2001 (9) TMI 610 - AT - Central Excise

Summary

Issues:
1. Inclusion of the cost of packing material in the assessable value of goods.
2. Determination of the relationship between two entities under Central Excise law.
3. Compliance with the Supreme Court's direction on durability/returnability of packing material.

Issue 1: Inclusion of the cost of packing material in the assessable value of goods:
The case involved a dispute regarding the inclusion of the cost of cardboard boxes in the assessable value of glass vials manufactured by the appellant. The Tribunal referred to the Supreme Court judgment in Hindustan Polymers v. CCE, stating that the cost of packing supplied by the buyer would not be included in the assessable value of the goods. The Tribunal remanded the matter to determine the distinct entity status of the two involved parties under Excise law. The Asst. Commissioner later held that the parties were independent entities, and thus, the packing material cost was not includable.

Issue 2: Determination of the relationship between two entities under Central Excise law:
The Tribunal emphasized the need to establish the separate existence of the two entities involved in the transaction under Central Excise law. It was noted that the lower authorities had not provided clarity on this aspect, leading to a remand for a detailed examination by the adjudicating authority. The Asst. Commissioner subsequently determined that the entities were indeed independent under Central Excise law, impacting the inclusion of packing material cost in the assessable value.

Issue 3: Compliance with the Supreme Court's direction on durability/returnability of packing material:
The department raised concerns about the Asst. Commissioner's failure to address the issue of durability/returnability of the packing material as directed by the Supreme Court. The Commissioner (Appeals) remanded the matter for consideration of this aspect. However, the Tribunal found that the department's appeal on this ground was beyond the scope of the remand order. It clarified that the cost of packing supplied by the buyers, whether durable or not, should not be included in the assessable value, aligning with the principles established in Hindustan Polymers.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s order and reinstating the Asst. Commissioner's decision. The judgment clarified the principles governing the inclusion of packing material costs in the assessable value of goods, the determination of entities under Central Excise law, and the compliance with the Supreme Court's directions on durability/returnability aspects.