1994 (12) TMI 242 - AT - Central Excise

Summary

Issues:
1. Whether the deposit money received for returnable drums should form part of the assessable value under Section 4 of the Central Excises and Salt Act, 1944.

Detailed Analysis:

Issue 1:
The main issue in this case was whether the deposit money received by the respondents for returnable drums should be included in the assessable value of the finished product, liquid glucose, under Section 4 of the Central Excises and Salt Act, 1944. The Collector of Central Excise, Ahmedabad contended that the deposit for the drums constituted additional consideration for the sale of goods and should be part of the assessable value. On the other hand, the respondents argued that there was an arrangement with buyers for the return of the drums, and the deposit was refundable upon return, citing the judgment in the case of K. Radha Krishnaiah. The Assistant Collector and the Collector (Appeals) both found that the drums were durable and returnable based on the agreement between the parties and actual practice. They referred to the Supreme Court decision in the case of Mahalakshmi Glass Works (P) Ltd. v. Collector of Central Excise and the Delhi High Court judgment in J.K. Cement Works v. Union of India to support their conclusion that the deposit for returnable drums should not be included in the assessable value. The authorities emphasized that the crucial factor was the obligation of the seller to accept and refund the deposit upon return of the packing, rather than the physical capability of the packing to be returned. The sample invoices submitted also confirmed the refund policy for returned drums. Therefore, both the Assistant Collector and the Collector (Appeals) applied the correct legal criteria established by the Supreme Court and rejected the Collector of Central Excise's appeal, affirming that the drums in question were durable and returnable packing, and the deposit should not be part of the assessable value under Section 4(4)(d)(i) of the Act.

This judgment clarifies the legal position regarding the treatment of deposit money received for returnable drums in the context of assessing the value of goods under the Central Excises and Salt Act, 1944. The decision underscores the importance of the contractual arrangement between the parties and the obligation of the seller to refund the deposit upon return of the packing, rather than the physical characteristics of the packing material. The judgment also highlights the significance of established legal precedents, such as the Supreme Court decisions in K. Radha Krishnaiah and Mahalakshmi Glass Works (P) Ltd., in guiding the interpretation and application of relevant provisions of the law.