1981 (9) TMI 126 - CGOVT - Central Excise

Valuation - Cost of packing to be excluded when packing material supplied by the customers - Manufacture

Summary

Issues:
Assessable value determination based on inclusion of packing charges in goods supplied in drums belonging to customers, interpretation of Section 4(4)(d)(i) of Central Excises and Salt Act, 1944, exclusion of value of durable packing in assessable value calculation, comparison to kerosene supply scenario, consideration of Notification No. 313/77 exemption, and justification for excluding cost of packing in goods supplied in containers belonging to buyers.

Analysis:
The case involved a dispute regarding the assessable value declared by M/s Gujarat State Fertilizers Company Limited for cyclohexanone, specifically concerning the inclusion of packing charges in goods supplied in drums belonging to customers. The Supdt. of Central Excise approved the price-lists with the inclusion of drum value, prompting the assessee to file appeals. The Appellate Collector allowed the appeals, leading the Government to issue a show cause notice based on a strict interpretation of Section 4 of the Central Excises and Salt Act, 1944.

The assessee contended that the value of drums should be excluded from the assessable value, citing the durable and returnable nature of the containers used. They referenced a judgment of the Gujarat High Court and Notification No. 313/77, which exempted certain excisable goods from duty on packing supplied by buyers. The assessee argued that the value of durable packing should not be included in the assessable value as per Section 4(4)(d)(i) of the Act.

The Government considered data provided by the assessee, showing that the majority of their production was sold in containers supplied by buyers. They agreed with the assessee's comparison to the supply of kerosene in customer-provided containers, stating that the value of goods cleared in packed conditions should only refer to the manufacturer's cost. Since the drums were durable and belonged to buyers, the Government concluded that the cost of packing should not be included in the assessable value.

In their decision, the Government upheld the order-in-appeal and dropped the review proceedings, emphasizing that the value of durable packing supplied by customers should not be part of the assessable value. They highlighted that the absence of specific mention of cyclohexanone in the exemption notification did not alter this conclusion.