 1973 S.C. 225. The Revised price list furnished by the Company purported to represent only the manufacturing cost and manufacturing profit. In this connection, it may be stated that their factory is at Ambattur and according to their marketing pattern there are no sales at the factory gate and all their manufactured goods are removed from the factory and taken as 'Stock Transfer' to their office at Broadway from where sales are effected through distributors, wholesaler and stockists. As the transportation charges were uniformly charged irrespective of the destination of the consignments these charges partake the nature of .'equalised freight' and are to be considered as an integral part of the assessable value itself. In these circumstances the Assistant Collector of Central Excise, Madras Division required the company by his order C. No. V/14F/17/3/74 dated 2-2-1974 to furnish a revised price list including the equalised freight charges of determination of the assessable value. The Assistant Collector also demanded the duty short levied on clearances effected in the past by non-inclusion of 'equalised freight' charge in the price list, in arriving at the assessable value. The Company preferred an appeal against the Assistant Collector's order to the Appellate Collector of Central Excise, Madras who by his order No. 14-F/3/74/AU-55/74 (M) rejected the same. The licensee thereafter filed a revision application before the Government of India which was also rejected by their order No. 642/75 dated 24-9-1975. The Company has filed the above writ petition praying for the issuance of a writ of certiorari seeking to quash the Government of India Order No. 642/75 dated 24-9-75.
3. The learned counsel for the petitioner urges that merely because uniform freight is charged for the despatch of all the consignments, it cannot be held that the excise duty is liable to be paid on the actual cost of manufacture plus the uniform freight charged, because it is only for the purposes of ease though there is variation in price structure, this uniform rate of freight is charged. It is a matter purely between the petitioner and his customers and has nothing to do with the excise.
4. The learned counsel for the respondent would, however, try to meet this submission stating that freight means actual freight incurred. So long as this freight is included as part of the price structure at the factory gate which alone is the relevant basis for the levy of the excise duty, the imposition is valid.
5. It is well settled in law that excise is on the incidence of the manufacture. It is admitted in this case that petitioner does incur expenditure by sending the consignment and therefore, he is entitled to charge the freight. Merely because he charges a uniform rate of freight, it does not follow that should also be included as the cost price of manufacturer. As rightly contended by the Learned Counsel for the Petitioner, it is a post-manufacturing operation. In my view, there is no warrant for holding that freight should be construed as one actually incurred. Merely because freight comes to be charged when the goods leave the factory, it cannot be contended that it should go in the cost price. Therefore, the impugned order is hereby set aside and this writ petition will stand allowed, but there will be no order as to costs.