2005 (2) TMI 691 - AT - Central Excise

Summary

Issues:
1. Inclusion of value of packing material in the assessable value of sodium silicate.
2. Time bar for the demand due to non-declaration of value of packing material.

Issue 1: Inclusion of value of packing material in the assessable value of sodium silicate:
The appeal was filed against the Order-in-Appeal passed by the Commissioner (Appeals) concerning whether the value of packing material, specifically drums, should be included in the assessable value of sodium silicate. The appellants argued that since the drums were durable and returnable, their value should not be considered part of the assessable value of the finished products. They cited legal precedents to support their position, emphasizing that if packing material is durable and returnable, its value should not be included even if not returned by the customer. On the other hand, the Revenue contended that without evidence of an arrangement for the return of packing material, its value must be included in the assessable value. The Tribunal noted the absence of any evidence of such an arrangement and ruled that in the absence of such an agreement, the value of the packing material should indeed be included in the assessable value of the final products. The decision was supported by a Supreme Court ruling emphasizing the importance of evidence regarding any arrangement for the return of packing material.

Issue 2: Time bar for the demand due to non-declaration of value of packing material:
Regarding the limitation issue, the appellants had never informed the Revenue that they were not including the value of the packing material in the assessable value of the final product. Consequently, the Tribunal found no merit in the appellants' argument that the demand was time-barred. The appellants claimed they believed in good faith that the cost of returnable and durable packing material should not be included in the assessable value. However, the Tribunal upheld the demand confirmation but set aside the penalty imposed on the appellants, considering the circumstances of the case. The decision highlighted the importance of informing the Revenue about any exclusion of packing material value from the assessable value to avoid time bar issues.

In conclusion, the Tribunal upheld the inclusion of the value of packing material in the assessable value of sodium silicate due to the lack of evidence of an arrangement for return. Additionally, the Tribunal rejected the time bar argument due to the appellants' failure to declare to the Revenue the exclusion of packing material value, although the penalty imposed was set aside.