JUDGMENT Gopalan Nambiyar, C.J. 1. The appellant, The Madras Rubber Factory Ltd., Madras, is a company registered under the Companies Act with its registered office in Madras. It is engaged in the manufacture of automobile tubes, tread rubber both with and without cushion, and other rubber products sold under the name and style of 'Mansfield'. Its factory is located at Vadavathoor in Kottayam District in this State. It started its manufacture of rubber products from the financial year 1969-70. Its products are supplied to its depots at various places throughout the country. In so doing, it has incurred expenses of storage, transportation, insurance, etc. In the matter of costing rubber, the practice seems to have been to strike the average price called the 'billing price' after taking into account all these heads of expenses, and to transfer to the depots the stock at the said billing price. The depots in their turn sell to the dealers or consumers. 2. The question agitated in this petition is regarding the levy of excise duty on the articles produced and sold by the petitioner. In brief, the excise duty was sought to be levied on the value of the goods calculated after taking into account not only the post manufacturing profit but also the post manufacturing cost. These post manufacturing costs and expenses taken into account comprise, as indicated, such items as freight, transportation charges, interest charges, travelling expenses of agents, insurance, etc. The petitioner has 32 depots throughout the country. There are no factory gate sales but the sales are only through depots to dealers and consumers. The dealer is entitled to 7 1/2 per cent commission from the consumer. S.3 of the Central Excise and Salt Act, 1944 referred to for convenience, where necessary, as the Act provides for the levy of excise duty on excisable goods produced or manufactured in India at the rates set forth in the I Schedule. The I Schedule classifies the commodities and fixes the rates based on the number, area, length, quantity or value. For instance, item 16 is 'tyres', and, in the case of tyres, the excise duty is 40 per cent ad valorem plus special duty at 20 per cent. 3. The I Schedule classifies the commodities and fixes the rates based on the number, area, length, quantity or value. For instance, item 16 is 'tyres', and, in the case of tyres, the excise duty is 40 per cent ad valorem plus special duty at 20 per cent. 3. The case of the petitioner in short is that a duty of excise is a tax on the production or manufacture of goods; and that it had been explained by the Supreme Court in A. K. Roy v. Voltas Ltd. ( AIR 1973 SC 225 ), that S.4 of the Excise and Salt Act, which provides that the real value of the goods for purposes of excise duty should be found after deducting the selling cost and the selling profit, can signify that the real value can include only the manufacturing cost and the manufacturing profit. The argument proceeds that expenses incurred by the petitioner's sales organisation which pertains to the post manufacturing stage and selling profit, would not enter into the assessable value for purposes of excise duty. After the pronouncement of the Supreme Court in Volta's case ( AIR 1973 SC 225 ), there was an amendment of the Central Excise and Salt Act by Act 22 of 1973 by which S.4 was amended. The provisions of the amending Act would be noticed immediately. The new section was brought into force on 1st October 1975 by a notification dated 8th August 1975. Rules were also made on that date called the Central Excise Valuation Rules, 1975. The 4th respondent, namely, the Collector of Customs and Central Excise, Cochin, issued notices to the petitioner to file declaration about the price lists of their goods chargeable with ad valorem duty for determination of value, and in pursuance of the same the petitioner complied, showing the manufacturing cost and the manufacturing profit of their goods. Exts. P-1, P-1(a), P-1(b), and P-1(c) represent these lists, and Ext. P-1(d) is a copy of the covering letter enclosing the lists. Ext. P-2, P-2(a), P-2(b) and P-2(c) are the orders of the respondents disallowing the deduction claimed by the petitioner. The 1st respondent, the Assistant Collector of Central Excise, had allowed only 2.3 per cent out of 6.4 per cent claimed by the petitioner as representing freight, octroi and other taxes. Ext. P-2, P-2(a), P-2(b) and P-2(c) are the orders of the respondents disallowing the deduction claimed by the petitioner. The 1st respondent, the Assistant Collector of Central Excise, had allowed only 2.3 per cent out of 6.4 per cent claimed by the petitioner as representing freight, octroi and other taxes. The petitioner claimed six items of post manufacturing expenses, and four of these were disallowed by the 1st respondent. The deduction thus disallowed included 2.8 per cent of the basic price (selling price minus excise duty), representing freight, octroi and other charges, having a direct bearing on the case. The petitioner was directed to file the declaration in Form No. 7 instead of in Form No. 5. The writ petition is to quash Exts. P-2, P-2(a), P-2(6) and P-2(c) as illegal and without jurisdiction. 4. S.3 and 4 of the Central Excise and Salt Act as they stood prior to the amendment by Act 22 of 1973, read as follows: "3. Duties specified in the first Schedule to be levied.- (1) 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. 1(a). The provisions of sub-s.(1) shall apply in respect of all excisable goods other than salt which are produced or manufactured in India by or on behalf of, the Government of a Part A State or a Part B State and used for the purposes of a trade or business of any kind carried on by, or on behalf of, that Government or of any operations connected with such trade or business as they apply in respect of goods which are not produced or manufactured by any Government; (2) The Central Government may, by notification in the official gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specially or under general headings, in the first Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force: (3) Different tariff values may be fixed for different classes or descriptions of the same article. 3A. * * * * 4. 3A. * * * * 4. Determination of value for the purpose of duty.- Where under this Act, any article is chargeable with duty at a rate dependent on the value of the article, such value be deemed to be (a) the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or (b) where such price is not ascertainable, the price at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer or producer, or his agent, at the time of the removal of the article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production or if such article is not capable of being sold at such place, at any other place nearest thereto. Explanation.-- In determining the price of any article under this section, no abatement or deduction shall be allowed except in respect of trade discount and the amount of duty payable at the time of the removal of the article chargeable with duty from the factory or other premises aforesaid." After the amendment by Act 22 of 1973, the sections stand thus: "3. Duties specified in the first Schedule to be levied.--(1) 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 6r 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. [1A. [1A. The provisions of sub-s.(1) shall apply in respect of all excisable goods other than salt which are produced or manufactured in India by, or on behalf of, the Government of a Part A State or a Part B State and used for the purposes of a trade or business of any kind carried on by, or on behalf of, that Government or of any operations connected with such trade or business as they apply in respect of goods which are not produced or manufactured by any Government]. 2. The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specially or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force; 3. Different tariff values may be fixed for different classes or descriptions of the same article. 3A. Different tariff values may be fixed for different classes or descriptions of the same article. 3A. * * * * 4 (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: Provided that (i) where, in accordance with the normal practice of the whole sale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such, price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof; (iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail; (b) where the normal price of such goods is not ascertainable for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. (2) Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price. (3) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-s.(2) of S.3. (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 the excisable goods; or (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed; (c) 'related person' means a person who Ss so associated with the assessee that they have interest, directly or indirectly in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub distributor of such distributor. Explanation.-- In this clause 'holding company', 'subsidiary company' and 'relative' have the same meanings as in the Companies Act, 1956; (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, pin, spool, real or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; (c) 'wholesale Trade' means sales to dealers, industrial consumers, Government, local authorities and other buyers, who or which purchase their requirements otherwise than in retail." 5. The controversy agitated in this writ petition turns on the scope and significance of the amendment, and how far if any, it has effected a change in the law as expounded by judicial decisions prior to the amending Act of 1973. 6. The gist of the argument is that the nature of excise duty is well settled by judicial decisions as a duty on manufacture or production of the goods. Therefore, it is said, that post manufacturing expenses and post manufacturing cost cannot be taken into account for purposes of excise duty, and if they are, the levy cannot pass as excise duty. 7. The concept of excise duty has been the subject matter of innumerable decisions. The fountain source of these has been the pronouncement of the Federal Court in In re C.P. Motor Spirit Act (AIR 1939 FC 1) an opinion delivered by the Federal Court in its advisory jurisdiction. The reference was under the provisions of the Government of India Act, 1935. Entry 45 of List I of the 7th Schedule of the Act corresponds to Entry 84 of List I of the 7th Schedule of the Constitution, and Entry 48 of List 2 of the 7th Schedule of the Government of India Act corresponds to Entry 54 of List 2 of the 7th Schedule of the Constitution. Entry 45 of List I of the 7th Schedule of the Act corresponds to Entry 84 of List I of the 7th Schedule of the Constitution, and Entry 48 of List 2 of the 7th Schedule of the Government of India Act corresponds to Entry 54 of List 2 of the 7th Schedule of the Constitution. In the course of the judgment of Chief Justice Gwyer, we get the following observations: "The primary meaning of 'excise duty' or 'duty of excise' has come to be that of a tax on certain articles of luxury (such as spirits, boor or tobacco) produced or manufactured in the United Kingdom, and it is used in contradistinction to customs duties on articles imported into the country from elsewhere. At a later date the licence fees payable by persons who produced or sold excisable articles also became known as duties of excise; and the expression was still later extended to licence fees imposed for revenue, administrative, or regulative purposes on persons engaged in a number of other trades or callings. Even the duty payable on payments for admission to places of entertainment in the United Kingdom is called a duty of excise; and, generally speaking, the expression is used to cover all duties and taxes which, together with customs duties, are collected and administered by the Commissioners of Customs and Excise. But its primary and. fundamental meaning in English is still that of a tax on articles produced or manufactured in the taxing country and intended for home consumption. I am satisfied that that is also its primary and fundamental meaning in India; and no one has suggested that it has any other meaning in Entry (45). (page 6) * * * It was argued on behalf of the Provincial Government that an excise duty was a tax on production or manufacture only and that it could not therefore be levied at any later stage. Whether or not there be any difference between a tax on production and a tax on the thing produced, this contention, no less than that of the Government of India, confuses the nature of the duty with the extent of the legislative power to impose it, Nor for the reasons already given, is it possible to agree that in no circumstances could an excise duty be levied at a stage subsequent to production or manufacture. If therefore a legislature is given power to make laws 'with respect to' duties of excise, it is a matter to be determined in each case whether on the true construction of the enactment conferring the power, the power itself extends to imposing duties on home produced or home manufactured goods at any stage upto consumption, or whether it is restricted to imposing duties, let us say, at the stage of the production or manufacture only. A grant of the power in general terms, standing by itself, would no doubt be construed in the wider sense; but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by considerations arising out of what appears to be the general scheme of the Act. (page 7) * * * In my opinion the power to make laws with respect to duties of excise given by the Constitution Act to the Federal Legislature is to be construed as a power to impose duties of excise upon the manufacturer or producer of the excisable articles, or at least at the stage of, or in connection with, manufacture or production, and that it extends no further. I think that this is an interpretation reasonable in itself, more consonant than any other with the context and general scheme of the Act, and supported by other considerations to which I shall refer. (page 9 emphasis supplied) * * *" In the course of the discussion of the learned Chief Justice, two decisions of the United States Supreme Court were examined; and at page 10, we get the observation that an imposition of an excise duty at a stage later than production or manufacture was obviously regarded as an unusual thing. We skip the discussion in the judgment of Sulaiman, J. and Jayakar, J., which disclose a somewhat different approach while agreeing with the conclusion of learned Chief Justice. 8. We may then notice the judgment of the Nine Judges' Court in In re Sea Customs Act ( AIR 1963 SC 1760 ). In Para.25 of the said report, occurs the following: "This will show that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. In Para.25 of the said report, occurs the following: "This will show that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. We may in this connection contrast sales tax which is also imposed with reference to goods sold, where the taxable event is the act of sale. Therefore, though both excise duty and sales tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it said that the excise duty or sales tax is a tax directly on the goods for in that event they will really become the same tax. It would thus appear that duties of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished from direct taxes like taxes on property and income." These observations are stressed to show that the duty is not on the goods but on the manufacture or production thereof. 9. We shall extract the two legislative entries, Entry 84 of List I of the 7th Schedule of the Constitution and Entry 54 of List II: "84. Duties of excise on tobacco and other goods manufactured or produced in India except" (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I." With the lines squarely drawn between the above two legislative entries, one for the Union and the other for the States, it is contended that there must be a dividing line between the two, to define where manufacture or production ends and sale begins. May be, in Thackeray's phrase, "thin walls do their bounds divide"; but however tenuous, a line of division must be found at least by a process of judicial interpretation. May be, in Thackeray's phrase, "thin walls do their bounds divide"; but however tenuous, a line of division must be found at least by a process of judicial interpretation. The argument of counsel for the petitioner was that post manufacturing expenses pertain to sale and not to manufacture or production, and a duty which takes into account these post manufacturing expenses, cannot partake of the nature of an excise duty. Alternatively, he would contend that S.3 authorises the levy of an excise duty; and, if S.4 of the Act as amended in 1973 permits the taking into account of post manufacturing expenses, the resultant levy would fall outside the legislative periphery of Entry 84 of List I, and outside the scope and content of the leviable duty as demarcated by S.3 of the Act. In either event, counsel for the petitioner would argue that S.4 would have to be read down to square with that the impost sanctioned by S.3, and with the legislative power under Entry 84 of List I of Schedule.7 of the Constitution. 10. The strong point in the petitioner's armoury was the decision in A. K. Roy v. Voltas Ltd. ( AIR 1973 SC 225 ). M/s Voltas Ltd., there challenged the order demanding excise duty for the years 1962, 1963, 1964, 1965 and 1966 in respect of air conditioners, water coolers, etc. The sales of those were organised from the Head Office at Bombay and from the branch offices at Calcutta, Delhi, Madras, Bangalore, Cochin and Lucknow. According to the agreements with the wholesale dealers, the articles were to be sold in accordance with the list prices fixed by the Company. The Company's contention was that the list prices, after deducting discount of 22 per cent, allowed to the wholesale dealers, would alone constitute the "wholesale cash price" for ascertaining the real value of the goods. The Excise Department contented that the sales under the agreement were not sales to independent purchasers, but to favoured ones, and therefore the price charged would not reflect the "wholesale cash price" as mentioned in S.4(a) of the Act. The Excise Department contented that the sales under the agreement were not sales to independent purchasers, but to favoured ones, and therefore the price charged would not reflect the "wholesale cash price" as mentioned in S.4(a) of the Act. It was ruled by the Supreme Court that for a wholesale market to exist, it was not necessary that there should be a market in the physical sense of the term where articles are or could be sold; nor was it necessary that the articles should be sold to independent buyers. The Court then proceeded to consider the concept of a wholesale market. In discussing the concept, the Court noticed the decision in Ford Motor Company of India Ltd. v. Secretary of State for India in Council (AIR 1933 PC 15) and other cases, and remarked that the wholesale cash pries has to be ascertained on the basis of transactions at arm's length. Discussing the meaning of the expression 'wholesale cash price', the Court observed: "21. Excise is a tax on the production and manufacture of goods [see Union of India v. Delhi Cloth and General Mills, (1963 Supp. (1) SCR 586 = ( AIR 1963 SC 791 )] S.4 of the Act therefore provides that the real value should be found after deducting the selling cost and selling profits and that the real value can include only the manufacturing cost and the manufacturing profit. The section makes it clear that excise is levied only on the amount representing the manufacturing cost plus the manufacturing profit and excludes post manufacturing cost and the profit arising from post manufacturing operation, namely, selling profit. The section postulates that the wholesale price should be taken on the basis of cash payment thus eliminating the interest involved in. wholesale price which gives credit to the wholesale buyer for a period of time and that the price has to be fixed for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles. As already stated it is not necessary for attracting the operation of S.4(a) that there should be a large number of wholesale sales. The quantum of goods sold by a manufacturer on wholesale basis is entirely irrelevant. As already stated it is not necessary for attracting the operation of S.4(a) that there should be a large number of wholesale sales. The quantum of goods sold by a manufacturer on wholesale basis is entirely irrelevant. The mere fact that such sales may be few or scanty does not alter the true position." The discussion was no doubt with respect to the wholesale cash price under S.4 of the Act. But it seems to us that there can be no getting away from the fact that it was in relation to the excise duty levied by S.3, the basis of which was indicated in S.4. The observations of the Court that excise is levied only on the amounts representing the manufacturing cost, and excludes post manufacturing cost and profit, are significant. It is of interest to recall the observations of Gwyer, C. J. in In re C P. Motor Spirit Act ( AIR 1939 PC 1 ), at page 9, which we have quoted earlier, and to discern in nuclear form, the statement of a principle which was to evolve as law in Voltas's Ltd.'s case ( AIR 1973 SC 225 ). 11. We shall refer, next, to the decision in Atic Industries v. Assistant Collector, Central Excise ( AIR 1975 SC 960 ). After noticing the decision in Voltas's Ltd.'s case ( AIR 1973 SC 225 ), the Court stressed that the dealings between the Atic Industries and the Imperial Chemical Industries were purely dealings at arm's length and the price charged for sales in wholesale, less trade discount, was clearly "wholesale cash price" within the meaning of S.4(a). There occurs the following observations: "12. In the first place, as pointed out by Mathew, J., in Voltas' case (supra), 'excise is a tax on the production and manufacture of goods .............. S.4 of the Act therefore provides that the real value should be found after deducting the selling cost and selling profit and that the real value can include only the manufacturing cost and the manufacturing profit. The section makes it clear that excise is levied only on the amount representing the manufacturing cost plus the manufacturing profit and excludes post manufacturing cost and the profit arising from post manufacturing operation namely, selling profit'. The section makes it clear that excise is levied only on the amount representing the manufacturing cost plus the manufacturing profit and excludes post manufacturing cost and the profit arising from post manufacturing operation namely, selling profit'. The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post manufacturing cost or profit arising from post manufacturing operation. 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 purchases the goods from the manufacturer and sells them in wholesale to another dealer were 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 may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions. In fact the more common and less expensive the goods, there would be greater possibility of more than one tier of wholesale transactions. For instance, in a textile trade, a manufacturer may sell his entire production to a single wholesale dealer and the latter may in his turn sell the goods purchased by him from the manufacturer to different wholesale dealers at State level, and they may in their turn sell the goods to wholesale dealers at the district level and from the wholesale dealers at the district level the goods may pass by sale to wholesale dealers at the city level and then, ultimately from the wholesale dealers at the city level, the goods may reach the consumers. The only relevant price for assessment of value of the goods for the purpose of excise in such a case would be the wholesale cash price which the manufacturer receives from sale to the first wholesale dealer, that is, when the goods first enter the stream of trade. The only relevant price for assessment of value of the goods for the purpose of excise in such a case would be the wholesale cash price which the manufacturer receives from sale to the first wholesale dealer, that is, when the goods first enter the stream of trade. Once the goods have entered the stream of trade and are on their on ward journey to the consumer, whether along a short or a long course depending on the nature of the goods and the conditions of the trade, excise is not concerned with what happens subsequently to the goods. It is the first immediate contract between the manufacturer and the trade that is made decisive for determining the wholesale cash price which is to be the measure of the value of the goods for the purpose of excise. The second or subsequent price, even though on wholesale basis, is not material. If excise were levied on the basis of second or subsequent wholesale price, it would lead the price with a post manufacturing element, namely, selling cost and selling profit of the wholesale dealer. That would be plainly contrary to the true nature of excise as explained in the Voltas' case (supra). Secondly, this would also violate the concept of the factory gate sale which is the basis of determination of value of the goods for the purpose of excise. 13. There can, therefore, be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise. That would be the wholesale cash price for which the goods are sold at the factory gate within the meaning of S.4(a). The price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealers would be irrelevant to the determination of the value and the goods would not be chargeable to excise on that basis. The price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealers would be irrelevant to the determination of the value and the goods would not be chargeable to excise on that basis. The conclusion is therefore, inescapable that the assessable value of the dye stuffs manufactured by the appellants must be taken to be the price at which they were sold by the appellants to I.C.I. and Atul less 18 per cent trade discount, and not the price charged by I.C.I. and Atul to their dealers." It is not possible for us to divorce the discussion from the principle stressed that it was the fundamental concept of a duty of excise that it was not to take into account post manufacturing expense. 12. We would refer to one other case, namely, Shinde Brothers v. Dy. Commr. Raichur ( AIR 1967 SC 1512 ). The question there considered was regarding the validity of the health cess under the Mysore Health Cess Act, 1962. The cess was levied on shop rent collected from the contractors who had bid in auction the toddy shops under the Mysore Excise Act, 1901. The validity of tree tax levied by the impugned Act in this case was also questioned. But it was conceded that this was an excise duty. The validity of the health cess essentially depended upon the question as to whether the shop rent on which it was based, was an excise duty The majority of Judges ruled that it was not; Hidayatullah, J. (as he then was) dissented. Sikri, J. (who spoke for the majority), after analysing the decisions, noticed the character of an excise duty as (a) the levy must be upon goods, and (b) the taxable event must be the manufacture or production of goods, although levy need not be imposed at the stage of production or manufacture, but may be imposed later. In judging the nature of the levy, the learned Judge stressed three principles, namely: (1) uniformity of incidence (2) close relation to manufacture or production; and (3) absence of duplication of payment of excise duty. The second of these principles, which we have emphasised, appears to us to be significant. Having stated these principles, Sikri, J. observed: "(23) In view of these characteristics, can it be said to be an excise duty? The second of these principles, which we have emphasised, appears to us to be significant. Having stated these principles, Sikri, J. observed: "(23) In view of these characteristics, can it be said to be an excise duty? In our opinion the answer is in the negative. The taxable event is not the manufacture or production of goods but the acceptance of the license to sell. In other words, the levy is in respect of the business of carrying on the sale of toddy. There is no connection of any part of the levy with any manufacture or production of any goods. To accept the contention of the State would mean expanding the definition of 'excise duty' to include a levy which has close relation to the sale of excisable goods. It is now too late in the day to do so." (emphasis supplied). The observations are significant. 13. Petitioner's counsel further highlighted this aspect of the borderline between excise duty and sales tax, by reference to a decision of the Federal Court, another of the Privy Council, and a third, of the Supreme Court. We proceed to examine these cases. 14. In Madras Province v. Boddu Paidanna and Sons (AIR 1942 FC 32) the validity of the Madras General Sales Tax Act was attacked. It was ruled that the first sale was not connected with manufacture or production and would not form part of a duty of excise, but was germane to and connected with a tax on sale of goods within the meaning of Entry 48 of List 2 of Schedule.7 of the Government of India Act, 1935. This was how the position was expressed: "According to the High Court, a tax on the first sale of goods is so connected with their production that it is an excise duty; but, with great respect to the Court, that appears to us to be hardly the question. Every tax on the sale of goods produced in India is in a sense an excise duty, whether the sale is the first, second or third, though an excise duty is not necessarily a tax on sales; and the High Court should have formulated their proposition thus: a tax on the first sale of goods is so connected with their production that it cannot properly be described as, and is not in fact, a tax on sale. Stated in this way, the proposition is surely difficult to sustain. We may recall that in 1935, when the Constitution Act was passed, the distinction between a producer's or manufacturer's sales tax and sales taxes (including retail sales taxes) of other kinds was familiar to economists and those concerned with public finance (see Findlay Shirras: Science of Public Finance, Vol. II, Chap.25): and it is therefore not without significance that Parliament did not think fit to confine the Provincial taxing power in terms to sales taxes other than taxes on first sales. It is also material, even if not necessarily conclusive, to point out that the judgment of the High Court would deprive the Provincial Legislature of the whole yield of taxes on first sales, and not merely of the tax on the first sale of commodities which are also subject to a duty of excise; and it would do so without in practice conferring any corresponding benefit on the Central fisc, since for plain reasons of convenience the number of commodities on the production of which it is administratively worth while to impose an excise duty will always be very limited." (Page 36) The passage once again emphasises the need for a connection between the excise duty and the manufacture or the production of the goods. 15. In G.G. in Council v. Madras Province ( AIR 1945 PC 98 ), the appeal was taken against the decision of the Federal Court on the validity of the Madras General Sales Tax Act in the decision reported in G.G. in Council v. Madras Province (AIR 1943 FC 11) We quote the relevant passage: "Under S.3(2) of the Madras Act, the Provincial Government made rules which are called 'the Madras General Sales Tax (Turnover and Assessment) Rules, 1939' and under S.19 further rules which are called 'the Madras General Sales Tax Rules, 1939'. To these rules which are of an elaborate and comprehensive character it is unnecessary to refer except to note that under R.4(1) of the first mentioned rules the gross turnover of a dealer for the purpose of the rules is to be the amount for which the goods are sold by him except that under R.4(2) in the case of certain goods therein enumerated the gross turnover is to be the amount for which the goods are bought. Their Lordships have thought it desirable to refer to the provisions of the Madras Act in this detail in order to emphasis its essential character. Its real nature, its 'pith and substance,' is that it imposes a tax on the sale of goods. No other succinct description could be given of it except that it is a 'tax on the sale of goods'. It is in fact a tax which according to the ordinary canons of interpretation appears to fall precisely within Entry No. 48 of the Provincial Legislative List." (page 100) The Privy Council noticed the definition in S.2 of the Act of the expression 'turnover'. There was an explanation to that definition which reads as follows: "Explanation.--Subject to such conditions and restrictions, if any, as may be prescribed in this behalf: '(i) the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery thereof; '(ii) any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover'; '(iii) where for accommodating a particular customer a dealer obtains goods from another dealer and immediately dispose of the same to the said customer, the sale in respect of such goods shall be included in the turnover of the latter dealer but not in that of the former'." 16. We then turn to the Supreme Court's pronouncement in Tata Iron and Steel Co., Ltd's case ( AIR 1958 SC 452 ). That related to the provisions of the Bihar Sales Tax Act of 1947 passed under the provisions of the Government of India Act, 1935. The Court stated: "(10) The vires of S.4(1) read with S.2(g), second proviso, is also questioned on the ground that it is in reality not a tax on the sale of goods but is in substance a duty of excise within the meaning of Entry 45 in List 1 of the Seventh Schedule to the Government of India Act, 1935, with respect to which the Provincial Legislature could not, under S.100 of that Act, make any law. Our attention is drawn to clause (ii) of the second proviso which contemplated a sale of the goods by the producer or manufacturer thereof. Our attention is drawn to clause (ii) of the second proviso which contemplated a sale of the goods by the producer or manufacturer thereof. It is urged that, according to this clause, tax was not imposed on all sales of goods produced or manufactured in Bihar, but was imposed only on these goods produced or manufactured in Bihar which were sold by the producer or manufacturer. It is pointed out, as and by way of an illustration, that if the goods produced or manufactured in Bihar were taken out of the Province of Bihar and then gifted away by the producer or manufacturer to a person outside Bihar and that person sold the goods, he would not be liable under the proviso. This argument, however, overlooks the fact that under clause (ii) the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods, but because he sold the goods. In other words the tax was laid on the producer on manufacturer only qua seller and not qua manufacturer or producer, as pointed out in 1942 PCR 90 : (AIR 1942 FC 33) (B). In the words of their Lordships of the Judicial Committee in Governor - General in Council v. Province of Madras, 72 Ind. App. 91 at p. 103: ( AIR 1945 PC 98 at p. 101) (D), 'a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It Is a tax on goods and not on sales or the proceeds of sale of goods.' If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under S.4(1) read with S.2(g), second proviso. It Is a tax on goods and not on sales or the proceeds of sale of goods.' If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under S.4(1) read with S.2(g), second proviso. As Gwyer, C. J., said in 1942 FCR 90: (AIR 1942 FC 33) (B) at p. 102 (of F.G.R.): (at p. 35 of AIR) the manufacturer or producer would be 'liable, if at all, to a sales tax because he sells and not because he manufactures or produces; and he would be free from liability if he chose to give away everything which came from his factory.' In our judgment both lines of the argument advanced by the learned Attorney General in support of points 1 and 4 are untenable and cannot be accepted." The principle was thus recognised by the above decision that selling expense or post manufacturing expense has no connection with production or manufacture of goods but pertains to the region of sale. 17. The learned Central Government Pleader who appeared for the Department contended that the scope and the incidence of an excise duty is very wide; that although it is a duty on manufacture or production, it can be imposed at any stage even subsequent to the stage of manufacture or production, and that the wide gamut of Entry 84 of List I had to suffer a detraction only to mark off the area of operation of a tax on sale of goods. The power to levy sales tax was conceded to the State Legislature by reason of Entry 54 of List II. He relied on the decision of a Division Bench of this Court in Jose v. State (tree tax case ( 1973 KLT 463 ), where the levy of a duty of excise even prior to the stage of manufacture or production was sustained as a valid levy. On principle, the decision appears to us to be understandable; but, as we pointed out with respect to the observations of Gwyer, C. J., and of the other decisions, to which we have referred, there must be a connection between the levy and the manufacture or production. On principle, the decision appears to us to be understandable; but, as we pointed out with respect to the observations of Gwyer, C. J., and of the other decisions, to which we have referred, there must be a connection between the levy and the manufacture or production. We may recall the observations of Sulaiman, J. in In re C.P. Motor Spirit Act (AIR 1939 FC 1) at page 23: "There is really nothing absolutely irreconcilable between excise duty mentioned in Entry No. 45 of List I and tax on retail sales included in Entry No. 48 of List II. They can be mutually exclusive, so as not to bring in operation the provisions of S.100 at all. Excise duties can be imposed by the Centre on motor spirits and lubricants manufactured or produced at the place or in the Province of their origin, while the Central Provinces and Berar can impose a tax on the retail sale of all such goods (both foreign and Indian) within the Province. It is not at all clear why the Centre which can easily impose an excise duty at an earlier stage should try to follow the petrol after it has been exported from the Province of its origin into other autonomous Provinces and impose excise duties on retail sales thereafter the commodity has become a part of the general stock in such Provinces and in the case of some other goods, mixed up with and become indistinguishable from similar foreign products. The suggestion that manufacture or production itself may be seriously affected is rather far fetched." 18. The learned Central Government Pleader contended that whatever be the position under the Act before its amendment in 1973, after the said amendment, it is permissible and possible to levy a duty of excise on the value of the goods as determined by S.4. It was pointed out that the criterion for the levy under S.4(1)(a) was the "normal price in the course of wholesale trade for delivering at the time and place of removal where the buyer is not related personally". It is the case of the petitioner that this section would not apply to it, as it has no factory gate sale. That is quite apart from its contention that the section itself is ultra vires. It is the case of the petitioner that this section would not apply to it, as it has no factory gate sale. That is quite apart from its contention that the section itself is ultra vires. Central Government pleader also placed reliance on S.4(1)(b) where a power is given to determine the value of the goods in such manner as may be prescribed. But neither this power nor the power to determine tariffs as provided in the First Schedule to the Act, and as relied on by the Central Government Pleader, would carry with it a power to cross the frontiers of the levy sanctioned by S.3 of the Act. Both by reason of the legislative entry -- Entry 84 of List I -- and by reason of the express provision of S.3, the power is only to levy a duty of excise, as explained by the Supreme Court in Voltas's case ( AIR 1973 SC 225 ) Atic Industries's case ( AIR 1975 SC 960 ) and Shinde Brothers's case ( AIR 1967 SC 1512 ) not to mention the other cases referred to already. The very nature of excise duty requires a proximate connection with production or manufacture. At any rate, what has passed beyond the region of manufacture and production and entered the domain of sale, cannot pass as excise duty. It appears to us clear enough that the inclusion of post manufacturing expenses would indicate that the levy is something other than a duty of excise. 19. The Central Government Pleader placed reliance on S.4(2) of the Act as amended, which provides that where the price for delivery at the time and place of removal is not known and the value is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price. The argument of the Central Government Pleader was that for the computation of value of goods under S.4 provision was made for deduction of the cost of transportation alone, and of no other charge. Positively, he argued that every other item of post manufacturing expense could be included in the value of the goods. We are afraid this is not the precise scope of the provision. Positively, he argued that every other item of post manufacturing expense could be included in the value of the goods. We are afraid this is not the precise scope of the provision. In the circumstances, and against the background we would not be justified in applying the latin maxim that express mention of the one is exclusion of all the rest. S.4(2) does not, to our mind interdict the deduction of other types of expenses. Besides, if the inclusion of these other types of expenses would be destructive of the nature and character of the permissible levy, that is sufficient to introduce a vitiating element, in the imposition. Such indeed, was the ruling of the Patna High Court in The Tata Engineering and Locomotive Company Ltd. v. S. N. Guha Thakurta (Civil Writ Jurisdiction Case No. 704 of 1976), a copy of the judgment in which, was tendered for our perusal. Special Leave Petition filed against the same, it was said, was dismissed by the Supreme Court. In its judgment, the Patna High Court after noticing the provisions of S.4, observed that it was not disputed that under the amended S.4(1)(a), a wholesale cash price will be the normal price. To attract S.4(1)(a) what is required is to determine the normal price which will be price at which it is ordinarily sold to buyers in the course of wholesale trade. It found that there was no force in the contention that S.4(2) provides for the only deduction that had to be made in assessing the value of the goods; and that other post manufacturing charges could be included. Counsel also drew our attention to the judgment of the Madras High Court in Writ Petition No. 4497 of 1976. There again the contention that post manufacturing charges will have to be included, was rejected. It was observed that excise duty was one on production and manufacture of the goods and therefore post manufacturing expenses on profits must be excluded from consideration in determining the wholesale value of the excisable goods. 20. Attention was also called to a judgment of the Allahabad High Court in Civil Mis. Writ No. 179 of 1976. That was concerned with the question of sale to a related person. Strictly speaking, it has no application to the case before us. 21. 20. Attention was also called to a judgment of the Allahabad High Court in Civil Mis. Writ No. 179 of 1976. That was concerned with the question of sale to a related person. Strictly speaking, it has no application to the case before us. 21. The Central Government Pleader strongly urged that even on the argument of counsel for the appellant, we would not be justified in holding the assessment to be unjustified and wrong. The compliant, at the most, could only be that a small margin of post manufacturing expenses have entered the reckoning; but shorn of this, the rest of the levy could certainly pass a duty of excise. It was therefore contended that the levy in pith and substance is to be regarded as a duty of excise. Were the matter res integra, we might have had to evaluate the argument; but, we are afraid, we cannot countenance it, in the light of the decisions of the Supreme Court in Voltas Ltd.'s case ( AIR 1973 SC 225 ) Atic Industries's case ( AIR 1975 SC 960 ) and Shinde Brothers's case ( AIR 1967 SC 1512 ), which we have noticed already. 22. The Central Government Pleader had one other argument to sustain the levy. He contended that the power of taxation was available to the Union Government under the residuary powers under Art.248 of the Constitution read with the Entry 97 of List I of the 7th Schedule. The Article and the Entry give power only with respect to a matter 'not enumerated in Concurrent List' or State List. The duty is expressly termed an 'excise duty'. That seems to be clearly referable to Entry 84 of List I; and we see no case for pressing into service the residuary powers under Art.248 and Entry 97 of List I. S.3 of the Act again expressly refers to the duty as a duty of excise. In these circumstances, we are afraid we cannot sustain the levy under the residuary powers pressed into service by the learned Central Government Pleader. 23. We are therefore of the opinion, that the respondents were wrong in insisting on the post manufacturing expenses and post manufacturing profits to be included in the reckoning for determining excise duty. In the light of the decisions noticed, this is vitiated. The learned Judge was wrong in holding otherwise. 23. We are therefore of the opinion, that the respondents were wrong in insisting on the post manufacturing expenses and post manufacturing profits to be included in the reckoning for determining excise duty. In the light of the decisions noticed, this is vitiated. The learned Judge was wrong in holding otherwise. We allow this appeal and set aside the judgment of the learned Judge. The result is that O.P. No. 4578 of 1975 would stand allowed an Exts. P-2, P-2 (a), P-2(b) and P-2(c) would stand quashed, leaving the respondents free to act in accordance with law and in the light of the observations contained in this judgment. There will be no order as to costs.