1988 (5) TMI 167 - AT - Central Excise

Summary

Issues:
- Inclusion of cost of corrugated boxes in the value of goods for Central Excise duty assessment under Section 4 of the Central Excises and Salt Act, 1944.

Detailed Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the inclusion of the cost of corrugated boxes in the value of biscuits manufactured by the appellants for the purpose of assessment of Central Excise duty under Section 4 of the Central Excises and Salt Act, 1944. The period of controversy was from February 1982 to July 1982. The Assistant Collector found that the biscuits were usually sold in the wholesale market after being packed in tins and corrugated boxes. The department relied on previous judgments, including one by the Supreme Court, to argue that the cost of tins and corrugated boxes should be included in the assessable value. The respondents, during the hearing, presented fresh evidence in the form of a certificate claiming that the corrugated boxes were used for long-distance transport only, based on audited sales figures for the period 1979 to 1982. The respondents argued that the cost of corrugated boxes should not be included in the assessable value based on this evidence.

The Tribunal considered the nature of biscuits as a delicate food item requiring adequate packing to protect them during transport and preserve their freshness. The respondents had categorized their biscuits into two groups: cheaper and fast-moving biscuits like Glucose biscuits, which were delivered in poly bags for local markets, and other varieties sold in tins and corrugated boxes. The Tribunal noted that since significant quantities of cheaper biscuits were sold in local wholesale markets without corrugated boxes, the use of corrugated boxes for out-station deliveries was solely for the safety of biscuits during long-distance transport. Relying on a later judgment of the Supreme Court, the Tribunal held that the cost of corrugated boxes should not be included in the assessable value for biscuits sold in local wholesale markets in poly bags only. However, for biscuits sold in tins and corrugated boxes, the cost of packaging materials would be included in the assessable value.

Consequently, the Tribunal modified the impugned order-in-appeal and partially allowed the department's appeal in line with the above determination. Both parties were directed to give consequential effect to the Tribunal's order.