2002 (6) TMI 492 - AT - Central Excise

Summary

Issues:
- Whether the cost of packing has to be added for arriving at the assessable value of the goods as per Section 4 of the Central Excise & Salt Act, 1944.

Analysis:
The judgment involves an appeal concerning the assessable value of goods under Section 4 of the Central Excise & Salt Act, 1944, specifically focusing on whether the cost of packing should be included. The appellant, engaged in manufacturing glass sheets, packed the goods in wooden crates for safe delivery. An arrangement was made with customers for the return of wooden crates, with a specified refund amount. The appellant claimed deductions for freight and packing charges, which the Excise department disputed through show cause notices demanding a substantial sum as differential duty. The Assistant Commissioner initially allowed the deductions, but the Revenue challenged this decision before the Commissioner (Appeals). The Commissioner (Appeals) held that the packing was not durable and thus not eligible for exemption under Section 4(4)(d)(I) of the Act.

The key issue revolved around the durability and returnability of the packing material. The law stipulates that to claim deduction, the packing must be durable and returnable by the buyer to the assessee. The Commissioner (Appeals) contended that since the wooden crates had to be opened for removing the glass sheets, they were not capable of reuse as packing material. However, the Tribunal disagreed, emphasizing that the wooden crates, made of wooden planks, could still be utilized for packing even after dismantling some planks. Referring to a statement detailing the return of durable packing, labeled as 'wooden box,' the Tribunal concluded that the packing used by the appellant was indeed durable. Consequently, the Tribunal overturned the Commissioner (Appeals) decision, allowing the appellant's claim for the cost of packing as a deduction under Section 4.

In conclusion, the Tribunal's judgment clarified the criteria for deducting packing costs under Section 4 of the Central Excise & Salt Act, 1944, emphasizing the importance of durability and returnability. By analyzing the nature of the packing material and its potential for reuse, the Tribunal upheld the appellant's right to claim the cost of packing as a deduction, setting aside the Commissioner (Appeals) decision and ruling in favor of the appellant.