1979 (11) TMI 106 - CGOVT - Central Excise

Metal containers in unassembled condition - Dutiability - Valuation - Margin of profit - Determination of assessable value

Summary

Issues:
1. Dutiability of metal containers manufactured for captive consumption.
2. Inclusion of profit margin in the cost of manufacture.
3. Applicability of Rule 10A of the Central Excise Rules.

Analysis:
1. The petitioners, who are manufacturers of PP foods, also produce metal containers within their factory for packing the PP foods. The dispute revolves around the dutiability of these metal containers used for captive consumption. The authorities demanded differential duty, alleging that the declared price did not include a profit margin. The Assistant Collector upheld the demand, adding a 10% profit margin to the cost of manufacture, a decision later affirmed by the Appellate Collector.

2. During a personal hearing, the petitioners argued that the manufactured goods did not qualify as metal containers under the tariff item. They contended that the process of production did not result in saleable or deliverable containers meeting the description of metal containers. Additionally, they disputed the addition of a profit margin, citing the absence of such provision during the relevant period under Section 4 of the Central Excises & Salt Act.

3. The government, after reviewing the submissions, disagreed with the petitioners' arguments. They determined that the goods in question indeed constituted metal containers subject to excise duty. The tariff item definition of containers encompassed items intended for packaging goods for sale, including various types of containers. The government found that the petitioners' products met this definition, being used to pack the PP foods they manufactured. Furthermore, the government upheld the inclusion of a profit margin in the assessable value, citing the Supreme Court's precedent in the Voltas case, which established that manufacturing profit forms part of the assessable value. The government also supported the application of Rule 10A due to the petitioners' failure to declare their profit margin or submit revised price-lists as requested.

In conclusion, the government rejected the revision application, affirming the duty liability on the metal containers manufactured for captive consumption and justifying the inclusion of a profit margin in the assessable value. The decision was based on the interpretation of the tariff item definition and the legal provisions under the Central Excises & Salt Act, along with the petitioners' failure to comply with the authorities' requests for information.