Sabyasachi Mukherjee, J.:— The subject matter of challenge in this application under Article 226 of the Constitution is determination of assessable value of certain chemicals under Central Excises and Salt Act, 1944.

2. The petitioner carries on the business in the manufacture and sale, inter alia of Rubber Processing Chemicals such as Accelerators and Antioxidants, which in turn are mainly used for the manufacture of rubber goods like automobile tyres and tubes footwear, belting pcses etc. Some of the said Chemicals are also used by the petitioner for what is commonly known as captive consumption in the manufacture of other special accelerators and antioxidants. Approximately 90% of the sales of the said Chemicals are made in bulk by the petitioner directly to the consumers throughout India, namely, Dunlop India Limited, Firestone Tyre and Rubber Co. of India (Pvt.) Ltd., Ceat Tyre of India Ltd. Madras, Rubber Factory, Inchek Tyres Ltd., Premier Tyres Ltd., Goodyear India Ltd. and Bata Shce Co. Ltd. The remaining quantity is sold through a network of Stockists located in various parts of India having dealings with rubber goods manufacturers operating in smaller scale. The petitioner has no sole selling agent for the said Chemicals. The petitioner has, however, appointed three stockists in Bombay region and two each in Delhi, Calcutta and Madras regions. The petitioner has also regional selling offices at Bombay, Delhi, Calcutta and Madras. The petitioner maintains all India selling prices on a uniform scale being the petitioner's list prices in respect of the said chemicals. All sales made by the petitioner are at the list prices. The stockists, however, are allowed 2½% commission and/or discount on the said prices. The cost of packing/freight/handling/service charges etc. upto the point of sales from the four regional selling offices are included in the selling prices. By virtue of the Finance Act, 1973, the said chemicals, namely, accelerators and antioxidants became excisable under Item 65 of the First Schedule of the Central Excises and Salt Act, 1944 with effect from the 1st April, 1973. The said chemicals were cleared by the petitioner under self removal procedure laid down in Chapter VII-A of the Central Excise Rules, 1944. The petitioner was maintaining an account current commonly known as P.L.A, in which the amounts deposited are credited. The amounts are deposited in the Treasury from time to time in order to cover the Excise duty payable on the Chemicals. At the time of clearance of the said Chemicals the duty payable thereon is debited in the said account current. The petitioner has also been filing monthly returns in what is known as Form No. RT-12 in respect of clearance of the said Chemicals under which the pjtitionir was provisionally assessed. On or about the 30th March, 1973 the petitioner furnished a bond for Rs. 20,000/- guaranteed by the National and Grindlays Bank. According to the petitioner the said Chemicals are not sold at the factory gate of the petitioner at Rishra in the normal course of business. The nearest place of sale of the said Chemicals in Calcutta. By its letter dated the 12th March, 1973 the petitioner submitted to the respondent No. 4 its price list in respect of the said Chemicals for approval as required under Rule 173C of the Central Excise Rules, 1944. By the said letter the petitioner slab indicated that it would clear the said Chemicals pending approval of the price list upon payment of the Excise duty on the assessable value of the said Chemicals as determined by the petitioner and shown in the enclosure thereto. The said enclosure has been annexed to the petition. It appears that in the said enclosure the petitioner has indicated under column 5 ex-factory wholesale cash price excluding Central Excise duty. The petitioner has also given a chart to show how the assessable value has been computed. In that chart the petitioner has indicated the list price in Column A and under Column B the petitioner has indicated what according to the petitioner was the post manufacturing expenses as per actuals (details being attached) which amounted to Rs. 55 lakhs and the petitioner calculated the average for India at the rate of 13.8% of the list price. Under Column C selling profit as per actuals has been indicated which has been averaged at 8% of the list prices and under Column D the assessable value has been computed in rupees after deducting from. A both the figures mentioned at B and C. The petitioner has also indicated what according to the petitioner was the details of the post manufacturing expenses leased on 1971 and 1972 actuals. In the analysis of the said details, the petitioner has mentioned the expenses on account of realisation, packing material, technical fee, freight, distribution and selling profit. The petitioner has also indicated the percentage of post manufacturing expenses to realisation which the petitioner has computed at 13.87 and the percentage of selling profit to realisation, which the petitioner has computed at 6.8%.

3. There was a requisition by the respondent No. 4 and pursuant to the requisition contained in the letter dated 9th April, 1973, the representative of the petitioner appeared on the 3rd May, 1973 and discussed the matter with the petitioner. Thereafter, certain documents were required by the Assistant Collector of Central Excise and in compliance thereof, the petitioner by its letter dated the 22nd July, 1974 submitted to the said Assistant Collector a copy of the balance sheet for the year ending 30th September, 1973 and also copies of the agreement with its stockists. The other documents according to the petitioner being voluminous and being vague and of general description, the petitioner offered inspection and scrutiny of the documents at the petitioner's place of business. Thereafter, on the 10th October, 1974 the respondent No. 3 being the Assistant Collector of Central Excise, passed the order which is the subject matter of challenge in this application. In the said impugned order the respondent No. 3 stated, inter alia, as follows:

“On study of the Marketing Organisation and Pattern of Sale, of the Products the following facts reveals:

The goods produced by the assessee are being marketed by themselves through their own chain for supplies. Rubber processing Chemicals are industrial goods of highly sophisticated nature requiring high expertise supervision and post sale advice to bulk users and in all the stages the supervision is indispensable by the manufacturer. In very limited cases a few small independent stockists were appointed to handle small quantity of retail sales in few localities in India the entire process of manufactures and sales fell into in integrated pattern of manufacture of an intermediate industrial goods in the organised sector of the industry where production and sales were but two phases of the same function of catering to the need of the Rubber Industries in the country where output were always undertaken on a basis of previous booking of the sales orders and market survey.

All sales are being undertaken on the basis of agreement with the party and the agreements depict the overriding control of the assessee even for subsequent dealings of the commodity in question.

The assessee has an equalised price throughout India. The mode of sale of the goods does not specify any existence of market at the factory gate or at Calcutta.

Assessee has no separate profit and loss account for their sales organisation, which for all intents and purposes is under the same management control of the company.

Assessee was given a chance to establish the contention for claiming deduction of post manufacturing expenses and selling profit from their listed price in order to ascertain the assessable value of the goods which they availed but could not establish themselves.

It may be mentioned that assessee is collecting C. Ex. duty from the party on the listed price but duty is being paid by them on the assess able value ascertained after deduction of post manufacturing expenses and selling profit from their listed price. Balance sheet shows that expenditure due to commission on sales which is a conclusive evidence that no discount is paid by the company to any one and the sales are therefore sold through appointed agents only.

After careful study of the marketing organisation and pattern of sale, I hold that the assessable value will be under section 4(b) of C. Ex. and Salt Act, 1944. Listed price without any deduction whatsoever should be the assessable value. Freight and packing charges and service charges of billed by assessee should also be loaded to the assessable value.”

4. Thereafter demands were raised on the basis of the said order. It is this order which is Annexure ‘jD’ to the petition which is the subject matter of challenge in this application under Art. 226 of the Constitution.

5. The question is, therefore, whether the said order determining the assessable value of the said Chemicals under the Central Excises and Salt Act, 1944 is legal and valid. In order to appreciate this question it would be necessary to refer to certain provisions of the statute. Sub-section (1) of section 3 of the Central Excises and Salt Act, 1944 provides that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt, which are produced or manufactured in, India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates set forth in the First Schedule to the said Act. Section 4 of the Act provides as follows:

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6. Under the scheme of the Act excise is a duty on production or manufacture of the items which are excisable. It is important to emphasise this aspect of the matter. Liability to duty under the Act arises on the production or manufacture Section 3 makes that position clear beyond doubt. Duties can be imposed by numbers, weight, measurements etc. or ad valorem, i.e at certain per cent on the valuation of the property. Section 4 provides for determination of the value for the purpose of duty where the item is chargeable with duty at rates depending on the value of the article. The Section provides two alternative methods in case where wholesale cash price in respect of an article of the like kind and quality is available or as ascertainable then clause (a) would be applicable and the value has to be determined in the manner provided in clause (a) of section 4 of the Act, and where such wholesale cash price is not ascetainable the value has to be determined in the manner contemplated by clause (b) of Section 4 of the Act. Section 29 and Section 30 of the Sea Customs Act, 1878 which contained similar provisions provided as follows:—

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7. In Ford Motor Co. v. Secretary of State, A.I.R (1939) P.C 15 : 1978 E.L.T (J 265), the judicial committee observed that the word “ascertain able” in clause (b) of Section 30 imported more that could be satisfied by the result of mere estimate. In the case of A.K Roy v. Voltas Ltd. [1977 E.L.T (J 177)], the Supreme Court observed that a wholesale market did not always mean that there should be an actual place where articles were sold and bought on a wholesale basis. These words could also mean the potentiality of the articles being sold on a wholesale basis. So, even if there was no market in the physical sense of the term at or near the place of manufacture where the articles of like kind and quality were or could be sold, that would not in any way affect the existence of any market in the proper sense of the term provided the articles themselves could be sold wholesale to traders, even though the articles were sold to them on the basis of agreements which conferred certain extra commercial advantages upon them. The Supreme Court, further, observed that Section 4 of the Act provided that the real value should be found out after deducting the selling cost and selling profit and the real value can include only the manufacturing cost and manufacturing profit. The Supreme Court, further, observed that the section postulated that the wholesale price should be taken on the basis of cash payment thus eliminating the interest involved in wholesale price which gave credit to the wholesale buyer for a period of time and the price had to be fixed for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles.

8. In the case of Attic Industries v. Assistant Collector of Central Excise — (1975) 1 SCC 499 : A.I.R 1975 S.C 960 : 1978 E.L.T (J 444), the Supreme Court again reiterated that the value of the goods for the purpose of excise must take into account only the manufacturing cost and manufacturing profit and it must not be loaded with post manufacturing profit arising from post manufacturing opera tion. The price charged by the manufacturer for sale of the goods in wholesale would, therefore, represent the real value of the goods for the purpose of assessment of excise duty. If the price, charged by the wholesale dealer who purchased the goods from the manufacturer and sold/them in wholesale to another dealer, was taken as the value of the goods, it would include not only the manufacturing cost and the manufacturing profit of the manufacturer but also the wholesale dealer's selling cost and selling profit and that would be wholly incompatible with the nature of excise. It would also, according to the Supreme Court, violate the concept of the factory-gate sale which was the basis of determination of value of the goods for the purpose of excise.

9. In the light of the aforesaid judicial decision and in the light of the provisions of the Act, in my opinion, the following principles emerge:

(1) A duty of excise is tax or levy on home produced goods of specified class or description the duty being calculated according to quantity or value of the goods and which is levied because of the mere fact of the goods having been produced or manufactured and unrelated to and not dependent on commercial transaction in them. (See Messrs Chhotabhai v. Union of India, A.I.R 1962 S.C 1006). Though it is a duty on the operation of manufacture or production it may be imposed on a basis or at a stage which is post manufacture or post production, provided however, there is a rational nexus or connection between the imposition and the act of production or manufacture.

(2) The duties of excise are charged either at the rates specific or at rates ad valorem. The method of charging the duty varying with the nature of the duty varying with the nature of the goods charged, as indicated in the First Schedyle of the Act.

(3) Where an article is chargeable with duty at a rate dependent on the value of the article then Section 4 provides the method for the determination of such value.

(4) Where wholesale cash price as indicated in clause (a) of Section 4 of the Act is ascertainable then the value of the article would be such wholesale cash price computed in the manner indicated in clause (a) of Section 4 of the Act. Where such wholesale cash price is not ascertainable then the value of the article would be the price to be computed in the manner indicated in clause (b) of Section 4 of the Act.

Clause (a) of Section 4 speaks or (i) which is (a) wholesale i.e in contradistinction to retail price, and (b) cash i.e free from any augmentation for credit or other advantages allowed to a buyer, it is to be a price “less trade discount it is a price conservative in every aspect and free in particular from any loading for any post manufacture and post production charge (c) if there is an actual price for the goods themselves at the time and place of sale and if that is a “wholesale cash price” the clause (a) of Section 4 would not be inapplicable for want of sale of other goods of like kind and quality. If the manufacturer enters into agreements with dealers for wholesale sales of articles manufactured on certain terms and conditions it would not follow from that along that price for those sales would not be “wholesale cash price” for the purpose of Section 4(a) of the Act if the agreements were made at arms length in usual cause of business (d) once wholesale dealing at arms length are established the determination of wholesale cash price for the purpose of section 4(a) of Act is not dependent upon the number of such wholesale dealings (e) if, however, a whole sale dealer after purchase of the goods from the manufacturer sells the goods to another wholesale dealer the price received on the occasion of the second sale, however, would be irrelevant for the determination of the value and goods would not be chargeable to excise on that basis; (ii) the price would be at the factory gate or at the nearest place where such market exists thereby eliminating freight, octroi and other charges involved in the transaction; (iii) a wholesale market, however, does not always mean that there should be an actual place in the physical sense where articles are sold and bought on the wholesale basis. The potentiality of the articles being sold on the wholesale basis would suffice for the purpose of clause (a) of Section 4 of the Act. (iv) the price would be chargeable at the time of removal, emphasizing the fact that post manufacturing expenses should be eliminated.

(5) If the wholesale cash price is not ascertainable in the manner indicated as aforesaid then the value for the purpose of imposition of ad vrlorem duty would be the price at which article of like kind or quality is sold or is capable of being sold by the manufacturer or producer or his agent at the factory gate or if there is no such market at the factory gate then at the nearest place where such market actual or potential exists.

(6) Clause (b) of Section 4 is applicable only where “such price” meaning thereby price as indicated in clause (a) is not ascertainable. Therefore, the impossibility or the difficulty of the ascertainment of the wholesale cash price as indicated in clause (a) of Section 4 attracts the operation of clause (b) of Section 4 for determination of the value.

10. I have to examine the impugned order to find out whether there is any illegality in the said order. The Asstt. Collector has held that clause (a) of Sec. 4 would not be applicable. Therefore it must be presumed that he has come to the conclusion that the wholesale cash price is not ascertainable. He has given certain reasons and the reasons seem to be:

(1) The goods produced by the assessee are marketed by himself.

(2) All sales are undertaken on the basis of the agreement between the parties and the agreement depicts. The overriding control of the assessee even for subsequent dealings of the commodities in question.

(3) The assessee has equalised price throughout India.

(4) The assessee has no separate profit and loss account.

(5) The assessee was given a chance to establish the contention for claiming the deduction of post manufacturing expenses and selling profit but the assessee failed to do so.

(6) The assessee is collecting the excise duty from its customers.

11. The question, is whether these are factors relevant for the germane to the determination of the question whether clause (a) of Sec. 4 would be applicable or in other words whether the wholesale cash price is ascertainable or not. The main factor seems to be the difficulty which officer has felt in ascertaining the wholesale cash price and what would be the manufacturing profit and the manufacturing expenses. It is true that this is not a case of deduction but it is a case of computation of the assessable value of the goods. It is also true that irrespective of the help or lack of help from the assessee the assessing authority has to compute the assessable value of the goods to the best of his judgment on the materials before him. But if in a particular case, the materials are such from which it is not possible to ascertain the assessable value of the goods then such a conclusion, in my opinion, cannot be construed to be either an error of law or perverse finding of fact if there are some materials for coming to that conclusion. As the judicial committee observed in the case of Ford Motor Co. (Supra) ascertainment of the wholesale cash price was not a matter of mere estimate. The Assistant Collector has come to the conclusion that wholesale cash price was not ascertainable due to the difficulties inherent in the situation. He has tabulated the factors some of which may be irrelevant and not decisive by themselves but reading the order as a whole it cannot be said that the finding of the Assistant Collector that the wholesale cash price is not ascertainable is based on no material or on irrelevant material or is perverse. That being the position such a finding cannot be interfered within this writ application.

12. The next question, is whether in the case of clause (b) of Section 4, the post manufacturing expenses or post manufacturing profits are to be excluded. Learned Advocate General appearing on behalf of the respondents contended that under clause (b) of Section 4, post manufacturing profits and post manufacturing expenses were not to be excluded. I am unable to accept this contention. The very basis of excise in my opinion, is a tax on manufacture. Therefore, the assessable value of the goods must normally be on the manufacturing cost and anything which takes into consideration the post manufacturing element, either under clause (b) or under clause (a) of Sec. 4, in my opinion would be beyond the scope of excise unless the intendment of clause (a) or clause (b) express or implied bring in the post manufacturing stage into the computation. I do not find any such intendment express or implied. On the other hand I find the contrary intention. The observations of the Supreme Court in Voltas case (Supra) at page 230 and 231 of the report and Attic's case (supra) corroborates this view though in both these cases the Supreme Court was dealing with determination of assessable value under clause (a) of Section 4 of the Act. In so far as the Assistant Collector in the impugned order has held that the listed price without any deduction together with freight and packing charges would be the assessable value, the Assistant Collector is clearly in error and in violation of the ratio of the aforesaid Supreme Court decisions.

13. Two other aspects were argued in this matter. One was that there was an alternative remedy provided under the Act by Section 35 whereunder appeals were provided from this order. It was submitted that the petitioner had not resorted to the alternative temedy and as such, the petitioner was not entitled to any relief under Art. 226 of the Constitution. The existence of an alternative remedy is not a bar to the granting of the relief under Art. 226 of Constitution but only, a factor to be taken into consideration in exercising the discretion of the court. In this case where this is an error of law and where the court has entertained this application and issued a rule nisi, in my opinion, it would be inappropriate at this stage to exercise my discretion not to grant the reliefs to the petitioner on the plea of alternative remedy.

14. It was, then, contended that the petitioner had realised excise duty from its customers. Therefore, the petitioner was not entitled to any relief in this application. It was contended that on the theory of unjust enrichment, the petitioner should be refused relief in this application. It is true, where a matter of discretion of Court is there, the court should not exercise its discretion in a manner which would lead to unjust enrichment. But the theory of unjust enrichment applies both to the tax: payer and to the tax Collector, inasmuch as the tax payer has no right to be enriched at the cost of another citizen, it would be equally improper in my mind, to allow the state to share in the booty on the above theory. If a citizen is not permitted to enrich itself at the cost of other, the State should not equally be permitted to levy tax which under law it is not permitted to. levy. This is not a case of refund but to levying of tax, which in my opinion, must be in accordance with law. Therefore, the petitioner should not be refused relief on this plea.

15. My attention was drawn to a decision of Masud, J. in the case of Electric Lamp Mfg. Co, (India) Ltd. v. Collector of Central Excise, Calcutta — 1978 E.L.T (J 84). In that case the learned judge was dealing with entirely a different set of facts which are not relevant in this application and as such I need not discuss the said decision). In the view I have taken, the order which is annexed to the petition, being Annexure ‘D’ in so far as it determined the assessable value of the chemicals is set aside. In so far as the order held that clause (b) of Sec. 4 would be applicable the same is upheld. The Respondents are directed to proceed in accordance with law. This order will not, however, prevent the Respondents from making assessment in accordance with law and realising the tax from the petitioner on the aforesaid basis and the respondents will also be at liberty, while determining the assessable value of the goods, to find out what are the post manufacturing expenses and whether any of the items mentioned by the Assistant Collector in the impugned order are at all post manufacturing expenses or not in the facts and circumstances of this case and in that light the Assistant Collector would investigate the facts, The guarantee is discharged. The petitioner is also directed to deposit the excess amount of excise duty, already realised by it from its customers, in a separate banking account within 4 weeks and also to go on depositing whatever excess amount of excise duty will be realised by the petitioner in that account. The petitioner is also directed to give particulars of such deposit to the respondents.

16. The Rule is made absolute to the extent indicated above. There will be no order as to costs.