1990 (2) TMI 183 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of the cost of containers in the assessable value for excise duty.
2. Validity and specificity of the Show Cause Notice.
3. Applicability of different High Court and Supreme Court decisions on the matter.
4. Time bar objection regarding the review Show Cause Notice.

Detailed Analysis:

1. Inclusion of the Cost of Containers in the Assessable Value for Excise Duty:
The core issue revolves around whether the cost of tin containers used for packing vegetable products should be included in the assessable value for excise duty. The Appellate Collector had allowed the deduction of the container cost based on the High Court of Bombay's decision in Union of India v. Mansingha Industries Pvt. Ltd., which held that including the value of tin containers and freight costs in the assessable value was outside the law. Conversely, the department argued, citing the Supreme Court's decision in the Bombay Tyre International case, that the cost of primary packing should be included in the assessable value.

2. Validity and Specificity of the Show Cause Notice:
The respondents contended that the Show Cause Notice was vague and invalid because it referenced different High Court decisions without specificity and incorrectly cited the Auro Food Products case, which pertained to a period before the amendment of Section 4 of the Central Excise & Salt Act, 1944. The Tribunal, however, found that the notice was not vague or invalid as it clearly outlined the issue and the laws being applied.

3. Applicability of Different High Court and Supreme Court Decisions:
Several judgments were considered:
- Bombay High Court in Mansingha Industries: Held that excise duty on tin containers and freight costs was outside the law.
- Madras High Court in Auro Food Products: Held that the value of tin containers should be included in the assessable value as the excisable article (biscuits) was not delivered without them.
- Supreme Court in Bombay Tyre International: Interpreted the amended Section 4, stating that the cost of primary packing should be included in the assessable value. This decision was considered binding and applicable to all pending cases, including the current one.

4. Time Bar Objection Regarding the Review Show Cause Notice:
The respondents raised a preliminary objection that the review Show Cause Notice was time-barred. This objection was dismissed by the Tribunal in Misc. Order No. 43/89-A, and the matter proceeded on merits.

Conclusion:
The Tribunal concluded that the Appellate Collector had rightly allowed the appeal filed by the respondents, and the Show Cause Notice issued by the Department was not valid. Therefore, the appeal was dismissed. However, there was a dissenting opinion by one member who believed that the Supreme Court's decision in the Bombay Tyre International case should be applied, which would result in the inclusion of the cost of containers in the assessable value and the setting aside of the Collector (Appeals) order. Ultimately, the majority decision prevailed, and the deemed appeal was dismissed.