2004 (5) TMI 181 - AT - Central Excise

Summary

Issues:
Assessable value of cement - Inclusion of packing charges and handling charges.

Analysis:
The appeal involves M/s Panyam Cements & Mineral Industries Ltd. challenging the assessment done by the Commissioner of Customs & Central Excise. The appellants collected packing and handling charges from customers, which the department added to the assessable value of cement. The appellants argued that the packing charges were for returnable gunny bags and should be deducted. The Supreme Court remanded the matter back for disposal based on relevant principles. The Assistant Commissioner decided to add the cost of gunny bags to the assessable value. The appeal against this decision was rejected by the Commissioner (Appeals).

Shri V.K. Dorairaj, representing the appellants, argued that the gunny bags were durable and returnable, citing a CEGAT decision. He emphasized the requirement for returnability to be a term of sale, supported by evidence of the Cement Control Release Order and ledger entries showing purchase of second-hand gunny bags. The Commissioner (Appeals) rejected this argument, stating lack of evidence of bag returns or packing charge refunds.

On the other hand, Shri P.M. Saleem for the Revenue supported the Commissioner (Appeals) decision, referencing Supreme Court judgments on packing charges. The Commissioner (Appeals) highlighted the necessity of packing for marketability and the absence of return obligation for buyers. The ownership of cement and gunny bags passed to buyers, making the bags non-returnable. The Commissioner (Appeals) found no evidence of bag returns or packing charge refunds, upholding the rejection of the appeal.

The Appellate Tribunal upheld the Commissioner (Appeals) decision, emphasizing the principles laid down by the Supreme Court. They noted that the ownership of cement and bags transferred to buyers, with no obligation for return. The Tribunal found no evidence of an agreement for bag returns or packing charge refunds, supporting the rejection of the appeal. The order of the Commissioner (Appeals) was upheld, and the appeal was rejected.