2007 (11) TMI 193 - AT - Central Excise

Printed labels, polythene bags and corrugated boxes are part of packing materials in respect of the final product viz, canister manufactured and cleared by the appellant for packing of liquor - None of the packing materials are of durable or returnable nature and therefore, the cost of such packing is includable in the assessable value of the canisters - non-inclusion of the same came to light only after detection by preventive officers misdeclaration & supression demand not time barred

Summary

Issues:
Demand of duty on containers cleared by appellants including cost of packing materials - Printed labels, polythene bags, and corrugated boxes supplied by Manohar Canister P. Ltd.

Analysis:
The judgment addresses a demand of duty amounting to Rs.3,18,000/- imposed on the appellants for containers cleared during the period from 1993-94 to 1995-96, inclusive of the cost of printed labels, polythene bags, and corrugated boxes supplied by Manohar Canister P. Ltd. Despite the absence of representation from the appellant, the tribunal considered the case based on the submissions of the learned DR and the records. The tribunal found that the mentioned packing materials were an integral part of the final product, canisters, manufactured and cleared by the appellant for packing liquor. According to the provisions of sub-section (4) of Section 4 of the Central Excise Act, 1944, the cost of packing materials should be included in the assessable value of goods if they are not of durable or returnable nature. Since the packing materials in question did not meet the criteria of being durable or returnable, the tribunal upheld the demand for duty. The tribunal also noted that the extended period of limitation applied in this case as the appellants failed to disclose the receipt of packing materials from Manohar Canister P. Ltd. and did not inform the department about the inclusion of the packing material costs in the assessable value of the canisters they manufactured. The non-disclosure was discovered by preventive officers, leading to the conclusion that the appellants had misdeclared the value of the canisters by suppressing the supply of packing material. Consequently, the tribunal upheld the impugned order confirming the duty demand and dismissed the appeal.

This judgment highlights the importance of including the cost of packing materials in the assessable value of goods, as per the provisions of the Central Excise Act, 1944. It emphasizes the significance of disclosing all relevant information to the department to avoid misdeclaration and subsequent demand for duty. The case serves as a reminder for manufacturers to adhere to the legal requirements concerning the valuation of goods and the inclusion of associated costs in the assessable value.