1986 (5) TMI 174 - AT - Central Excise

Summary

Issues Involved:
1. Deduction of cost of durable and returnable packing materials from assessable value.
2. Exclusion of cost of special secondary packing from the wholesale price.
3. Compliance with procedural requirements for filing an appeal.
4. Evidence of packing materials' durability and returnability.
5. Application of the doctrine of promissory estoppel.
6. Allegation of double taxation on packing materials.

Detailed Analysis:

1. Deduction of Cost of Durable and Returnable Packing Materials:
The appellants sought to deduct the cost of durable and returnable corrugated fibre cardboard containers from the assessable value under Section 4 of the Central Excises and Salt Act, 1944. However, the Assistant Collector and the Collector (Appeals) disallowed this deduction, a decision upheld by the Tribunal. The Tribunal noted that the appellants failed to provide evidence that the packing materials were returnable as per the interpretation by the Gujarat High Court in Ahmedabad Manufacturing and Calico Printing Limited v. Union of India, 1982 E.L.T. 821 (Guj.). The Tribunal emphasized that the appellants did not maintain records of returned packings, nor could they substantiate their claim with any significant evidence.

2. Exclusion of Cost of Special Secondary Packing:
The appellants introduced a new ground during the appeal, citing the Supreme Court judgment in Union of India v. Bombay Tyre International Limited, which allowed the exclusion of the cost of special secondary packing from the wholesale price. The Collector (Appeals) requested evidence to substantiate that the packing was provided at the specific instance of wholesale buyers and was not a normal feature of wholesale trade. The evidence presented by the appellants was deemed insufficient as it only showed customer preferences for different types of packing without proving these were special secondary packings.

3. Compliance with Procedural Requirements for Filing an Appeal:
A technical objection was raised by the respondent regarding the appeal not being signed by the Principal Officer of the Company as required by Rule 213 of the Central Excise Rules read with CEGAT Procedure Rules. The Tribunal acknowledged the importance of this procedural requirement but opted to address the appeal on its merits rather than dismiss it on technical grounds.

4. Evidence of Packing Materials' Durability and Returnability:
The Tribunal found that the appellants did not produce any evidence to show that the manufactured goods were cleared without packing or that the packing materials were durable and returnable. The Assistant Collector noted the absence of records for returned packings and cited only one instance of returned containers, which was insufficient to establish a pattern. The Tribunal referred to judgments from the Gujarat and Bombay High Courts, which required evidence of an agreement for returnability and actual return of packings to exclude their cost from the assessable value.

5. Application of the Doctrine of Promissory Estoppel:
The appellants argued that the doctrine of promissory estoppel should apply based on a 1976 clarification by the Central Board of Excise and Customs. However, the Tribunal ruled that this doctrine was inapplicable as the clarification pertained to the secondary packing of cigarettes, which was not analogous to the appellants' case. The appellants failed to demonstrate that their situation matched the conditions outlined in the clarification.

6. Allegation of Double Taxation on Packing Materials:
The appellants contended that including the cost of corrugated fibre containers and wooden boxes in the assessable value would result in double taxation. The Tribunal dismissed this argument, stating that Section 4 of the Central Excises and Salt Act mandates the inclusion of packing costs in the assessable value of excisable goods.

Conclusion:
The Tribunal concluded that the appellants did not provide sufficient evidence to support their claims regarding the exclusion of packing costs from the assessable value. The orders of the lower authorities were found to be legally sustainable, and the appeal was dismissed.