2010 (9) TMI 598 - AT - Central Excise

Valuation - whether the appellants are entitled for deduction of the expenses in relation to the packing material in the form of gunny bags from the assessment value - the goods are packed in the outer gunny in order to prevent tear and damage to the goods and further that the assessee has not adduced any evidence support of their plea that the goods are sold generally in polythene covers - product is usually sold in polythene covers and therefore the cost of gunny bags could not be included in assessable value and the specific challenge in the appeal before the Commissioner (Appeals) was that the packing of the excisable goods with the gunny bags was only a secondary packing to facilitate safe transportation - Merely because the assessee raises the plea without any material in support thereto, no obligation is cast upon the Adjudicating Authority to elaborately discuss such plea - Appeal is dismissed

Issues Involved:

1. Entitlement for deduction of expenses related to packing material in the form of gunny bags from the assessment value.
2. Analysis of factual findings by the lower authorities regarding the nature and necessity of packing materials.
3. Application of legal principles established by the Supreme Court in similar cases.
4. Consideration of previous unchallenged decisions in similar matters involving the same assessee.

Issue-wise Detailed Analysis:

1. Entitlement for Deduction of Expenses Related to Packing Material:

The primary issue in this case is whether the appellants are entitled to deduct the cost of packing materials, specifically gunny bags, from the assessable value of their goods. The appellants argued that the cost of gunny bags should be excluded based on prior decisions and similar cases. However, both the Original Authority and the Commissioner of Central Excise (Appeals) ruled against the appellants, stating that the cost of packing materials in the form of gunny bags is includable in the assessable value.

2. Analysis of Factual Findings by Lower Authorities:

The Adjudicating Authority, in its order dated 5-10-2000, noted that the goods were packed in gunny bags to prevent tear and damage, and the appellants did not provide evidence to support their claim that the goods were generally sold in polythene covers. The Commissioner (Appeals) further observed that gunny bags are not durable or returnable and are used for transport convenience rather than as primary packing. These findings were not challenged by the appellants, leading to the conclusion that the goods were indeed packed in gunny bags to prevent damage, and no evidence was provided to support the claim of sales in polythene covers.

3. Application of Legal Principles Established by the Supreme Court:

The appellants relied on the Supreme Court decisions in *Madras Rubber Factory Ltd.* and *Bombay Tyre International Ltd.* to argue their case. The Supreme Court in these cases laid down the principle that the cost of packing is includable in the assessable value if it is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market. The Court also emphasized that whether packing is necessary, durable, and returnable are questions of fact to be decided based on evidence. The Tribunal found that the lower authorities followed these principles correctly, as the appellants failed to provide necessary evidence to support their claims.

4. Consideration of Previous Unchallenged Decisions:

The appellants contended that a previous decision by the Assistant Collector in their own case, which allowed the deduction of packing material costs, should be binding as it was unchallenged. However, the Tribunal rejected this argument, stating that each case must be decided based on its facts and evidence. The previous decision was based on specific findings of fact which were not present in the current case. The Tribunal emphasized that the absence of evidence in the current case justified the lower authorities' decisions.

Conclusion:

The Tribunal concluded that the appellants failed to provide sufficient evidence to support their claim for deduction of packing material costs. The lower authorities' findings were based on the facts and evidence presented, and they correctly applied the legal principles established by the Supreme Court. The appeal was dismissed, affirming the inclusion of the cost of gunny bags in the assessable value of the goods.

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