1994 (11) TMI 238 - AT - Central Excise

Summary

Issues Involved:
1. Deduction of warehousing expenses from the assessable value.
2. Deduction of secondary packing costs from the assessable value.

Detailed Analysis:

1. Deduction of Warehousing Expenses from the Assessable Value:
The appellants, engaged in manufacturing and selling toilet soaps and tooth powder, sought to deduct warehousing expenses from the assessable value of their products. They argued that since there was no factory gate sale, the expenses incurred post-clearance, including warehousing, should be deductible. They cited several Supreme Court decisions, including Assistant Collector of Central Excise v. M.R.F. and Union of India v. Duphar Interfran Ltd., to support their claim. However, the Collector (Appeals) and the lower authorities disallowed these deductions, referencing Section 4(2) of the Central Excises & Salt Act, 1944, and the Supreme Court judgment in Bombay Tyre International. The Tribunal upheld the Collector (Appeals)' decision, emphasizing that warehousing expenses incurred post-clearance are not deductible as per the established legal principles in Bombay Tyre International and Garware Paints v. Union of India.

2. Deduction of Secondary Packing Costs from the Assessable Value:
The appellants also sought to deduct the cost of secondary packing, arguing that it was necessary for the protection of goods during transit and not for marketing purposes. They relied on the Supreme Court decisions in Geep Industrial Syndicate Ltd. v. Union of India and Godfrey Philips. The lower authorities, however, found that the secondary packing was essential for the goods to be marketable and, therefore, includible in the assessable value. The Tribunal agreed, noting that the packing ensured the goods' maintainability and was necessary for their condition in the wholesale market. The Tribunal referenced the Patel Aluminium v. Union of India case, which held that such packing costs are includible in the assessable value. Consequently, the Tribunal upheld the Collector (Appeals)' decision to include the secondary packing costs in the assessable value.

Conclusion:
The Tribunal rejected the appeal, upholding the Collector (Appeals)' decision that both warehousing expenses and secondary packing costs are includible in the assessable value of the goods manufactured by the appellants. The legal principles established in Bombay Tyre International and subsequent case law were deemed applicable, and the appellants' arguments were found unpersuasive in light of these precedents.