1995 (2) TMI 226 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of the cost of the capsule in the assessable value of biscuits.
2. Interpretation of Notification No. 34/83-C.E. regarding exemption.
3. Definition and scope of the term "metal container" under the Central Excise Tariff.

Issue-wise Detailed Analysis:

1. Inclusion of the cost of the capsule in the assessable value of biscuits:
The primary issue revolves around whether the cost of the capsule, fitted over the lid of the KOT container, should be included in the assessable value of the biscuits. The Revenue contended that the capsule was an additional fitment and not part of the metal container, thus its cost should be included in the value of the biscuits. Conversely, the appellant argued that the capsule was an integral part of the KOT container and its cost should not be added to the biscuits' assessable value. The Tribunal, after considering the arguments and relevant case law, concluded that the capsule was necessary for protecting the lid and maintaining the integrity of the biscuits during transit, thus forming part of the metal container.

2. Interpretation of Notification No. 34/83-C.E. regarding exemption:
Notification No. 34/83-C.E. exempted biscuits from excise duty equivalent to the duty on the value of metal containers in which the biscuits were packed. The Tribunal had to determine if the capsule's cost fell under this exemption. It was noted that the exemption notification should be construed strictly, but once applicable, full effect should be given. The Tribunal referred to various Supreme Court judgments emphasizing that exemption provisions, once applicable, should be interpreted liberally to give full play to the exemption. The Tribunal concluded that the cost of the capsule, being part of the metal container, was eligible for exclusion from the value of the biscuits under the exemption notification.

3. Definition and scope of the term "metal container" under the Central Excise Tariff:
The term "metal container" was not explicitly defined in the notification, but reference was made to the definition under Item No. 27 of the old Central Excise Tariff, which included various forms of containers. The Tribunal also considered dictionary definitions and previous case law to interpret the term. It was concluded that the term "metal container" was broad enough to include the capsule as part of the container. The Tribunal emphasized that the capsule, being essential for the protection and integrity of the biscuits, should be considered part of the metal container, thus its cost should not be included in the assessable value of the biscuits.

Conclusion:
The Tribunal allowed the appeal, holding that the cost of the capsule forms part of the cost of the KOT container. Consequently, the cost of the KOT container, inclusive of the capsule, is eligible for exclusion from the value of the biscuits under Notification No. 34/83-C.E. The Tribunal emphasized that the exemption notification should be applied liberally once it is determined to be applicable, and the cost of the capsule should not be added to the assessable value of the biscuits.