The bench in its August verdict, while setting aside the excise tribunals order, had directed the car maker to pay duty for Uno cars sold at a price lower than the cost price to penetrate the market.
Upholding the departments stand, the Supreme Court had clarified that central excise duty was chargeable on manufacture or production of goods and not only on sale price.
As per the judgment, Fiat will have to pay around Rs 311 crore and Premier will pay more than R49 crore as outstanding excise duty.
A bench comprising Chief Justice Altamas Kabir and justices P Sathasivam, GS Singhvi, H L Dattu and Anil R Dave said that in our opinion, no case is made out within the parameters indicated in the decision of this Court in Rupa Ashok Hurra vs Ashok Hurra & Anr., reported in 2002 (4) S.C.C.388. Hence, the Curative Petitions are dismissed.
The apex court had held that price of cars was not normal price as the same was not based on manufacturing cost and manufacturing profit, but was fixed at a lower price to penetrate market. Besides, the price charged from customer was not sole consideration as main reason for assessee to sell cars at a price lower than manufacturing cost and profit was to penetrate market and this would constitute extra commercial consideration and not sole consideration. Therefore, assessee was asked to pay differential duty.
The case related to Fiats JV with Premier Automobiles in 1996, the time when the former was importing completely-knocked-down kits (CKD) of its popular Uno hatchback and selling them in the country below cost price. The department had levied the duty on the cost price of Uno hatchbacks between 1996 and 2001.
The department had found that the wholesale price declared by the company was much less than the cost of production and, therefore, the price declared by them could not be treated as a normal price for the purpose of quantification of assessable value.
This was opposed by Fiat and Premier.