1995 (10) TMI 117 - AT - Central Excise

Summary

Issues:
1. Whether the cost of secondary packing in wooden crates should be included in the assessable value.

Detailed Analysis:

Issue 1: Whether the cost of secondary packing in wooden crates should be included in the assessable value.
The case involved appeals filed by the assessee and the Department regarding the inclusion of the cost of secondary packing, specifically wooden crates, in the assessable value of pressure cookers. The assessee argued that the cost of card board cartons was included in the price, but not the cost of wooden crates. The authority initially held that the cost of wooden crates should be included, leading to a demand. However, for a different period, the Collector (Appeals) reversed the demand, stating that the cost of wooden crates should not be included. The Department appealed this decision.
The Tribunal referred to the Supreme Court decision in M.R.F. Ltd. case, which established that the test for including packing costs in assessable value is whether the packing is necessary for selling the goods in the wholesale market at the factory gate. If necessary, the cost should be included; otherwise, it should be excluded, especially if the packing is durable and returnable.
The Assistant Collector and Collector (Appeals) had based their decisions on the number of clearances of goods packed in wooden crates compared to those without. However, the Tribunal disagreed with this approach, emphasizing that the relevant factor is the proportion of goods sold with primary versus secondary packing. The data showed that about two-thirds of the goods were sold with primary packing in card board cartons, indicating that primary packing was necessary for wholesale market sales, not secondary packing in wooden crates.
Consequently, the Tribunal set aside the orders in the first two appeals filed by the assessee and confirmed the order of the Collector (Appeals) in the Department's appeal, ruling that the cost of secondary packing in wooden crates should not be included in the assessable value of the pressure cookers.

In conclusion, the Tribunal's decision clarified the criteria for including packing costs in the assessable value of goods and emphasized the necessity of the packing for wholesale market sales. The judgment provided a detailed analysis of the relevant data and highlighted the distinction between primary and secondary packing, ultimately ruling in favor of excluding the cost of secondary packing in wooden crates from the assessable value of pressure cookers.