1987 (2) TMI 170 - AT - Central Excise

Summary

Issues:
1. Inclusion of cost of outer carton packing in assessable value of products.
2. Competency of Assistant Collector to review past assessments.
3. Benefit of High Court judgments on packing cost inclusion.
4. Interpretation of Supreme Court judgment on outer carton cost inclusion.

Issue 1: Inclusion of cost of outer carton packing in assessable value of products:
The dispute in the appeal revolves around whether the cost of outer carton packing should be considered in the assessable value of the products. The respondents manufactured food and confectionery products packed in cellophane bags inside unit cartons, which are then placed in outer cartons made of corrugated board. The Assistant Collector initially approved price lists without including the outer carton cost but later demanded duty based on including this cost. The Collector (Appeals) referred to a Supreme Court judgment and held that the outer carton was used for transport only, hence its cost should not be included. However, the Tribunal disagreed, stating that the outer cartons were essential for product protection during transport, storage, and handling, making their cost includable in the assessable value.

Issue 2: Competency of Assistant Collector to review past assessments:
The respondents argued that the Assistant Collector could not review past assessments retroactively, citing a Tribunal judgment. However, the Tribunal clarified that re-opening past assessments is permissible if earlier approvals were erroneous due to non-consideration of material facts or provisions. The Tribunal referenced specific provisions in the law allowing for such reviews and disagreed with the respondents' argument, upholding the Assistant Collector's authority to demand duty for the past period.

Issue 3: Benefit of High Court judgments on packing cost inclusion:
The respondents sought the benefit of High Court judgments predating a Supreme Court ruling on packing cost inclusion. They argued that since the High Courts viewed packing costs differently, they should benefit from those judgments. However, the Tribunal held that all disputes must be resolved based on the latest authoritative pronouncements, such as the Supreme Court ruling, even if it overruled previous High Court decisions. Therefore, the Tribunal did not consider the outdated High Court judgments in the present appeal.

Issue 4: Interpretation of Supreme Court judgment on outer carton cost inclusion:
The Department representative contended that the Collector (Appeals) misinterpreted a Supreme Court judgment regarding the inclusion of outer carton costs. They argued that the respondents' case was distinct from the precedent cited, as the outer cartons were essential for product protection and marketing. The Tribunal agreed, emphasizing the necessity of outer cartons for hygiene, preservation, and marketing of food products. Relying on a more recent Supreme Court judgment, the Tribunal concluded that the cost of outer cartons should be included in the assessable value of the respondents' products.

In conclusion, the Tribunal allowed the appeal, setting aside the Order-in-Appeal and reinstating the Assistant Collector's order to include the cost of outer cartons in the assessable value of the products.