2016 (4) TMI 288 - SC - Central Excise

Inclusion of value of gunny bags for determination of assessable value of manufactured goods - Arrangement between appellant and buyers of soda ash - Held that - if an arrangement exists between the seller and the buyer of excisable goods for return of the packing materials by the buyer to the seller, carrying an obligation on the seller to return the value of the packing materials to the buyer on such return, such value is not liable to be included in the assessable value of the finished product. Furthermore, if such an arrangement exists, the question of actual return is not relevant. As per material placed, it cannot be concluded that the appellant has succeeded in establishing that such an arrangement of return of the packing materials of the gunny bags with the obligation on the part of the seller to refund the value thereof existed between the parties. Also, obligation taken by the appellant to refund the value of the gunny bags to the Buyer in terms of any arrangement between the parties not found. - Value to be included - Decided against the assessee.

Summary

Issues:
1. Whether the inclusion of the value of gunny bags in the assessable value of manufactured goods is justified.
2. Whether an arrangement existed between the seller and the buyer for the return of packing materials.
3. Whether the law laid down in Mahalakshmi Glass Works and Triveni Glass Ltd. is applicable in the present case.
4. Whether there is an obligation on the seller to refund the value of packing materials to the buyer.
5. Whether the matter should be remanded for further consideration regarding the inclusion of the value of gunny bags supplied by the buyer.

Analysis:

1. The Supreme Court considered the appellant's claim regarding the arrangement between the manufacturers/sellers and buyers of soda ash for the return of gunny bags, as per previous judgments in Mahalakshmi Glass Works and Triveni Glass Ltd. The Court emphasized that if an arrangement exists for the return of packing materials by the buyer to the seller, with an obligation on the seller to refund the value upon return, such value should not be included in the assessable value of the finished product.

2. The Court examined the evidence presented and concluded that there was no established arrangement for the return of gunny bags with an obligation on the seller to refund their value. Without such an arrangement, the principles laid down in the aforementioned judgments could not be applied to the present case.

3. The appellant's request for a remand for further consideration of the inclusion of the value of gunny bags supplied by the buyer and the exclusion of the duty element was dismissed. The Court found a lack of factual foundation supporting this request, indicating that the issue was not adequately addressed in previous orders.

4. The Court highlighted the absence of any obligation on the part of the appellant to refund the value of gunny bags to the buyer as per the required arrangement. Without this essential element, the Court determined that there was no basis for remanding the appeal for further review.

5. Ultimately, the Court dismissed the appeals without any order as to costs, based on the lack of evidence supporting the existence of an arrangement for the return of packing materials and the obligation to refund their value, as required by the legal precedents cited.