the respondent-M/s Shivam Coke Industries, Dhanbad is a manufacturer of coal and was registered under the provisions of the Bihar Finance Act, 1981 [now repealed - for short "BFT Act, 1981"] and presently under the provisions of Jharkhand Value

                                                                  REPORTABLE




                          IN THE SUPREME COURT OF INDIA


                           CIVIL APPELLATE JURISDICTION






                    CIVIL APPEAL NOS.  6889-6891 OF 2011


                [Arising out of SLP (C) Nos. 19104-19106 of 2008]






State of Jharkhand & Ors. Etc.                          .... Appellants








                                      Versus








M/s. Shivam Coke Industries, Dhanbad, Etc.               .... Respondents






                                       With






                           CIVIL APPEAL NO. 6892 OF 2011


                    [Arising out of SLP (C) No. 21491 of 2008]






                                       With






                           CIVIL APPEAL NO. 6893 OF 2011


                     [Arising out of SLP (C) No. 8424 of 2010]








                                    JUDGMENT








Dr. MUKUNDAKAM SHARMA, J.










1.    Delay condoned in SLP (C) No. 8424 of 2010.








2.      Leave granted.



By   this   common   judgment   and   order,   we   propose   to   dispose   of   these 






appeals   as   they   involve   similar   issues   both   of   facts   as   also   of   law   and 






therefore, they were heard together.








3.    Appeals   arising   out   of  SLP   (Civil)   Nos.   19104-19106   of   2008   are 






directed   against   the   judgment   and   order   dated   14.3.2008   in   WP   (T)   No. 






6377 of 2007, WP (T) No. 5895 of 2007 and WP (T) No. 5892 of 2007. The 






appeal arising out of SLP (Civil) No. 21491 of 2008 is directed against the 






judgment and order dated 19.3.2008 in WP (T) No. 6071 of 2007 and the 






appeal arising out of SLP (Civil) No. 8424 of 2010 is directed against the 






judgment and order dated 31.7.2009 in W.P. (T) 54 of 2009 passed by the 






High Court of Jharkhand at Ranchi allowing all the Writ Petitions filed by 






the respondents herein.








CIVIL APPEAL ARISING OUT OF SLP (C) NO. 19104 OF 2008




4.    The facts leading to the filing of the case in the appeal arising out of 






SLP   (C)   No.   19104   of   2008   are   that   the   respondent-M/s   Shivam   Coke 






Industries, Dhanbad is a manufacturer of coal and was registered under 






the   provisions   of   the   Bihar   Finance   Act,   1981   [now   repealed   -   for   short 






"BFT Act, 1981"] and presently under the provisions of Jharkhand Value 



Added Tax, 2005. Respondent-assessee being manufacturers of hard coke 






buys coal from Bharat Coking Coal Ltd. after making the payment of local 






Sales   Tax   @   4%   which   is   being   used   as   an   input   for   the   purpose   of 






manufacturing   the   hard   coke.    Respondent   was   assessed   to   tax   for   the 






Financial   Years   1988-89,   1992-93   and   1996-97   determining   the   tax   on 






intra-State sales transactions as well as Central Sales Tax on inter-State 






sales   transactions.   Respondent   preferred   an   Appeal   before   the   Joint 






Commissioner   of   Commercial   Taxes   (Appeals),   Dhanbad   Division, 






Dhanbad   against   the   assessment   orders   passed   between   26.4.1990   to 






23.12.1998 for the Financial  Years 1988-89, 1992-93 and 1996-97, who 






vide   order   dated   25.08.2003   remanded   the   aforesaid   assessment 






proceedings by a common order to re-examine the books of account and 






to re-determine the nature of sales as to whether they are intra-state sales 






or   inter-state   sales,   on   the   basis   of   the   books   of   account   and   the   audit 






reports   as   well   as   on   the   basis   and   within   the   meaning   and   scope   of 






Section 3(a) of the Central Sales Tax Act, 1956 (for short "the CST Act"). 






Thereafter,   Deputy   Commissioner   of   Commercial   Taxes,   Dhanbad   Circle 






on   the   basis   of   guidelines   issued   by   the   Joint   Commissioner   of 






Commercial   Taxes   (Appeals)   passed   the   revised   assessment   orders   on 






26.12.2003 reversing the then inter-State sales under Section 3(a) of the 



CST  Act  1956  into  the  intra-State  sales.     Respondent   on  10.3.2005  filed 






an application for refund of excess amount of tax after adjustment of the 






amount to be paid by Respondent. Accordingly, on 21.8.2006 notice was 






issued   by   Deputy   Commissioner   of   Commercial   Taxes   to   Respondent   to 






file   its   refund   application   before   the   Joint   Commissioner   of   Commercial 






Taxes   since   the   amount   refundable   to   the   Respondent   is   above   Rs. 






25,000/-.     Thereafter   in   the   year   2006,   as   is   alleged  by   the   respondent, 






the Deputy Commissioner of the Dhanbad Circle got changed and the new 






Deputy   Commissioner   examined   the   revised   assessment   orders   of   the 






Respondent   and   he   opined   that   the   revised   assessment   orders   do   not 






conform to the appellate direction and Deputy Commissioner informed the 






Joint   Commissioner   of   Commercial   Taxes   (Administration)   about   his 






observations.   The   Joint   Commissioner   of   Commercial   Taxes 






(Administration),   Dhanbad   Division,   Dhanbad   [Appellant   No.   4]   then 






initiated   the   proceeding  suo   motu  under   Section   46(4)   of   the   adopted 






Bihar Finance Act, 1981 [now repealed] and issued notice/Memo No. 744 






dated   1.8.2007   directing   the   Respondent   to   furnish   the   complete   sets  of 






books   of   account   in   order   to   determine   the   legality   and   propriety   of   the 






said   revised   assessment   orders   conforming   to   the   appellate   order.   On 






28.11.2007   Respondent   filed   Writ   Petition   before   the   High   Court   of 



Jharkhand which was registered as WP (T) No. 6377 of 2007 praying for a 






direction to quash the notice/Memo No. 883 dated 20.9.2007 [which was 






issued   in   pursuance   to   earlier   notice/Memo   No.   744   dated   1.8.2007] 






issued   by   the   Joint   Commissioner   of   Commercial   Taxes   (Administration) 






for initiating the proceeding  suo motu  under Section 46(4) of the repealed 






BFT Act, 1981 and also for quashing the order dated 26.11.2007 passed 






by the Joint Commissioner of Commercial Taxes by which he set aside the 






revised assessment order dated 26.12.2003. The High Court of Jharkhand 






vide   its   order   dated   14.03.2008   allowed   the   Writ   Petitions   of   the 






respondent   herein   against   which   the   appellants   have   filed   the   present 






appeals on which we heard the learned counsel appearing for the parties.








CIVIL APPEALS ARISING OUT OF SLP (C) NOS. 19105-06 OF 2008










5.    The  facts  leading to the filing of appeals arising out of SLP (C) Nos. 






19105-06   of   2008   are   that   the   Respondent   -M/s.   Rani   Sati   Coke 






Manufacturing Company, Baliyapur, Dhanbad is engaged in processing of 






coal to coke and was assessed to tax for the Financial Years from 1984-85 






to  2000-2001  determining the tax  on "intra-State sales"  transactions,  as 






well   as   Central   Sales   Tax   on   inter-State   sales   transactions.   Respondent 



filed an appeal against the assessment orders passed between 29.12.1987 






to   10.3.2003   for   the   Financial   Years   from   1984-85   to   2000-01   and   the 






appellate   authority,   i.e.,   the   Joint   Commissioner   of   Commercial   Taxes 






(Appeal), Dhanbad Division, Dhanbad remanded the aforesaid assessment 






proceedings   by   a   common   order   to   re-examine   the   nature   of   intra-State 






sales and inter-State sales on the basis of the books  of account and the 






audit reports as well as on the basis of the meaning and scope of Section 






3(a)   of   the   CST   Act,   1956.   Thereafter,   the   Deputy   Commissioner   of 






Commercial Taxes  passed the revised assessment order vide orders dated 






14.12.2005   and   29.12.2005   reversing   /   converting   the   then   inter-State 






sales  under  Section  3(a)  of  the  CST   Act,  1956   into the   intra-State   sales. 






Pursuant   thereto,   Respondent   filed   prescribed   refund   application   before 






the   Deputy   Commissioner   of   Commercial   Taxes.   Thereafter   in   the   year 






2006, it is alleged by the respondents that, the Deputy Commissioner  of 






the   Dhanbad   Circle   got   changed   and   the   new   Deputy   Commissioner 






examined the revised assessment orders of the Respondent and he opined 






that   the   revised   assessment   orders   do   not   conform   to   the   appellate 






direction and as such do not have any merit as they were re-assessed on 






the basis  of same facts  for  converting  the then  inter-State  sales into  the 






intra-State   sales,   which   resulted   the   claim   of   refund   and   Deputy 



Commissioner   informed   the   Joint   Commissioner   of   Commercial   Taxes 






(Administration)   about   his   observations.   Pursuant   to   this   Joint 






Commissioner   of   Commercial   Taxes   (Administration)   initiated   the 






proceeding  suo motu  under Section 46(4) of the Bihar Finance Act, 1981 






and   issued   notice   No.   850   dated   06.09.2007   directing   Respondent   to 






furnish the complete sets of  books of  account,  in order to  determine the 






legality and propriety of the said revised assessment orders conforming to 






the appellate order. Thereafter, Respondent No. 2 filed two Writ Petitions 






before the High Court of Jharkhand which were registered as W.P. (T) Nos. 






5892   and   5895   of   2007   praying   for   the   direction   to   the   appellants   for 






immediate   refund   of   the   entire   amount   arising   out   of   the   revised 






assessment   orders   in   which   High   Court   directed   the   appellants   to 






participate   in   revision   proceedings,   after   which   Respondent   filed   an 






amended   petition   before   the   High   Court   by   bringing   the   fact   that   the 






revision  proceedings  under   Section   46(4)  of the  Bihar  Finance   Act,  1981 






was   opened   on   the   basis   of   an   application   of   the   Deputy   Commissioner 






which is not permitted as per the provisions of the repealed BFT Act, 1981 






and   that   the   same   is   also   barred   by   limitation.   The   High   Court   of 






Jharkhand   vide   its   order   dated  14.03.2008   allowed   the   Writ   Petitions   of 






the   respondents   herein   against   which   the   appellants   have   filed   the 



present appeals on which we heard the learned counsel appearing for the 






parties. 








CIVIL   APPEALS   ARISING   OUT   OF   SLP   (C)   NO.   21491   AND   8424   OF 


2008










6.    The appeals arising out of SLP(C) No. 21491 of 2008 are against the 






judgment   and   order   of   the   High   Court   of   Jharkhand   dated   19.03.2008 






following   the   judgment   in   WP   (T)   NO.   6377   of   2007.       The   facts   of   this 






appeal and also of the appeal arising out of SLP (C) No. 8424 of 2010 are 






similar to the other appeals at hand. So, we need not go into the detailed 






facts of the said two appeals.








7.    The   learned   counsel   appearing   for   the   appellant   while   taking   us   to 






the   impugned   judgment   and   also   the   connected   records   submitted   that 






judgment   and   order   passed   by   the   High   Court   is   incorrect.   He   further 






submitted   that   the   findings   arrived   at   by   the   High   Court   are   erroneous 






and based on wrong readings of the materials available on record.








8.    The   learned   counsel   appearing   for   the   respondents   on   the   other 






hand   while   drawing   support   from   the   impugned   judgment   and   order 






submitted that the findings recorded by the High Court are findings of fact 



and   therefore   this   Court   should   not   interfere   with   the   aforesaid 






conclusions of fact arrived at by the High Court by giving cogent reasons 






for its conclusions.








9.       Upon reading the entire records and materials placed and also upon 






hearing   the  learned   counsel   appearing  for   the   parties,   in  our  considered 






opinion three following issues appear to arise for our consideration;








      a) Whether   the  suo motu power  of revision under  Section  46(4)  of the 






         BFT Act, 1981, vested with the Joint Commissioner was legally and 






         properly exercised in the present case;






      b) Whether   or   not   the   action   taken   by   the   Department   was  barred   by 






         limitation   and   whether   such   action   was   bad   for   not   having   been 






         initiated within a reasonable time;






      c) Whether   the   order   dated   26.11.2007   passed   by   the   Joint 






         Commissioner   setting   aside   the   revised   assessment   order   dated 






         26.12.2003 is proper and could be maintained;








10.      We propose to deal with the aforesaid three issues one after the other 






and record our reasons for coming to the decision in each of the aforesaid 






issues;



Issue 1: Whether exercise of Suo Motu power of revision as provided 


under Section 46(4) of the BFT Act, 1981 could be upheld;




        


11.    Section 46 of the BFT Act, 1981 with which we are concerned in the 






present   case   came   to   the   statute   book   with   the   enactment   of   Bihar 






Finance   Act,   1981.   The   aforesaid   Act   was   a   consolidated   Act   which   was 






passed by the State Legislature amending the law relating to levy of tax on 






sale and purchase of goods.   In the said Act, Section 45 provides for the 






provision of filing an appeal whereas Section 46 of the Act lays down the 






provision of revision.  In the present case, we are only concerned with the 






provision of revision and in our estimation, the entire provision of Section 






46 should be extracted hereinafter.




       46.   Revision  - (1)   Subject to such rules as may be made by 


       the State Government an order passed on an appeal under sub-


       section   (1)   or  (2)   of   section   45  may,   on  application,   be   revised 


       by the Tribunal.






       (2)     Subject   as   aforesaid   any   order   passed   under   this   part   or 


       the rules made thereunder, other than an order passed by the 


       Commissioner   under   sub-section   (5)   of   section   9   or   an   order 


       against which an appeal has been provided in section 45 may, 


       on application be revised.


            (a)   by the Joint Commissioner,  if  the said  order  has been 


            passed   by   an   authority   not   above   the   rank   of   Deputy 


            Commissioner; and






            (b)     by the Tribunal, if the said order has been passed by 


            the Joint Commissioner or Commissioner.



       (3)     Every   application   for   revision   under   this   section   shall   be 


       filed   within   ninety   days   of   the   communication   of   the   order 


       which is sought to be revised, but where the authority to whom 


       the application lies is satisfied that the applicant had sufficient 


       cause for not applying within time, it may condone the delay.






       (4)   The   Commissioner   may,   on   his   own   motion   call   for   an 


       examine the records of any proceeding in which any order has 


       been passed by any other authority appointed under section 9, 


       for   the   purpose   of   satisfying   himself   as   to   the   legality   or 


       propriety   of   such   order   and   may,   after   examining   the   record 


       and   making   or   causing   to   be   made   such   enquiry   as   he   may 


       deem necessary, pass such order as he thinks proper.






       (5)   No order under this section shall be passed without giving 


       the appellant as also the authority whose order is sought to be 


       revised   or   their   representative,   a   reasonable   opportunity   of 


       being heard.






       (6)     Any   revision   against   an   appellate   order   filed   and   pending 


       before  the  Joint  Commissioner   or a  revision  against  any  other 


       order filed and pending before the Deputy Commissioner since 


       before   the   enforcement   of   this   part   shall   be   deemed   to   have 


       been   filed   and/or   transferred   respectively   to   the   Tribunal   and 


       Joint Commissioner; and any revision relating to a period prior 


       to   the   enforcement   of   this   part   against   an   appellate   order,   or 


       against   any   other   order   passed   by   an   authority   not   above   the 


       rank   of   Deputy   Commissioner   shall,   after   the   enforcement   of 


       this part, be respectively filed before the Tribunal and the Joint 


       Commissioner.









12.    The said Act came to be amended in 1984.   Section 10 of the Bihar 






Finance   Amendment   Act,   1984   amended   Section   46   in   some   respect 






which again is extracted hereinbelow:-



        10.    Amendment of section  46 of the  Bihar  Act V, 1981 (Part  


               I).  -  In  sub-section  (3) of section 46  of the  said  Act  for 


               the word "sixty" the word "ninety" shall be substituted.






        (2)   For   sub-section   (4)   the   following   sub-section   shall   be 


          substituted namely :-






        "4 (a) The Commissioner may, on his own motion call for and 


          examine  the  records of any proceeding  in which  any order 


          has   been   passed   by   any   other   authority   appointed   under 


          section   9,   for   the   purpose   of   satisfying   himself   as   to   the 


          legality or property of such order and may, after examining 


          the record and making or causing to be made such enquiry 


          as   he   may   deem   necessary,   pass   such   order   as   he   thinks 


          proper.








13.    By   inserting   a   provision   namely   Section   7   of   the   Bihar   Finance 






(Amendment)   Ordinance,   1989,   clause   (b)   of   sub-Section   (4)   has   been 






deleted with effect from May, 1989. Therefore, the statutory provision that 






now stands and is operative is that Section 46 provides for a revision of all 






appellate   and   other   orders   passed   by   various   authorities   under   the   BFT 






Act,   1981.     According   to   the   statutory   provision   as   applicable,   power   of 






revision   is   vested   with   the   Tribunal   and   the   Joint   Commissioner,   which 






power   is   to   be   exercised   on   application   by   any   person   aggrieved,   but 






subject   to   time   limit   prescribed   in   sub-Section   (3)   i.e.   90   days   of   the 






communication of the order with a further power to condone the delay, if 






sufficient   cause   is   shown.       There   is   an   additional   power   vested   on   the 



Commissioner   which   empowers   the   Commissioner   to   initiate   suo   motu 






revision   proceedings   at   any   time   and   for   exercising   such   power   no 






limitation   has   been   prescribed   in   the   statute.     The   power   of   the 






Commissioner   to   initiate   such   suo   motu   revisional   proceeding   has   been 






delegated   to   the   Joint   Commissioner   of   Commercial   Taxes 






(Administration)   against   the   orders   of   the   officers   lower   than   his   rank 






which   is   so   delegated   in   terms   of   the   notification   issued   by   the   State   of 






Bihar under S.O. No. 795 dated 28th June 1986.   








14.    It is thus established that under Section 46 of the BFT Act, 1981, it 






is   the   Commissioner   who   on   the   basis   of   an   application   filed   by   an 






aggrieved   party   revise   the   order   passed   by   any   authority   subordinate   to 






him.   He also has the additional power alongwith the Joint Commissioner 






as   a   delegatee   as   provided   under   Section   46(4)   of   the   BFT   Act,   1981   to 






revise an order passed by an authority subordinate to it by exercising its 






suo motu power.








15.    In   all   these   appeals,   the   Joint   Commissioner   of   Commercial   Taxes 






has exercised the power vested on him under Section 46(4) of the BFT Act, 






1981   which   power   in   most   cases   concerning   the   present   appeals   was 



exercised   by  him within   a period  of  three   years  but in  some  other   cases 






beyond the expiry of three years period, but soon thereafter.








16.    In   that   view   of   the   matter,   counsel   appearing   for   the   respondent 






submitted   in   the   High   Court   that   exercise   of   such   power   by   the   Joint 






Commissioner after expiry of more than two years time is illegal, without 






jurisdiction   and   bad   in   law.   The   Division   Bench   of   the   Jharkhand   High 






Court found force in the aforesaid  submissions of the counsel appearing 






for   the   respondent   and   held   that   such   suo   motu   power   vested   on   an 






authority   must   be   exercised   within   three   years   period   which   is   a   period 






prescribed   under   Article   137   of   the   Limitation   Act,   1963.       According   to 






the   High   Court   where   no   time   limit   is   prescribed   for   filing   a   revision, 






Article 137 of the Limitation Act would apply to such cases.  It was further 






held   that   since   under   Section   46(4),   no   time   limit   is   prescribed   the 






limitation   as   prescribed   under   Article   137   of   the   Limitation   Act   would 






apply to the facts and circumstances of the present case.








17.    Counsel   appearing   for   the   appellant,   however,   submitted   before   us 






that   the   aforesaid   contentions   on   the   face   of   it   cannot   be   accepted   as   a 






correct  position in law for by enacting sub-Section  (4) in Section  46, the 






legislature thought it fit not to impose any restriction or time limit so far 



as   limitation   is   concerned   and   therefore   to   hold   that   Article   137   of   the 






Limitation Act would apply to such provisions is nothing but misreading 






of   the   provisions   for   if   that   was   the   intention   of   the   legislature   it   would 






have   so   stated   specifically   by   making   the   said   provision   applicable   to   a 






case like this.








18.    The counsel therefore, submitted that such power of initiation of suo 






motu revision proceedings by the Commissioner or Joint Commissioner as 






the case may be should be held to be without any time or such restriction 






or at least it should be held that such exercise of power of revision could 






be   exercised   suo   motu   within   a   reasonable   time   depending   on   the   facts 






and circumstances of each case.








19.    Another submission which is advanced by the counsel appearing for 






the respondent was that the Joint Commissioner has exercised the power 






of   suo   motu   revision   in   the   instant   case   on   the   basis   of   an   application 






filed   by   the   Deputy   Commissioner   which   was   sent   to   the   Joint 






Commissioner by him and that application was drawn up and submitted 






under Section 46(4) itself and therefore, the entire exercise of power by the 






Joint   Commissioner   is   fallacious,   untenable   and   should   be   held   to   be 






illegal.



20.    The   counsel   appearing   for   the   appellant,   however,   refuted   the   said 






allegations   and   submitted   that   although   Deputy   Commissioner   had 






written   a   letter   to   the   Joint   Commissioner   bringing   to   his   notice   some 






mistakes and errors apparent on the face of records and illegalities by his 






predecessor in his order, but, it was a power which was exercised by the 






Joint   Commissioner   independently   on   his   own   accord   and   therefore,   it 






cannot be said that the aforesaid power was exercised illegally or without 






jurisdiction.








21.    We may therefore, refer to the materials on record so as to record our 






findings on the aforesaid issue.   








22.    In   all   these   appeals,   there   are   letters   which   were   written   by   the 






Deputy   Commissioner   of   Commercial   Taxes   to   the   Joint   Commissioner 






(Administration).  One of such letter is dated 28.8.2007.  In the said letter 






it is stated by the Deputy Commissioner that the said communication is 






regarding filing of suo motu revision under Section 46(4) of the BFT Act, 






1981.     The   aforesaid   letter   by   the   Deputy   Commissioner,   Commercial 






Taxes   was   written   to   the   Joint   Commissioner   (Administration).       In   the 






said   letter,   the   Deputy   Commissioner   has   pointed   out   some   alleged 



mistakes in the original tax assessment order and the revised order.     He 






also   stated   in   that   communication   that   he   is   unable   to   agree   with   the 






revised   tax   assessment   order   and   reimbursement   order   passed   by   the 






Divisional   Incharge   and   therefore,   according   to   his   opinion   a   revision 






should   be   filed   under   Section   46(4)   of   the   BFT   Act,   1981   against   the 






revised tax assessment order dated 29.12.2005








23.    Our attention was also drawn to the notice for revision issued by the 






Joint   Commissioner   of   Commercial   Taxes   (Administration).     One   of   the 






notices   is   dated  17.12.2007  issued   to   M/s.   Shivam   Coke   Industries 






namely   the   respondent   herein   for   the   assessment   years   1988-1989   to 






1992-1993 and 1996-1997.   The said notice reads as follows:-






         "Whereas all the points and facts have not been considered 


         while   passing   the   revised   assessment   orders   pertaining   to 


         the   above   cases   which   were   to   be   considered   as   per 


         directions   of   the   appellate   court,   hence  the   related   revised 


         assessment   orders   are   not   in   conformity   neither   the 


         directions of the appellate court and the provisions of law.






         In the light of the above facts the legality & propriety of the 


         revised   assessment   orders   has   not   been   established   and 


         hence the revision of the said orders have been considered 


         necessary.






         You   are   hereby   directed   to   be   present   before   the 


         undersigned   on   15.5.2007   and   place   your   side   as   to   why 


         the above stated revised orders should not be set aside?



                 Joint Commissioner of Commercial Taxes (Adm.)


                 Dhanbad Division, Dhanbad"








24.    Such   orders   are   also   existing   against   similar   notices   in   the 






connected matters.








25.    Relying   on   the   aforesaid   two   documents,   the   counsel   for   the 






respondent   submitted   before   us   that   it   is   apparent   on   the   face   of   the 






record that the Joint Commissioner of Commercial Taxes initiated the suo 






motu   action   on   the   basis   of   the   letter   of   the   Deputy   Commissioner, 






Commercial Taxes who had stated that the revision should be filed under 






Section 46(4) of the BFT Act, 1981.   It was submitted in such a situation 






and that since it is an application filed by the Deputy Commissioner, the 






same   was   a   power   to   be   exercised   under   Section   46   (2)   of   the   BFT   Act, 






1981     which   is   an   ordinary   power   of   revision   to   be   exercised   by   the 






competent   authority   on   an   application   filed   by   the   aggrieved   party   and 






here   the   Deputy   Commissioner.     According   to   the   counsel,   since   the 






Deputy   Commissioner   is   an   aggrieved   party,   he   could   file   such   an 






application seeking for revision within a period prescribed i.e. 90 days and 






in   that   view   of   the   matter   even   if   the   Joint   Commissioner   exercises   suo 



motu power, such power could and should have been exercised within a 






period of 90 days as prescribed.








26.    We are, however, unable to accept the aforesaid contentions for the 






simple reason that  a bare perusal of the notice issued on 17.12.2007, the 






contents   of   which   have   been   extracted   hereinbefore   would   indicate   that 






the aforesaid notice was issued by the Joint Commissioner by exercising 






his individual suo motu power as provided under Section 46(4).   It is not 






a case where such notice was issued on the basis of an application filed 






by the Deputy Commissioner. This is obvious because in the said notice, 






there   is   absolutely   no   reference   made   of   the   application   sent   by   the 






Deputy Commissioner.   If from the available records of a particular case, 






the Joint Commissioner forms an independent opinion that the same is a 






case   where   suo   motu   power   of   Revision   should   be   exercised,   he   is 






empowered to so exercise such suo motu power of revising an order which 






appears to  be illegal  and without jurisdiction  to  the  competent  authority 






who   is   empowered   to   issue   such   notice   by   recording   his   reasons   for 






coming to such a conclusion in the notice itself.








27.    In the present case,  the  Joint  Commissioner has  exercised his own 






independent   mind   for   issuing   the   notice   and   also   recorded   his   own 



reasons   for   coming   to   a   conclusion   as   to   why   the   power   under   Section 






46(4)   should   be   exercised.       Having   recorded   the   aforesaid   reason,   such 






notice was issued to the assessee after forming a decision.   The assessee 






was informed by issuing the said notice that the legality and propriety of 






the   revised   assessment   order   has   not   been   established   because   of   the 






reasons   mentioned   in   the   notice   and   therefore,   the   revision   of   the   said 






orders   is   proposed   is   it   has   been   considered   necessary.         By   the   said 






notice,   the   assessee   was   directed   to   be   present   before   the   Joint 






Commissioner and place his side as to why the above revised assessment 






order should not be set aside.  








28.    The   respondent   being   aggrieved   by   the   issuance   of   the   aforesaid 






order   filed   a   writ   petition   before   the   High   Court.       The   High   Court, 






however, did not grant any stay of the aforesaid notice and permitted the 






respondent   to   contest   the   said   notice   in  accordance   with   law  during  the 






course   of   which   the   Joint   Commissioner   of   Commercial   Taxes   has   set 






aside the revised orders and sent back the matter for fresh assessment to 






the assessing officer.   








29.    The   aforesaid   subsequent   development   which   had   taken   place 






during the pendency  of the writ petition  in  the High  Court  has  not been 



addressed   to   and   decided   by   the   High   Court   as   the   High   Court   has 






disposed of the entire writ petition on two issues namely on the issue of 






the ambit and scope of Section 46(4) of the BFT Act, 1981 and also on the 






ground of limitation.








30.    The   Deputy   Commissioner,   Commercial   Taxes   Division   has   pointed 






out in his communication to the Joint Commissioner several loopholes in 






the   revised   assessment   orders   passed   by   the   assessing   officer.     The 






Deputy   Commissioner   has   also   pointed   out   how   the   assessee   has   made 






conflicting   claims   and   statements   and   also   how   while   upholding   such 






contradictory   claims,   there   has   been   a   revenue   loss   for   the   department. 






Alongwith his letter, some of the relevant records were transmitted to the 






Joint   Commissioner.       It   is   true   that   the   Deputy   Commissioner, 






Commercial Taxes Division has brought out and pointed out some of the 






illegalities   and   irregularities  committed   in   the   revised   assessment   orders 






passed   by   his   predecessor   in   the   assessment   orders   relating   to   the 






respondent.








31.    But the impugned notice issued by the Joint Commissioner  ex facie  






indicates   that   he   being   the   competent   authority   has   formed   an 






independent   opinion   and   personal   satisfaction   that   the   legality   and 



propriety   of   the   revised   assessment   orders   has   not   been   established 






because of the reasons specifically stated in the said notice and therefore 






he has thought it fit to exercise his power of suo motu revision consequent 






upon which the aforesaid notice was issued.








32.    There   is   no  reference   in   the   said   notice   to   the   letter   and   any   other 






materials contained with the letter of the Deputy Commissioner anywhere 






in   the   notice   and   therefore,   it   cannot   be   said   that   while   coming   to   the 






aforesaid   conclusion   in   the   impugned   notice,   the   Commissioner   was 






influenced   only   by   the   opinion   of   the   Deputy   Commissioner.       On 






consideration   of   the   records   we   are   satisfied   that   it   was   not   a   revision 






initiated on the basis of any application filed by an aggrieved party namely 






the Deputy Commissioner but initiation of a Revisional proceeding by the 






Joint   Commissioner   by   forming   his   own   opinion   and   satisfaction   to 






exercise suo motu power vested under Section 46(4) of the BFT Act on the 






basis   of  the   materials  on  record.       The   aforesaid  contention   is   therefore, 






rejected.




Issue   2   -   Whether   or   not   the   action   taken   by   the   Department   was 


barred by limitation 



33.    The next issue which now arises for our consideration is whether the 






aforesaid   exercise   of   power   of   drawing   up   a   revisional   proceeding   by 






exercising   suo   motu   power   was   not   exercised   within   the   period   of 






limitation or within a reasonable period of time.








34.    We have also extracted the provision which clearly indicates that no 






period   of   limitation   is   prescribed   for   initiation   of   suo   motu   revisional 






proceeding   by   the   Commissioner   or   the   Joint   Commissioner   as   the   case 






may   be,   whereas   a   period   of   limitation   is   prescribed   for   filing   a   revision 






application   by   an   aggrieved   party   for   initiation   of   the   revisional 






jurisdiction   of the  Commissioner  which  period  is  90  days,   as  is  stood  at 






that relevant time.








35.    The High Court has held that there cannot be an unlimited period of 






limitation even for exercising of suo motu revisional power for initiation of 






a proceeding by the Commissioner or the Joint Commissioner as the case 






may  be   and  therefore  provision  of  Article   137   of  the   Limitation   Act    was 






read into the Act laying down that at least within a period of three years 






from the date of accrual of the cause of action such a power of suo motu 






Revision should be exercised by the Joint Commissioner.   



36.    We   are   again   unable   to   accept   the   aforesaid   contention   as   the 






legislature has not stated in the provision at all regarding the applicability 






of Article 137 of the Limitation Act to Section 46(4) of the BFT Act.   If the 






legislature intended to provide for any period of limitation or intended to 






apply   the  said   provision   of   Article   137   into  Section   46(4),   the   legislature 






would have specifically said so in the Act itself.   When the language of the  






legislature is clear and unambiguous, nothing could be read or added to 






the   language,   which   is   not   stated   specifically.   Therefore,   the   High   Court 






wrongly   read   application   of   Section   137   of   the   Limitation   Act   to   Section 






46(4) of the BFT Act. 








37.    It   is   a   settled   position   of   law   that   while   interpreting   a   statute, 






nothing could be added or subtracted when the meaning of the section is 






clear   and   unambiguous.     In   this   connection   we   may   also   refer   to   the 






decision of this Court in Sakuru vs. Tanaji reported in (1985) 3 SCC 590 






wherein   it   was   stated   by   this   Court   that   the   Limitation   Act   applies   to 






courts and not to quasi judicial authority.  








38.    The aforesaid principle and settled position of law was totally ignored 






by the High Court while laying down that Article 137 of the Limitation Act 






would be applicable to the facts and circumstances of the present case.



39.    We   would,   however,   agree   with   the   position   that   such   a   power 






cannot   be   exercised   by   the   revisional   authority   indefinitely.       In   our 






considered  opinion,   such   extra   ordinary   power   i.e.   suo   motu   power   of 






initiation of revisional proceeding has to be exercised within a reasonable 






period of time and what is   a reasonable period of time would depend on 






the facts and circumstances of each case.








40.    For   this   proposition,   a   number   of   decisions   of   this   Court   can   be 






referred to on which reliance was placed even by the counsel appearing for 






the respondent.










41.  In Sulochana Chandrakant Galande Vs. Pune Municipal Transport 




and   Others  reported   in  (2010)   8   SCC   467,  this   Court   dealing   with   the 




issue of "reasonable time" held as follows:-






          29. In view of the above, we reach the inescapable conclusion 


          that   the   revisional   powers   cannot   be   used   arbitrarily   at   a 


          belated stage for the reason that the order passed in revision 


          under   Section   34   of   the   1976   Act,   is   a  judicial   order.   What 


          should be reasonable time, would depend upon the facts and 


          circumstances of each case.






42.    In  Govt.   of   India   v.   Citedal   Fine   Pharmaceuticals,   Madras   and 




Others reported in  (1989) 3 SCC 483: 



          6.   ......While   it   is   true   that   Rule   12   does   not   prescribe   any 


          period within which recovery of any duty as contemplated by 


          the rule is to be made, but that by itself does not render the 


          rule   unreasonable   or   violative   of   Article   14   of   the 


          Constitution. In the absence of any period of limitation it is 


          settled that every authority is to exercise the power within a 


          reasonable  period. What  would  be  reasonable  period,   would 


          depend upon the facts of each case.....










43.    In  State of Punjab & Ors.   v. Bhatinda District Cooperative Milk 




Producers Union Ltd. reported in (2007)
                                                       11 SCC 363   






          18.   It   is   trite   that   if   no   period   of   limitation   has   been 


          prescribed, statutory authority must exercise its jurisdiction 


          within   a   reasonable   period.   What,   however,   shall   be   the 


          reasonable   period   would   depend   upon   the   nature   of   the 


          statute,   rights   and   liabilities   thereunder   and   other   relevant 


          factors.






44.    Now,   the   question   that   arises   for   our   consideration   is   whether   the 






power   to   exercise   Suo   motu   revisional   jurisdiction     by   the   Joint 






Commissioner   in   the   present   cases   was   exercised   within   a   reasonable 






period.     On perusal of the records, we find that such powers have been 






exercised   within   about   three   years   of   time   in   some   cases   and   in   some 






cases   soon   after   the   expiry   of   three   years   period.     Such   period   during 






which power was exercised by the Joint Commissioner cannot be said to 






be unreasonable by any stretch of imagination in the facts of the present 






case.       Three   years   period   cannot   be   said   to   be   a   very   long   period   and 



therefore, in all these cases, we hold that the power was exercised within 






a reasonable period of time.








Issue   3:   Whether   the   order   dated   26.11.2007   passed   by   the   Joint 


Commissioner is proper and could be maintained;




45.    Having decided the aforesaid two issues in the aforesaid manner, the 






next     and the  last  issue   that  arises for  our  consideration   is  whether   the 






order   dated   26.11.2007   passed   by   the   Joint   Commissioner   setting   aside 






the   revised   assessment   order   dated   27.12.2003   is   proper   and   could   be 






maintained, as the said order was passed during the pendency of the writ 






petition in the High Court.








46.     On this issue also, we have heard the learned counsel appearing for 




the   parties.   The   aforesaid   order   dated   26.11.2003   was   passed   while   the 






respondent was fighting out the litigation in the High Court and therefore, 






it was not possible for the assessee to give his entire focus and attention 






and   also   to   give   full   concentration   to   the   aforesaid   proceeding   pending 






before   the   Joint   Commissioner.     The   learned   counsel   appearing   for   the 






appellant   also   could   not   dispute   the   fact   that   the   respondent   was 






somewhat handicapped in contesting the aforesaid matter very effectively 






before the Joint Commissioner.   



47.    Considering the entire facts and circumstances of the case, we also 






set   aside   the   order   dated   26.11.2007   and   remit   back   the   matter   to   the 






Joint Commissioner once again to hear the parties and to pass fresh order 






in   respect   of   the   legality   and   propriety   of   the   revised   assessment   order 






dated 26.12.2003.  Consequently, the matter is now remitted to the Joint 






Commissioner of Commercial Taxes to pass order in accordance with law 






giving   reasons   for   its   decisions   as   expeditiously   as   possible.     The 






impugned   judgment   and   order   passed   by   the   High   Court   is   set   aside   to 






the aforesaid extent while remitting back the matter as aforesaid, leaving 






the parties to bear their own costs. 








                                                .....................................................J


                                           (Dr. MUKUNDAKAM SHARMA)










                                                .....................................................J


                                        (ANIL R. DAVE)






NEW DELHI


AUGUST 10, 2011

whether the cost of packing charges expended/incurred by the appellant-company is liable to be included in the assessable value of the motorcycles manufactured by the appellant-company. 3. The appellant-company, previously known as M/s. Eicher Limited - unit Royal Enfield Motors, are manufacturing motorcycles falling under Chapter 87 of the Central Excise Tariff Act, 1985. The issue relates to non-inclusion of the value of packing charges by the assessee-company in the assessable value for motorcycles despite the fact that the said motorcycles were cleared by the assessee to the dealers located outside Chennai by sending them to their various depots on stock transfer basis and in packed condition from their factory during the period from April, 1999 to December, 1999. 4. At the time of removal from the factory to depot the motorcycles were cleared in fully packed condition. It is also established from records that Rs. 190/- is being charged as packing charges by the appellant and, therefore, the said amount which was collected as packing charges must have been passed on to the buyers.

                                                                         REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                          CIVIL APPELLATE JURISDICTION




                          CIVIL APPEAL NO.  4406 OF 2010




M/s. Royal Enfield (Unit of M/s. Eicher Ltd.)                     ....Appellant




                                          VERSUS




Commissioner of Central Excise, Chennai                  ....Respondent




                                       JUDGMENT





Dr. MUKUNDAKAM SHARMA, J.




1.    By   this   judgment   and   order   we   propose   to   dispose   of   this   appeal


      which   is   filed   by   the   appellant-company   challenging   the   judgment



      and order dated 24.11.2009 of the Customs, Excise and Service Tax



      Appellate   Tribunal   [for   short   "the   Tribunal"],   Chennai,   whereby   the



      Tribunal   rejected   the   appeal   filed   by   the   appellant   and   upheld   the



      order of the Commissioner of Central Excise [Appeals], Chennai.




2.    The issue that arises for our consideration in the present case is as


                                        Page 1 of 12


      to   whether   the   cost   of   packing   charges   expended/incurred   by   the



      appellant-company is liable to be included in the assessable value of



      the motorcycles manufactured by the appellant-company.




3.    The appellant-company, previously known as M/s. Eicher Limited  -


      unit   Royal   Enfield   Motors,   are   manufacturing   motorcycles   falling



      under   Chapter   87   of   the   Central   Excise   Tariff   Act,   1985.   The   issue



      relates   to   non-inclusion   of   the   value   of   packing   charges   by   the



      assessee-company   in   the   assessable   value   for   motorcycles   despite



      the fact that the said motorcycles were cleared by the assessee to the



      dealers   located   outside   Chennai   by   sending   them   to   their   various



      depots   on   stock   transfer   basis   and   in   packed   condition   from   their



      factory during the period from April, 1999 to December, 1999.




4.    At the time of removal from the factory to depot the motorcycles were


      cleared in fully packed condition. It is also established from records



      that Rs. 190/- is being charged as packing charges by the appellant



      and,   therefore,   the   said   amount   which   was   collected   as   packing



      charges   must   have   been   passed   on   to   the   buyers.   The   appellant-



      company   filed   price   declaration   in   Annexure-II   for   the   vehicles   sold



      from   their   depots   and   therein   declared   the   depot   sale   price   per



      vehicle   and   claimed   abatement   of   Rs.   190/-   per   vehicle   towards


                                        Page 2 of 12


      packing charges.




5.    A show cause notice dated 4.10.1999 was issued by the respondent


      to   the   appellant-company   for   the   period   from   April,   1999   to



      September,   1999   directing   them   to   show   cause   as   to   why   the



      aforesaid   abatement   claimed   of   Rs.   190/-   should   not   be   disallowed



      and   as   to   why   a   differential   duty   of   Rs.   4,41,043/-   and   Cess   of



      Rs.   2,228/-   should   not   be   demanded.   Thereafter,   another   similar



      show cause notice dated 24.2.2002 was also issued for a subsequent



      period,   i.e.,   from   October,   1999   to   December,   1999   demanding



      differential duty of Rs. 2,45,602/- and Cess of Rs. 1,279/-.




6.    The Assistant Commissioner of Central Excise, Chennai `C' Division


      passed   an   order-in-original   disallowing   the   abatement   of   Rs.   190/-



      claimed by the assessee towards the cost of packing and upheld the



      demand   made   in   the   show   cause   notices.     While   recording   the



      aforesaid   finding   and   the   conclusion,   the   Assistant   Commissioner



      referred to the decision of this Court in the case of  Government of


      India   v.   M/s.   Madras   Rubber   Factory   Limited  reported   in  1995


      (77) ELT 433 (SC): (1995) 4 SCC 349  and on another order of the


      Customs,   Excise   and   Service   Tax   Appellate   Tribunal,   New   Delhi   in



      the case of Commissioner of Central Excise, Jaipur v. M/s. Eicher


                                        Page 3 of 12


      Limited reported in 2001 (136) ELT 1029 [Tri. Delhi] in which the


      Tribunal,   in   respect   of   the   same   assessee,   held   that   the   cost   of



      packing is to be included in the assessable value of the motorcycles



      manufactured   by   it.   Aggrieved   by   the   aforesaid   order-in-original   of



      the   Assistant   Commissioner   the   appellant-company   filed   an   appeal



      before the Commissioner of Central Excise [Appeals], Chennai which



      got rejected by order dated 23.07.2003 while relying on the decision



      of   CESTAT,   Delhi   in   the   case   of  Commissioner   of   Central   Excise,


      Jaipur [supra].




7.    Being   aggrieved   by   the   said   order   of   the   Commissioner   of   Central


      Excise   [Appeals],   Chennai   assessee-company   filed   an   appeal   before



      the   Tribunal,   Chennai   which   also   was   rejected   by   the   impugned



      judgment   and   order   dated   24.11.2009   and,   therefore,   the   present



      appeal was filed in this Court by the appellant-company on which we



      heard the learned counsel appearing for the parties.




8.    During the course of hearing our attention was drawn to Section 4 of


      the Central Excise Act, 1944 [for short "the Act"], the relevant portion



      of   which   is   extracted   below   for   better   understanding   and   ready



      reference: -



           "Section 4. Valuation  of excisable goods for purposes of charging



                                        Page 4 of 12


of duty of excise -

(1) Where under this Act, the duty of excise is chargeable on any

excisable goods with reference to value, such value, shall, subject

to the other provisions of this section, be deemed to be -

        (a)   the   normal   price   thereof,   that   is   to   say,   the   price   at

        which such goods are ordinarily sold by the assessee to a

        buyer in the course of wholesale  trade  for delivery at the

        time   and   place   of   removal,   where   the   buyer   is   not   a

        related   person  and  the  price is  the  sole  consideration   for

        the sale:

                        ........................................

                        ........................................

(4) For the purposes of this section, -

        (a) "assessee" means the  person who  is liable  to  pay the

        duty of excise under this Act and includes his agent;

        (b) "place of removal" means -

                  (i)   a   factory   or   any   other   place   or   premises   of

                  production or manufacture of the excisable goods;

                  (ii)   a   warehouse   or   any   other   place   or   premises

                  wherein   the   excisable   goods   have  been   permitted

                  to be deposited without payment of duty;

                  (iii)   a   depot,   premises   of   a   consignment   agent   or

                  any   other   place   or   premises   from   where   the

                  excisable goods are to be sold after their clearance

                  from the factory and,

                  From where such goods are removed;

        (ba)   "time   of   removal",   in   respect   of   goods   removed   from

        the place of removal referred to in sub-clause (iii) of clause

        (b),   shall   be   deemed   to   be   the   time   at   which   such   goods

        are cleared from the factory;

                        ........................................

                        ........................................

        (d) "value", in relation to any excisable goods, -

                  (i)   where   the   goods   are   delivered   at   the   time   of

                  removal in a packed condition, includes the cost of

                  such packing except the cost of the packing which

                  is   of   a   durable   nature   and   is   returnable   by   the

                  buyer to the assessee.

        Explanation  -   In   this   sub-clause,   "packing"   means   the

        wrapper, container, bobbin, pirn, spool, reel or warp beam

        or   any   other   thing   in   which   or   on   which   the   excisable


                             Page 5 of 12


                     goods are wrapped, contained or wound;

                                   ........................................

                                   ........................................"




9.    Relying   on   the   same   counsel   appearing   for   the   appellant-company


      submitted before us that the cost of the packing material cannot be



      included in the assessable value because the said cost of the packing



      material   cannot   be   said   to   be   the   price   at   which   such   goods   are



      ordinarily sold by the assessee to a buyer in the course of wholesale



      trade for delivery at the time and place of removal. He also submitted



      that   the   requisite   packing   is   done   so   as   to   avoid   scratch   to   the



      painted body and breakage of the lights fitted on to the motorcycles



      during   transportation,   and   therefore,   the   cost   of   the   aforesaid



      packing was not includable as per Section 4 of the Central Excise Act



      to   the   value   of   the   motorcycles.   In   support   of   the   aforesaid



      contentions   he   relied   and   referred   to   various   judgments   of   this



      Court,   viz.,  Union   of   India   &   Ors.   V.   Bombay   tyre   International


      Ltd. reported at 1983 (14) ELT 1896 (SC); Union of India & Ors. v.


      Godfrey Philips India Ltd. & Ors.  reported at  1985 (22) ELT 306


      (SC)  and  Hindustan   Polymers   v.   collector   of   Central   Excise


      reported at 1989 (43) ELT 165 (SC).




10. Counsel   appearing   for   the   respondent,   however,   submitted   that   the



                                        Page 6 of 12


   aforesaid submissions are untenable in view of the settled position of



   law in the decision of this Court in the case of Government of India


   v. M/s. Madras Rubber Factory Limited  [supra]. He also drew our


   attention to the fact that the appellant has been realizing Rs. 190/-



   as packing charges from the buyers, therefore, the entire amount is



   passed   on   to   the   buyers   by   the   appellant-company.   He   also



   submitted   that   the   cases   relied   upon   by   the   counsel   appearing   for



   the   appellant   are   distinguishable   on   facts.   In   the   light   of   the



   aforesaid   submissions   made   on  behalf   of   the   counsel   appearing   for



   the parties we would proceed to discuss and answer the issue raised



   before us.




11. The   provisions   extracted   hereinbefore   from   the   Central   Excise   Act



   would   indicate   that   there   is   express   provision   in   Section   4   for



   including   the   cost   of   packing   in   the   determination   of   value   for   the



   purpose   of   excise   duty.   Sub-Section   4   (d)(i)   along   with   explanation



   has   relevant   bearing   on   the   present   case.   According   to   the   said



   provision where goods are delivered at the time of removal from the



   factory gate in a packed condition the value would include the cost of



   such packing but would not include such cost of packing which is of



   a durable nature and is returnable by the buyer to the assessee.




                                      Page 7 of 12


12. In  Union   of   India   &   Ors.   V.   Bombay   Tyre   International   Ltd.



  reported at 1983 (14) ELT 1896 (SC): (1984) 1 SCC 467 this Court



  had an occasion to deal with the said provision and in paragraph of



  the said judgment this Court has held thus: -





  "15.   The   case   in   respect   of   the   cost   of   packing   is   somewhat

  complex.   The   new  Section   4(4)(d)(i)   has   made   express   provision

  for  including  the   cost   of   packing   in   the   determination   of   "value"

  for   the   purpose   of   excise   duty.   Inasmuch   as   the   case   of   the

  parties   is   that   the   new   Section   4   substantially   reflects   the

  position   obtaining   under   the   unamended   Act,   we   shall   proceed

  on the  basis  that  the position  in regard  to the  cost of packing is

  the same under the Act, both before and after the amendment of

  the Act. Section 4(4)(d)(i) reads:

         "(4) For the purposes of this section,--

               *         *         *

            (d) "value" in relation to any excisable goods,--

            (i) where the goods are delivered at the time of removal in

            a   packed   condition,   includes   the   cost   of   such   packing

            except   the   cost   of   the   packing   which   is   of   a   durable

            nature and is returnable by the buyer to the assessee."

            Explanation.--In   this   sub-clause   `packing'   means   the

            wrapper,   container,   bobbin,   pirn,   spool,   reel   or   warp

            beam   or   any   other   thing   in   which   or   on   which   the

            excisable goods are wrapped, contained or wound;"

  It   is   relevant   to   note   that   the   packing,   of   which   the   cost   is

  included,   is   the   packing   in   which   the   goods   are   wrapped,

  contained or wound when the goods are delivered at the time of

  removal. In other words, it is the packing in which it is ordinarily

  sold in the course of wholesale trade to the wholesale buyer. The

  degree of packing in which the excisable article is contained will

  vary   from  one   class   of   articles   to   another.   From   the   particulars

  detailed  before us by the  assessees, it is apparent that  the cost

  of   primary   packing,   that   is   to   say,   the   packing   in   which   the

  article   is   contained   and   in   which   it   is   made   marketable   for  the

  ordinary consumer, for example a tube of toothpaste or a bottle of


                                        Page 8 of 12


   tablets  in a cardboard  carton,  or biscuits  in a paper  wrapper  or

   in   a   tin   container,   must   be   regarded   as   falling   within   Section

   4(4)(d)(i).   That   is   indeed   conceded   by   learned   counsel   for   the

   assessee.   It   is   the   cost   of   secondary   packing   which   has   raised

   serious dispute.  Secondary  packing  is of different grades. There

   is   the   secondary   packing   which   consists   of   larger   cartons   in

   which   a   standard   number   of   primary   cartons   (in   the   sense

   mentioned earlier) are packed. The large cartons may be packed

   into even larger cartons for facilitating the easier transport of the

   goods   by   the   wholesale   dealer.  Is   all   the   packing,   no   matter   to

   what degree, in which the wholesale dealer takes delivery of the

   goods   to   be   considered   for   including   the   cost   thereof   in   the

   "value"? Or does the law require a line to be drawn somewhere?

   We must remember that while packing is necessary to make the

   excisable   article   marketable,   the   statutory   provision   calls   for

   strict   construction   because   the   levy   is   sought   to   be   extended

   beyond   the   manufactured   article   itself.   It   seems   to   us   that   the

   degree   of   secondary   packing   which   is   necessary   for  putting   the

   excisable   article   in   the   condition   in   which   it   is   generally  sold   in

   the wholesale market at the factory gate is the degree of packing

   whose   cost   can   be   included   in   the   "value"   of   the   article   for  the

   purpose of the  excise levy.  To that  extent,  the  cost of secondary

   packing cannot be deducted from the wholesale cash price of the

   excisable article at the factory gate."





13. In  Union   of   India   &   Ors.   v.   Godfrey   Philips   India   Ltd.   &   Ors.



   reported   at  1985   (22)   ELT   306   (SC)  this   Court   again   considered  a



   similar issue. What was decided by the majority of Judges in the said



   case   was   that   the   cost   of   packing   done   for   protection   of   excisable



   goods   during   the   transportation   is   also   includible   in   assessable



   value.   The   said   case   basically   revolved   round   the  cost   of   corrugated


   fibreboard containers and all the three learned Judges uniformly reiterated the




                                         Page 9 of 12


   principles   and   the   test   evolved   in  Bombay   Tyre   International  but   arrived   at


   divergent conclusions (the majority comprising Pathak and Sen, JJ. taking one


   view and Bhagwati, C.J., the other) on the basis of differing perceptions as to


   the factual situation in that case. As was noted in the said case the majority


   and minority came to different conclusions not on account of their adopting a


   different test or principle but only on account of their differing perceptions of


   the factual situation. So far as the test applicable is concerned, all the three


   learned Judges were at one and in agreement.




14. Finally   in   the   decision   of  Government   of   India   v.   Madras   Rubber



   Factory   Ltd.  reported   at  1995   (77)   ELT   433   (SC)  a   three-Judge


   Bench   of   this   Court   held   that   where   the   goods   are   delivered   in   a



   packed   condition   at   the   time   of   removal   the   cost   of   such   packing



   shall   be   included.   While   recording   the   aforesaid   conclusion   this



   Court took notice of the aforesaid definition of value as given in sub-



   Section   4   of   Section   4   of   the   Act.   After   noticing   the   aforesaid



   definition it was held that the provision in the sub-clause is a plain



   one   and   does   not   admit   of   any   ambiguity   as   what   it   says   is   that



   where   the   goods  are  delivered   in  a  packed   condition,   at  the  time   of



   removal,   the   cost   of   such   packing   shall   be   included   and   that   only



   where such packing is of a durable nature and is returnable by the



   buyer   to   the   assessee,   should   the   cost   of   such   packing   be   not



                                       Page 10 of 12


   included in the value of the goods. It was also held in that decision



   that   the   concept   of   primary   and   secondary   packing   which   is



   recognized   to   some   extent   in   the   decision   of   this   Court   in  Bombay


   Tyre   International   Ltd.  case   [supra],   which   is   not   possible   to   be


   wished away and is merely a refinement and is not borne out by the



   express language of the enactment and, therefore, the same is to be



   resorted   to   with   care   and   circumspection.   Thereafter,   the   Court



   proceeded   to   discuss   the   case   of  Bombay   Tyre   International   Ltd.



   [supra] and also the decision in  Godfrey Philips India Ltd. & Ors.



   [supra].   Having   discussed   both   the   cases,   this   Court   laid   down   the



   test in the following terms: -




         "43.   ..........Whether   packing,   the   cost   whereof   is   sought   to   be

         included   is   the   packing   in   which   it   is   ordinarily   sold   in   the

         course   of   a   wholesale   trade   to   the   wholesale   buyer.   In   other

         words,   whether   such   packing   is   necessary   for   putting   the

         excisable article in the condition in which it is generally sold in

         the wholesale market at the factory gate. If it is, then its cost is

         liable  to be  included  in  the  value  of  the  goods; and  if  it is  not,

         the cost of such packing has to be excluded.


         ......................."





15. The   aforesaid   decision   was   rendered   by   this   Court   with   respect   to



   "tyres" which also were sold at the factory gate in a packed condition



   for onward easy transportation. In the background of the said case, it




                                     Page 11 of 12


   was   held   that   the   cost   of   such   packing   would   be   included   in   the



   assessable value.




16. Almost   similar   are   the   facts   of   the   present   case.   The   authorities



   below   as   also   the   Tribunal   found   that  the   facts   of   the   present   case



   entirely fit in the facts of the aforesaid decision in the case of Madras


   Rubber Factory Ltd.  [supra]. The said three authorities as also the


   Tribunal on analyzing the records came to a finding that the packing



   which   is   given   by   the   appellant-company   to   their   motorcycles   is



   necessary for putting the excisable article in the condition in which it



   is   generally   sold   in   the   wholesale   market   at   the   factory   gate   and,



   therefore, such cost is liable to be included in the value of the goods



   and   the   cost   of   such   packing   cannot   be   excluded.     The   aforesaid



   conclusions are based on cogent reasons and are also supported by a



   well-reasoned decision of three Judges Bench of this Court.




17. Although,   the   counsel   appearing   for   the   appellant-company



   vehemently submitted that the facts of this case are more akin to the



   cases   of  Bombay   Tyre   International   Ltd.  [supra]   and   also   to   the



   that   of  Godfrey   Philips   India   Ltd.   &   Ors.  case   [supra]   having



   considered   the   above   situation   of   facts   and   law,   we   are   of   the



   considered opinion, that all the aforesaid decisions, which are relied


                                     Page 12 of 12


  upon by the counsel appearing for the appellant, were taken notice of



  in the subsequent decision in  Madras Rubber Factory Ltd.  [supra]



  and   this   Court   after   detailed   discussion   of   such   cases   has   given   a



  very   reasoned   order   which   is   applicable   to   the   facts   of   the   present



  case in full force.




18. Therefore,   we   agree   and   confirm   the   findings   recorded   by   the



  Tribunal as also by the authorities below and dismiss this appeal but



  leaving the parties to bear their own costs.




                                                    ............................................J

                                                     (Dr. MUKUNDAKAM SHARMA)




                                                   .............................................J

                                                 (ANIL R. DAVE)

NEW DELHI,

AUGUST 10, 2011.





                                    Page 13 of 12