1990 (12) TMI 213 - AT - Central Excise

Summary

Issues:
1. Inclusion of the cost of gunny packing in the assessable value of excisable goods.
2. Determination of sales at arm's length between the appellant and another company.
3. Validity of the order regarding the assessable value of goods and approval of price lists.

Analysis:

Issue 1: Inclusion of the cost of gunny packing in the assessable value of excisable goods
The appeal arose from the Collector (Appeals) confirming the inclusion of the cost of gunny packing in the assessable value of excisable goods sold by the appellant to another company. The Assistant Collector had directed the inclusion of the packing cost in the assessable value, which was upheld by the lower appellate authority. However, the Tribunal held that the cost of packing material should not be included in the assessable value unless there is evidence that the packing material is not returned by the buyers regularly. The Tribunal directed that the assessable value should be based on the ex-factory price at which the goods were sold.

Issue 2: Determination of sales at arm's length
The Assistant Collector had considered the sales between the appellant and the other company as not at arm's length due to the relationship between the directors of both companies. This led to the direction that the assessable value should be based on the prices charged by the other company to its customers. However, the Tribunal found that there were sales made to other customers at the same prices as the sales to the related company, establishing an ex-factory price. The Tribunal held that the companies were not related persons under the law, and the sales were at arm's length, directing that the assessable value should be based on the prices charged to the related company.

Issue 3: Validity of the order regarding the assessable value of goods and approval of price lists
The Tribunal set aside the order of the lower appellate authority and allowed the appeal, directing that the assessable value of the goods should be based on the prices charged to the related company. It was held that the price lists should be approved under Part I, emphasizing the importance of determining the assessable value based on the actual sales prices. The Tribunal clarified that the commonality of some directors between the companies did not establish a relationship under the law for the purpose of determining the assessable value.

In conclusion, the Tribunal ruled in favor of the appellant, directing that the assessable value of the goods should be based on the prices charged to the related company and that the price lists should be approved accordingly.