1998 (5) TMI 187 - AT - Central Excise

Summary

Issues:
1. Inclusion of packing charges in the assessable value of excisable goods.

Analysis:
The main question in this appeal was whether the packing charges named as P-41, collected by the respondents from their customers for goods transported through Railways, should be included in the value of the excisable goods. The Original Authority had included these charges in the assessable value, but the lower appellate authority disagreed. The lower appellate authority cited a judgment of the Hon'ble Supreme Court in the case of Bombay Tyres International, emphasizing that packing necessary to make the excisable article marketable should be included in the value for excise duty purposes. The degree of secondary packing required for selling the excisable article in the wholesale market at the factory gate should be considered. The cost of primary packing, in which the article is contained and marketed to ordinary consumers, should also be included.

The Revenue appealed against the lower appellate authority's decision, arguing that as per Section 4(4)(d)(i), the cost of packing should be included in the assessable value of goods unless it is durable and returnable. The Revenue contended that the packing charges were not durable and returnable, so they should be included. The Revenue also highlighted that most excisable goods in the case were removed under the packing in question, and charges were recovered from the buyer, not at the buyer's instance.

The respondent company, represented by Mrs. M.K. Gyara, relied on the Supreme Court judgment in the case of MRF, stating that only packing necessary for putting goods in the wholesale market at the factory gate should be included in the value of excisable goods. It was argued that the packing in question, P-41, was only necessary for goods transported through Railways and not for delivery in the wholesale market at the factory gate. Therefore, the charges should not be included.

After considering both sides' submissions, the tribunal agreed with the respondent's representative. They found that the packing charges for P-41 were specific to goods transported through Railways under Railway Authorities' rules and regulations and were not required for transportation by any other mode. Therefore, the tribunal concluded that the charges for packing P-41 should not be included in the assessable value of the excisable goods, ultimately dismissing the appeal of the Revenue.