2015 (10) TMI 2068 - AT - Central Excise

Valuation of goods - Non inclusion of packing material - Held that - special packing provided by them to the buyer is in the nature of secondary packing not includable in the assessable value. In order in appeal the Commissioner has observed that cost of all packing is includable in assessable value. - Since the nature of the special packing, claim to be secondary packing by the appellants, has not been disputed in the order in appeal, it has to be treated as secondary packing. - Since cost of secondary packing not ordinarily used and given specially at the request of customer, is not includible in the assessable value, the benefit of exclusion of the cost of special packing as a secondary packing has to be allowed to the appellant in terms of Section 4 of the Central Excise Act. - Decided in favour of assessee.

Summary

Issues involved:
1. Inclusion of the value of special packing in the assessable value for excise duty calculation.

Analysis:

Issue 1: Inclusion of the value of special packing in the assessable value for excise duty calculation

The case revolved around whether the value of special packing provided by the manufacturer to the buyer should be included in the assessable value for excise duty calculation. The appellant, a manufacturer of multilayered plastics collapsible tubes, had provided special packing to the buyer, which was alleged to be secondary packing. The appellant contended that the cost of secondary packing should not be included in the assessable value, citing precedents such as the National Leather Cloth Manufacturing Co. Ltd. and Marigold Paints Pvt. Ltd. cases. The appellate authority had confirmed the duty demand based on the inclusion of the packing cost in the assessable value.

The Commissioner observed that the cost of all packing is includable in the assessable value, but did not dispute the appellant's claim that the special packing was in the nature of secondary packing. Referring to the Bombay Tyre International Ltd. case, the Tribunal highlighted that the cost of secondary packing, not ordinarily used and provided specially at the request of the customer, should be excluded from the assessable value. The Tribunal concluded that since the special packing was not generally provided as a normal feature of wholesale trade and was given specially at the customer's request, it should be treated as secondary packing and not included in the assessable value. Consequently, the appeal filed by the appellants was allowed, granting them the benefit of excluding the cost of special packing from the assessable value as per Section 4 of the Central Excise Act.

In essence, the judgment clarified the treatment of special packing as secondary packing, which should be excluded from the assessable value for excise duty calculation if it is not ordinarily used and provided specially at the customer's request.