1998 (11) TMI 334 - AT - Customs

Summary

Issues Involved:
1. Inclusion of packing charges in the assessable value of glass bottles.
2. Determination of whether gunny bags and carton boxes are primary or secondary packing.
3. Assessment of the durability and returnability of packing materials.

Issue-Wise Detailed Analysis:

1. Inclusion of Packing Charges in the Assessable Value:
The appellants, engaged in manufacturing glass bottles, filed a price list with the Central Excise Authorities, including the cost of bottles, excise duty, and straw wrappings. From 1975, show cause notices were issued to raise duty on packing charges for gunny bags and cartons. Initially, the Assistant Collector ruled that gunny bags and cartons, being durable and returnable, should not be included in the assessable value. However, subsequent show cause notices led to a different interpretation, where carton boxes were considered primary packing and thus included in the assessable value. The Commissioner (Appeals) remanded the matter for further investigation.

2. Determination of Primary or Secondary Packing:
The Assistant Collector initially held that gunny bags were secondary packing and excluded from the assessable value, whereas carton boxes were primary packing. On appeal, the Commissioner directed a de novo adjudication to verify the nature of the packing. During de novo proceedings, the Assistant Collector concluded that both gunny bags and carton boxes were normal packing, thus includable in the assessable value. The appellants argued that their goods could be sold without any packing and that the packing was for safe transport at the buyers' instance, making it secondary and returnable.

3. Durability and Returnability of Packing Materials:
The appellants contended that both gunny bags and carton boxes were durable and returnable, supported by their practice of receiving back used packing materials from customers. The Assistant Collector, however, included the cost of both packings in the assessable value, which was upheld by the Commissioner (Appeals). The appellants argued that the Assistant Collector exceeded his authority by including gunny bags in the de novo adjudication, as this issue was not part of the remand order. The Commissioner (Appeals) failed to address the durability and returnability of carton boxes adequately.

Judgment Summary:
The Tribunal agreed with the appellants that the Assistant Collector overstepped by including gunny bags in the de novo adjudication, as the issue was settled previously and not appealed by the Revenue. The Tribunal set aside the inclusion of gunny bags in the assessable value.

Regarding carton boxes, the Tribunal noted that the Commissioner (Appeals) did not consider relevant Supreme Court judgments and relied solely on a previous case involving another manufacturer. The Tribunal emphasized that the durability and returnability of packing materials depend on agreements between buyers and sellers, not on actual returns. The Tribunal remanded the matter for a fresh decision, instructing the Assistant Commissioner to determine if carton boxes are durable and returnable and, if not, whether they are the normal packing for wholesale trade at the factory gate.

Separate Judgment by P.C. Jain:
P.C. Jain concurred with the general findings but added specific comments:
- The non-inclusion of gunny bag expenses was final, as the Revenue did not appeal.
- The matter of carton packing should be remanded for a decision based on Supreme Court judgments.
- The Assistant Commissioner should first determine if carton packing is durable and returnable.
- If not, the Assistant Commissioner should assess if carton packing is the normal packing for wholesale trade at the factory gate, without being influenced by the Tribunal's observations.

In conclusion, the appeals were disposed of with directions for a de novo decision on the inclusion of carton box packing costs in the assessable value, considering the durability and returnability of the packing materials.