2000 (4) TMI 691 - Commissioner - Central Excise

Issues Involved:
1. Dropping of demand of Rs. 1,62,20,468.20 for duty on value of packing materials supplied by the buyer.
2. Dropping of demand of Rs. 68,16,527.59 for duty on value of gunny bags.
3. Confirmation of demand of Rs. 2,63,49,261.65 for duty on value of cartons.
4. Maintainability of the review appeal after settlement under the Kar Vivad Samadhan Scheme (KVSS), 1998.

Issue-wise Detailed Analysis:

1. Dropping of Demand of Rs. 1,62,20,468.20 for Duty on Value of Packing Materials Supplied by the Buyer:
The Assistant Commissioner dropped the demand based on the Supreme Court's decision dated 20-7-1995, which held that the value of packing material supplied by the buyer should not be included in the value of the goods. The Department argued that the Assistant Commissioner failed to consider the subsequent observation of the Supreme Court, which mandated that the value of packing material should be included unless shown to be durable and returnable. The Department contended that the dropping of the demand was incorrect and contrary to the Supreme Court's decision.

2. Dropping of Demand of Rs. 68,16,527.59 for Duty on Value of Gunny Bags:
The Assistant Commissioner concluded that jute bags were durable and returnable, thus their value need not be included in the assessable value of the goods. The Department argued that there was no evidence of any agreement or contract for returning the packing materials, as required by Supreme Court precedents. The Department maintained that the mere issuance of a circular could not be considered a contract, and without evidence of return, the cost of packing could not be excluded.

3. Confirmation of Demand of Rs. 2,63,49,261.65 for Duty on Value of Cartons:
The Assistant Commissioner confirmed the demand for duty on the value of cartons, considering them non-durable and non-returnable. This part of the order was not contested in the review appeal, as the respondent had settled this amount under the KVSS.

4. Maintainability of the Review Appeal after Settlement under KVSS, 1998:
The respondents argued that the appeal was filed contrary to the law and facts, as the issues had already been settled under the KVSS. They highlighted that the proviso to Section 92 of the Finance Act, 1998, which allowed the Department to pursue appeals, was struck down by the Delhi High Court. The Department's appeal was filed after the settlement certificate was issued, and thus, the appeal was not maintainable. The respondents emphasized that the KVSS aimed to reduce litigation, and the Department's appeal was contrary to this objective.

Judgment:
The review appeal was found to be non-maintainable. The Assistant Commissioner's order dropping the demands was upheld due to the settlement under the KVSS. The proviso to Section 92 of the Finance Act, 1998, which the Department relied upon, was struck down by the Delhi High Court, and the Government had accepted this decision. The certificate of settlement issued under the KVSS was deemed a conscious decision, and the Department's appeal was dismissed as it was filed almost ten months after the settlement. The appeal was rejected without delving into the merits, solely on the ground of non-maintainability.

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