Almost every year, post-budget, there are disputes between consumers and manufacturers over the pricing of goods. Not without reason. When indirect taxes are brought down by the finance minister, manufacturers are most reluctant to give the full benefit of reduced duties to the end consumer. On the other hand, when duties are hiked, dealers are only too happy to immediately announce the hike in prices and these are effected even on goods that are already in the retail outlets and therefore do not attract the new duty structure.

Recently, the apex consumer court heard one such complaint where the consumer had been asked to pay the revised excise duty on a car that had already left the manufacturer’s factory by the time the duty revisions were announced. Said the National Commission in its order: Collection of excise duty from the consumer without paying such a duty to the government is not only unjust and illegal, but also an unfair trade practice.

In fact the apex consumer court expressed its displeasure over the fact that the petitioners (dealer and the manufacturer) had not only imposed, unjustifiably, the excise duty on the consumer, but had also carried on with the litigation for years. Keeping this in mind, it awarded the consumer costs of Rs 25,000. It also upheld the order of the State Commission directing the manufacturer and the dealer to pay back the consumer, the additional excise duty of Rs 38,344 collected from him and to pay interest on the amount at the rate of 12 per cent per annum, calculated from September 1996. (Tata Engineering Locomotive Company and Sakti Automobiles vs John Jacob, RP no. 1079 of 1998, decided on April 4, 2006)

The case dates back to 1996. In February that year, John Jacob booked a Tata Sumo car through Sakti Automobiles, Kochi, by making an advance payment of Rs 25,000. The agreed price of the vehicle at the time of booking was Rs 3,30,061, but at the time of delivery, Jacob was asked to pay an additional amount of Rs 38,344 on the ground that there was a hike in excise duty. Jacob paid the additional amount under protest and took delivery of the vehicle. Thereafter, he had to wage a long legal battle ? spanning over ten years ? for justice.

Considering the facts of the case, the consumer should have got a higher amount of compensation, high enough to send a clear signal to manufacturers and dealers not to indulge in such practices.