1991 (9) TMI 220 - AT - Central Excise

Summary

Issues:
- Whether the cost of dealwood packing for electrical water heaters should be included in the assessable value of the goods for taxation purposes.

Detailed Analysis:

1. Facts and Background: The case involved a dispute regarding the inclusion of the cost of dealwood packing for electrical water heaters in the assessable value of the goods. The respondents manufactured water heaters and used dealwood packing for goods transported to distant locations, while local sales were packed in polythene.

2. Revenue's Argument: The Revenue contended that dealwood packing was essential and should be considered part of the assessable value since a significant portion of the goods were sold in such packing. Citing relevant case laws, the Revenue argued that the cost of packing should be included in the assessable value.

3. Respondent's Argument: The respondents argued that dealwood packing was secondary and used only for long-distance transportation to protect the goods. They emphasized that the primary packing was polythene, indicating that the dealwood packing cost should not be part of the assessable value. They relied on a Bombay High Court decision to support their stance.

4. Tribunal's Analysis: After reviewing the case records and arguments, the Tribunal observed that the water heaters were supplied locally in polythene packing, with dealwood packing used only for long-distance transportation to ensure safety. Referring to a previous decision, the Tribunal highlighted that packing costs for non-fragile goods not needing additional protection were not included in the assessable value.

5. Decision and Rationale: Based on the facts presented and the precedent cited, the Tribunal concluded that the cost of dealwood packing should not be included in the assessable value of the goods. Since the primary packing was sufficient for local sales and dealwood was used solely for transportation safety, the appeal by the Revenue was dismissed.

6. Outcome: Consequently, the Tribunal upheld the Collector (Appeals) decision, ruling in favor of the respondents by dismissing the Revenue's appeal. The judgment clarified that the cost of secondary dealwood packing should not be considered in the assessable value of the electrical water heaters, given the nature of the goods and the purpose of the additional packing for long-distance transportation.