2015 (3) TMI 591 - SC - Central Excise

Valuation of goods - Inclusion of cost of cartons in the assessable value of the final product - Held that - The Collector of Central Excise (Appeals) has categorically stated in his order that these containers were placed in paper cartons of various sizes for transportation from the factory gate for sale to individual customers or as stock transfers. Therefore, on the facts of this case, we find that the test laid down in the aforesaid judgment in the case of Hindustan Safety Glass Works Ltd. 1985 (9) TMI 90 - SUPREME COURT OF INDIA would not be applicable. Even otherwise, the amount involved is only ₹ 1,22,740 - no merit in this case - Decided against Revenue.

Summary

Issues:
1. Claim of refund for duty paid on cartons
2. Inclusion of packing cost in assessable value for excise duty calculation

Issue 1: Claim of refund for duty paid on cartons
The respondent, a manufacturer of paints and varnishes, filed a claim of refund for duty paid on cartons in the year 1989. The claim was based on the argument that the duty paid on the cost of cartons should not be included in the assessable value of the final product, relying on a Supreme Court judgment. A show cause notice was issued, and the refund claim was rejected by the Assistant Collector of Central Excise on both merit and time-barred grounds. The respondent appealed to the Commissioner (Appeals) and later to the Central Excise Gold (Control) Appellate Tribunal, which allowed the appeal, stating that the value of carton boxes could not be included in the assessed amount.

Issue 2: Inclusion of packing cost in assessable value for excise duty calculation
The appellant argued that the cost of packing should be included for calculating excise duty, citing relevant judgments. The appellant emphasized that if packing is done to make goods saleable in the market, the cost of packing must be included. Reference was made to specific judgments to support this argument. The Court reiterated that the test is whether packing is done to put goods in a marketable condition and if goods can reach the market without such packing. Each case must be decided on its own facts, with a focus on whether goods are generally sold in the wholesale market at the "factory gate."

In the first case, the Court found that the containers were placed in paper cartons for transportation from the factory gate, making the test laid down in previous judgments inapplicable. The Court noted that the amount involved was minimal, and the respondent had not even received this amount from the Department. Consequently, the Court dismissed the case. In the second case, it was established that wooden packing was not required for sale at the factory gate, leading to the dismissal of the case based on the judgment in the first case.