1997 (1) TMI 172 - AT - Central Excise

Summary

Issues:
1. Inclusion of cost of special packing in the assessable value of metal containers.
2. Classification of buyers requesting special packing.
3. Barred by time notice for inclusion of packing cost in assessable value.

Issue 1: Inclusion of cost of special packing in the assessable value of metal containers:
The appellant, engaged in manufacturing metal containers, contended that the cost of optional special packing, such as corrugated cartons or wooden boxes, should not be added to the assessable value. The lower authorities held against the appellant, stating that buyers requesting special packing form a special class among industrial consumers, and the cost of such packing should be included in the assessable value. However, the Tribunal, referring to the principles laid down in previous cases, held that such special packing is not necessary to put the goods in the condition in which they are generally sold at the factory gate. The Tribunal emphasized that the existence of different classes of buyers does not affect the includibility of packing cost, as the test is whether the packing is necessary for the goods' sale condition. Therefore, the Tribunal allowed the appeals related to this issue, setting aside the lower authorities' orders.

Issue 2: Classification of buyers requesting special packing:
The lower authorities based their decision on the concept of different classes of buyers as per proviso (i) to Section 4(1)(a) of the Central Excise Act, 1944. They argued that buyers requesting special packing form a distinct class, justifying the inclusion of packing cost in the assessable value. However, the Tribunal clarified that the existence of different classes of buyers does not impact the includibility of packing cost. The Tribunal stressed that the necessity of packing for goods sold at the factory gate determines its includibility, not the classification of buyers. As most goods were sold without special packing, the Tribunal concluded that such packing was not necessary for the goods' sale condition. Therefore, the Tribunal allowed the appeals related to this issue, rejecting the lower authorities' classification of buyers.

Issue 3: Barred by time notice for inclusion of packing cost in assessable value:
In an appeal related to a notice for inclusion of packing cost in the assessable value, the Assistant Collector initially held the notice as time-barred and dropped the proceedings. However, the Collector (Appeals) reversed this decision, stating that the notice was not time-barred. The appellant did not challenge this aspect but insisted that the proceedings be dealt with in accordance with the law. The Tribunal dismissed the appeal related to this issue as unnecessary, emphasizing that the Assistant Collector must proceed with the matter following the appellate order. The Tribunal upheld the Collector (Appeals) decision on the notice's timeliness.

In conclusion, the Tribunal allowed the appeals related to the inclusion of special packing cost in the assessable value of metal containers, emphasizing the necessity of packing for goods sold at the factory gate. The Tribunal rejected the classification of buyers requesting special packing and dismissed the appeal concerning a notice for inclusion of packing cost as unnecessary, affirming the timeliness of the notice.