1987 (8) TMI 88 - HC - Central Excise

Summary

Issues:
1. Interpretation of excise duty on packing charges for glass bottles.
2. Validity of show cause notices issued to the appellant.
3. Application of the test for returnability of packing materials.
4. Judicial review of authorities' decisions on excise duty.

Analysis:

1. The judgment concerns an appeal by a private limited company and its director, challenging the dismissal of their writ petition regarding excise duty on wooden cases used for packing glass bottles. The Excise authorities alleged that the company was recovering packing charges from buyers, leading to an increase in assessable value. The revisional authority upheld the demand based on lack of returnability and durability of the wooden cases.

2. Show cause notices were issued to the company for two periods, and demands were confirmed without considering the returnability aspect adequately. The revisional authority's rejection of the grounds mentioned in the notices was not brought to the Single Judge's attention. The company was not given a fair opportunity to prove the durability and returnability of the packing material.

3. The Single Judge relied on a precedent emphasizing the exclusion of packing costs that are durable and returnable under a contract. The company's admission of no formal contract for return of packing material was crucial. However, the Supreme Court's test highlighted the need for an arrangement or implied agreement for returnability, not necessarily a formal contract. The judgment did not fully consider the returnability aspect due to lack of opportunity for the company to present evidence.

4. In light of the above, the High Court allowed the appeal, directing the Excise authorities to issue a fresh show cause notice considering the returnability test laid down by the Supreme Court. The company was granted an opportunity to present evidence and contest the allegations. The court also addressed the interim deposit made by the company and allowed for withdrawal based on the final decision. No costs were awarded in this matter.