1990 (7) TMI 229 - AT - Central Excise

Summary

Issues Involved:
1. Validity of the refund claims.
2. Compliance with principles of natural justice.
3. Inclusion of packing charges in the assessable value.
4. Limitation under Rule 11 read with Rule 173-J of the Central Excise Rules, 1944.
5. Evidence of protest letter dated 20-12-1973.
6. Inclusion of secondary packing cost in the assessable value.

Detailed Analysis:

1. Validity of the Refund Claims:
The respondents, manufacturers of glass and glasswares, filed six refund claims for the duty paid on packing materials. These claims were initially rejected by the Assistant Collector of Central Excise, Agra, without issuing any show cause notice or granting a personal hearing. The respondents appealed to the Appellate Collector of Central Excise, New Delhi, who set aside the Assistant Collector's orders and remanded the matters for de novo decision, emphasizing the need to observe principles of natural justice.

2. Compliance with Principles of Natural Justice:
The Appellate Collector noted a serious breach of principles of natural justice, as no show cause notice was issued, and no personal hearing was granted before rejecting the refund claims. The Assistant Collector was directed to re-examine the cases, considering whether the inclusion of packing charges in the assessable value was due to inadvertence, error, or mis-construction.

3. Inclusion of Packing Charges in the Assessable Value:
The respondents argued that they paid duty under protest, referring to their protest letter dated 20-12-1973. They contended that the packing charges were included in the assessable value under the instructions of the Central Excise authorities. The Assistant Collector, however, rejected their claims, stating that the duty was not paid under protest and that the claims were similar to a previously rejected case.

4. Limitation under Rule 11 read with Rule 173-J of the Central Excise Rules, 1944:
The review show cause notice issued by the Central Government alleged that the refund claims were time-barred under Rule 11 read with Rule 173-J. However, the Tribunal observed that the Assistant Collector's orders did not reject the claims on the ground of limitation but on the merits, following an earlier adjudication order.

5. Evidence of Protest Letter Dated 20-12-1973:
The Tribunal found evidence of the protest letter dated 20-12-1973, which was acknowledged by the Central Excise authorities. The Assistant Collector did not rebut the respondents' claim that the duty was paid under protest. The Appellate Collector also confirmed that the duty was paid under protest from 20-12-1973 onwards.

6. Inclusion of Secondary Packing Cost in the Assessable Value:
The Tribunal referred to Supreme Court judgments in the cases of Hindustan Polymers and Godfrey Philips India Ltd., which held that the cost of secondary packing for protection during transportation is not includible in the assessable value if the goods are marketable without packing. The respondents contended that their products were generally sold without packing, and special packing was done only at the customers' request, with the cost separately shown in the invoices. This contention was not rebutted by the Revenue.

Conclusion:
The Tribunal upheld the Appellate Collector's order, finding no infirmity in it. The appeals filed by the Revenue were dismissed, affirming that the cost of special packings requested by customers is not includible in the assessable value of the respondents' glass and glasswares.