Usha Beltron Ltd. vs Union Of India (Uoi)
2000 Latest Caselaw 758 Del

ORDER

Arijit Rasayat, C.J.

1. The only question that needs adjudication in this case is whether the petitioner is entitled to receive the excise duty component as indicated in the price bid made by it, at the rate of 18% or 16%.

2. For adjudication of this case, a brief reference to the factual aspect would be necessary.

Petitioner, a public limited company, is engaged in the manufacture of Polyethylene insulated Jelly Filled (PIJF) cables. In response to an advertisement for supply, inter alia, of PIJF cables, petitioner participated in the tender and has been supplying PIJF underground cables to Telecom Centres of Ministry of Telecommunication. The price indicated and accepted as per the general conditions of contract was that the excise duty is to be separately indicated. This is evident from the following clause in the tender document:

"9.2 The prices of the goods shall be quoted ex-factory. Excise duty, Sales Tax and other statutory taxes payable shall be quoted separately item wise."

The article in question is excisable goods and attracts levy of Excise duty under Central Excise Tariff Act, 1986 (in short, Tariff Act) and the Central Excise Act, 1944 (in short, the Act). As per Entry 85.44 in Schedule-I of the Tariff Act, during the relevant period i.e. financial year 1998-99, Excise duty was liable to be paid @ 18%. Subsequently, the rate was changed in the Union Budget for 1999-2000 and the rate was fixed at 16% w.e.f. 28-2-1999.

3. In the aforesaid undisputed background, petitioner's case is that after goods had left its go down/premises for delivery to the respondent's place of delivery, the old rate of 18% was applicable and was liable to be paid by the respondent in terms of price list.

4. Learned Counsel for the respondent submitted that the title in the goods passed only after delivery of the goods to the respondent and that event having taken place after 28-2-1999, and therefore reduced rate of 16% was applicable.

5. In order to appreciate the rival contentions, a few clauses in the tender documents and general conditions of tender are to be noticed.

6. As noted above Clause 9.2 in the tender document related to bid price and it was stipulated therein that the prices to be quoted were ex-factory, and Excise Duty was to be quoted separately. Clause 6.1 of the General Conditions of the Contract deals with the "Delivery and Documents" and reads as follows :

"6.1 Delivery of the goods and documents shall be made by the Supplier in accordance with the terms specified by the Purchaser in its Schedule of Requirements and special conditions of contract and the goods shall remain at the risk of the Supplier until delivery has been completed. The delivery of the equipment shall be to the ultimate consignee as given in the purchase order."

Prices are indicated in Clause 12.1 and the same reads as follows :

12.1(i)(b) in the case of revision of statutory levies/taxes during the supply period the purchaser reserves the right to ask for reduction in the prices.

(ii)(a) Price once fixed will remain valid for the period of delivery, increase and decrease in taxes and other statutory duties will not affect the price during this period.

7. On a combined reading of Clauses 12.1(i)(b) and 12.1(ii)(a), it is clear that in case of revision of statutory levies the respondent reserves his right to ask for reduction in price. What is contemplated relates to a situation where there was reduction in the case of statutory levies or tax. Price once fixed remains valid for the period of delivery and increase and decrease in duty does not effect this period. In the event of reduction of rate, purchaser has been given a right to ask for reduction. Here the rate has decreased but the petitioner is asked to pay duty at a particular rate because of the factual position that goods have left its go down/premises . Purchaser cannot take ad vantage in the reduction of rate. That is impossible because the price is quoted exclusive of Excise Duty which the contractor has to pay. Payment of lesser amount on account of reduction in duty while getting the quoted amount from the purchaser would not be equitable and would also be contrary to the spirit of Clause 12.1(ii)(a) which is intended to take care of such a situation. In other words if the supplier pays lesser amount as duty on account of reduction of rate, yet received the higher amount in terms of the agreement that would amount to unjust enrichment. To avoid such a contingency, purchaser has been given the right to seek revision of price. But the case at hand does not fit into that category. Liability to pay excise duty @ 18% existed in respect of goods which left the go down/premises of petitioner on or before 28-2-1999. This factual position is not disputed by the respondent. That being the position, in our considered opinion the petitioner is entitled to recover Excise Duty @ 18% as duty component from the respondent. Our conclusion would be applicable in respect of those goods which have left the premises of the petitioner on or before 28-2-1999. Petitioner will be required to furnish proof of these factual aspects before the respondent to be entitled to receive Excise Duty @ 18%. Circular dated 31-8-1998 has to be read in that line. Even though the Counsel for the petitioner states that there is some element of change in the Modvat ac count, there is no reference to this aspect in Annexure P/2. It is open to the petitioner to take up the matter with the respondent or other authority, who according to it can take a decision on the issue. We make it clear, we have not expressed any opinion on that regard.