1996 (9) TMI 304 - AT - Central Excise

Summary

Issues:
1. Inclusion of the value of paper cores or wooden reels in the assessable value of paper.
2. Interpretation of Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
3. Examination of evidence regarding the returnable nature of packing materials.
4. Consideration of limitation period for demanding the payment of duty.

Analysis:

1. The appellant, engaged in the manufacture of paper wound on paper cores or wooden reels, faced a dispute regarding whether the value of cores or reels should be added to the assessable value of paper. Excise officers issued show cause notices based on discrepancies in invoices and gate passes. The appellant argued that a part of the claim was time-barred and that the cores or reels were durable and returnable. Previous orders and Supreme Court rulings were cited to support the appellant's position.

2. Section 4(4)(d)(i) of the Act states that the value of goods includes the cost of packing unless the packing is durable and returnable by the buyer. The Supreme Court's interpretation emphasized the need for an arrangement between the buyer and the seller for the packing to be considered returnable. The appellant presented evidence through invoices indicating the returnable nature of the packing materials, but the lower authorities dismissed this evidence.

3. The lower authorities focused on the lack of concrete evidence proving the returnability of the packing materials, disregarding the endorsements on the invoices. However, the previous history of disputes between the Department and the appellant, along with the genuine nature of the invoices, indicated an agreement between the parties regarding the returnability of the containers. This should have attracted the exclusion clause of Section 4(4)(d)(i) of the Act.

4. Regarding the limitation period for demanding duty payment, the Tribunal found that the claim for duty prior to six months from the show cause notices was time-barred. The Department was aware of the appellant's practices, and previous settlements favored the appellant's contentions. The failure to mention the cost of packing materials separately in price lists or gate passes was not deemed intentional misdeclaration or suppression of facts to evade duty.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals based on the above analysis and findings.