Summary
Answering a larger-Bench reference on excise valuation, the Supreme Court held that the measure of a manufacture-based levy need not be confined to manufacturing cost and profit, provided it retains a reasonable nexus with the levy’s nature. It affirmed Bombay Tyre International and confined Acer India’s observations to its non-dutiable software context. The 2000 transaction-value definition incorporated permissible value additions already recognised under normal-price valuation; no discernible conceptual difference existed in that respect.
Issues
- Whether Section 4’s measure of excise duty is controlled by Section 3’s manufacture-based charge.
- Whether transaction value materially departed from the judicially developed normal-price concept and whether the cited precedents conflicted.
Provisions considered
- Sections 3 and 4, including Section 4(3)(d), as considered after the 2000 amendments, Central Excise Act, 1944Charge and valuation operate in their respective fields, subject to reasonable nexus. Transaction value recognises permissible additions enriching value and facilitating sale rather than only manufacturing cost and profit. (¶¶ 2, 3, 6, 7, 15, 16, 17, 20, 21, 22, 23)
Held
- The nature of excise as a levy on manufacture is distinct from its stage of collection and measure. Legislative choice of a broader measure is permissible while a reasonable nexus with the levy’s essential character remains. (¶¶ 6, 8, 9, 10, 11, 12, 14, 17, 23)
- Bombay Tyre International correctly rejected restriction of assessable value to manufacturing cost plus manufacturing profit. Appropriate additions contributing to the article’s value and marketability can enter valuation. (¶¶ 14, 16, 17, 18, 19, 20)
- Acer India’s statement concerning subservience to the charging provision arose from attempted inclusion of separately non-dutiable software in computer valuation. Understood in that limited context, it did not conflict with Bombay Tyre International. (¶ 22)
- The 2000 transaction-value definition statutorily incorporated additions judicially permitted under the former normal-price framework and reflected the changed description of the levy in Section 3. No discernible difference existed between those concepts as explained in this reference. (¶¶ 21, 23, 24)
Result
Reference answered on all three questions. Bombay Tyre International affirmed; Sections 3 and 4 operate in their respective fields subject to reasonable nexus, with transaction value incorporating permissible normal-price additions.