1998 (7) TMI 461 - AT - Central Excise

Summary

Issues:
1. Inclusion of cost of secondary packing in the assessable value of torches for duty calculation.
2. Dispute regarding inclusion of actual cost of packing in the assessable value.
3. Interpretation of Section 4(4)(d)(i) of the Central Excise Act, 1944.

Analysis:

1. The appellant, engaged in torch manufacturing, included the cost of secondary packing in the assessable value of torches for duty calculation. The dispute arose when it was found that the appellant had collected less from buyers for packing than the actual cost incurred. The Department issued show cause notices proposing demand of differential duty and penalty. Despite resistance, the demands were confirmed, leading to the present appeals challenging the decision.

2. The Department took a different stand for the period under consideration, arguing that the actual cost of packing, not the amount collected from buyers, should be included in the assessable value. Reference was made to a prior period dispute where excess charges collected for packing were the basis for demanding differential duty. The question at hand was whether this stand was justifiable, with both sides citing the decision in Hindustan Polymers v. Collector of Central Excise.

3. In the Hindustan Polymers case, the Supreme Court held that the cost of durable and returnable packing supplied free of cost by the buyer should not be included in the assessable value of excisable goods. The Court distinguished between "cost" and "value," emphasizing that only the cost of packing incurred by the manufacturer and recovered from the buyer should be included. The judgments by various Justices further clarified that the cost of packing to the buyer, i.e., the charges collected, should be added to the price, even if it is less than the actual cost of packing. Consequently, the Tribunal found the confirmation of demand and penalty unsustainable in law, setting aside the impugned orders and allowing the appeals.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on legal interpretations and precedents cited during the proceedings.