Scope of Supreme Court judgment in case of U.O.I. v. M/s. Godfrey Phillips India Ltd. on the question of Secondary packing - Regarding - Central Excise - 6/66/86-CX.1

Scope of Supreme Court judgment in case of U.O.I. v. M/s. Godfrey Phillips India Ltd. on the question of Secondary packing - Regarding F. No. 6/66/86-CX.1 Dated 25-11-1986 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Scope of Supreme Court judgment in case of U.O.I. v. M/s. Godfrey Phillips India Ltd. on the question of Secondary packing - Regarding. I am directed to refer to the Ministry's F. No. 15/29/86-CX.1, dated 1-9-1986 in terms of which it was intimated that the Ministry had decided to accept the Supreme Court judgment dated 30-9-1985 in the case of U.O.I. v. M/s. Godfrey Phillips India Ltd. as the Additional Solicitor General had advised against filing of review petition against the said judgment. 2. Doubts have been raised as to whether in terms of the said judgment the cost of secondary packing is required to be excluded from the assessable value for the purpose of assessment in all cases where packings are declared as "secondary packing" by the manufacturers. The matter has been considered in the Ministry. It is seen that the majority judgment in the instant case has relied, inter alia, upon the observations made by the Supreme Court in the case of U.O.I. v. Bombay Tyre International Ltd., wherein the Court had held that the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market, at the factory gate, is the degree of packing whose cost can be included in the "value" of the article for the purpose of the excise duty. A view has been taken by the Court that the corrugated fibre board containers in which the cartons of cigarettes are packed are employed only for the purpose of avoiding damage or injury during transit, and are not necessary for selling the cigarettes in the wholesale market at the factory gate. The ruling is therefore, confined to the aforesaid CFC type of packing used for packing cigarettes and cannot be considered as a ruling on all types of secondary packing as eligible for "exclusion" from the assessable value. Each case of secondary packing has to be examined on merits, keeping in view the nature of the commodity, the marketing practice and the observations made by the Supreme Court particularly in the Bombay Tyres International case and the Godfrey Phillips case. 3. The aforesaid views may be brought to the notice of field formations. 4. The receipt of this letter may please be acknowledged.