1998 (8) TMI 175 - AT - Central Excise

Issues:
1. Entitlement to claim discount on the cost of jars in packaging.
2. Consideration of durability and returnability of packaging.
3. Inclusion of cost of glass jars in assessable value.
4. Application of Section 4(4)(d)(i) of the Central Excise Act, 1944.
5. Interpretation of primary packing and its value in assessable value.
6. Relevance of judgments in determining the assessable value.
7. Dispute regarding the returnability of glass jars.
8. Argument of unjust enrichment and applicability of Section 11B of the CEA, 1944.

Analysis:

1. The main issue in this appeal is whether the appellants are entitled to claim a discount on the cost of jars used for packaging the product Bournvita. The question revolves around the applicability of Section 4(4)(d)(i) of the Central Excise Act, 1944, which allows for a deduction on packaging that is durable and returnable. The appellants argue that they should receive a refund of duty paid on the glass jars as they are durable, even though they are not returnable.

2. The Collector (Appeals) considered the issue and concluded that the glass jars, being primary packing, should be included in the assessable value of the final product. He emphasized the importance of packing for marketing the goods and cited relevant case laws to support his decision. He also highlighted that both durability and returnability should be satisfied for the packaging to qualify for an abatement under Section 4(4)(d)(i).

3. The appellants contended that the cost of packing of durable nature should be excluded based on precedents set by the Hon'ble Supreme Court in previous cases. However, the Departmental Representative argued that the glass jars, being essential for selling the product, should be included in the assessable value. The value of the glass jars, borne by consumers, was considered excludable.

4. The Tribunal analyzed the judgments of the Hon'ble Supreme Court in various cases, including the definition of primary packing and its inclusion in the assessable value. It was established that the cost of primary packing should be added to the assessable value, as confirmed by the Supreme Court in previous decisions.

5. The dispute over the returnability of the glass jars was a crucial point of contention. While the appellants claimed there was an agreement for returnability with wholesale dealers, the Collector (Appeals) and the Tribunal found that the glass jars were not being returned to the assessee, leading to the inclusion of their cost in the assessable value.

6. The issue of unjust enrichment was raised, with the Collector (Appeals) accepting the appellants' argument regarding the non-applicability of an amended section of the CEA, 1944. However, the Tribunal upheld the decision to include the cost of the glass jars in the assessable value, ultimately rejecting the appeal based on the established legal principles and precedents.

7. In conclusion, the Tribunal affirmed the decision of the Collector (Appeals) and rejected the appeal, emphasizing the importance of including the cost of primary packing, such as glass jars, in the assessable value of the final product as per the provisions of the Central Excise Act, 1944 and the interpretations provided by the Hon'ble Supreme Court in relevant cases.

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