1987 (1) TMI 242 - AT - Central Excise

Summary

Issues:
- Interpretation of the term "returnable" in Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
- Whether exclusion of the cost of packing from the assessable value of goods is justified if the packing is not actually returned.

Analysis:
1. The appeals before the Appellate Tribunal involved a common issue regarding the exclusion of the cost of packing from the assessable value of goods under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. The department sought to disallow such exclusion in cases where the packing, in this instance, drums, was not actually returned by the buyers to the assessees.

2. The Tribunal referred to a larger Bench decision in the case of M/s. Associated Cement Companies Ltd. and others, which discussed the meaning of the term "returnable." The Tribunal highlighted that the Supreme Court had held that for packing to be considered returnable, there must be an arrangement between the buyer and the seller for its return. The Tribunal summarized the norms relevant to returnability, emphasizing that actual return is not necessary, but the obligation to accept and refund the packing is crucial.

3. The Tribunal noted that there was no evidence to suggest the absence of a contract or arrangement for the return of the drums in question. The department had allowed exclusion in cases where drums were actually returned, indicating the existence of such an arrangement. The Tribunal emphasized that the actual return of the containers is not a prerequisite for exclusion, as per the judgments of the Supreme Court and various High Courts.

4. Based on the legal principles established by the Supreme Court and High Courts regarding returnability of packing, the Tribunal concluded that the department's argument for disallowing the exclusion in cases where drums were not actually returned was not legally sustainable. Therefore, the Tribunal dismissed both appeals, upholding the exclusion of the cost of packing from the assessable value of goods in line with the established legal interpretations.

This detailed analysis of the judgment highlights the legal interpretation of the term "returnable" and the significance of arrangements between buyers and sellers for the exclusion of packing costs from the assessable value of goods. The Tribunal's decision was based on established legal principles and precedents set by higher courts, ensuring a fair and consistent application of the law in the present case.