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TMI Blog1987 (7) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... their reply to the show cause notice appellants submitted that the goods in question viz. apple juice concentrate was in fact sold loose in durable PVC carboys, that the carboys were not filled with pre-determmed quantity, and finally the carboys were not sold to the consumers but returned and duly accounted for. It was urged that the price charged was per Kg. of contents, and not per carboys. For these reasons it was claimed that the product was not in fact sold in unit containers as such and therefore was classifiable under Tariff Item 68 and not under Tariff Item 1B of Central Excise Tariff. 4. Since the carboys were returnable, it was also claimed that, as per Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, the cost of the containers were not required to be included in assessable value. It was also claimed on behalf of the appellants that the demand for differential duty was barred by limitation as the goods were being cleared in accordance with duly approved price lists. 5. In the Order-in-Appeal passed by the Appellate Collector of Central Excise it was held that since the unit container in this case was of a durable and returnable nature therefore the pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -determined quantity. The product is sold in varying quantities, and in the facts of the case it can be considered that the sale is being undertaken in loose and not in packed form. 11. The facts of the case and the submissions made before us have been carefully considered. For facility of reference Item No. 1B of the Central Excise Tariff is reproduced below : 1B Prepared or preserved foods put up in unit containers and ordinarily intended for sale, including preparations of vegetables, fruit, milk, cereals, flour, starch, birds, eggs, meat offals, animal blood, fish, crustaceans or molluses, not elsewhere specified. 12. It seems to us that there has been some confusion as regards the issue on which decision is required to be taken. As per the show cause notice it was alleged that appellants had cleared their apple juice concentrate in plastic barrels without including the value of such barrels in the assessable value of the PP Foods. So the issue, as per show cause notice, basically, was not of classification but valuation, that is, whether the price of returnable plastic barrels was or was not liable to be included in the assessable value of apple juice concentrate clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foods, in unit containers, ordinarily presented for sale, shuts out from the coverage of this heading, only those foods which are not meant for sale, such as those transported for further industrial uses or transported from one place to another. It is well known that products like preserved foods or canned meat, canned fish or milk, or vegetables are always sold commercially in containers of certain sizes; it is the goods described and packed in these containers that the law wanted to tax under this heading. It is the last stage of the prepared and preserved foods before their sale commercially that the law wanted to tax and not the earlier stage when the foods are in large cans or containers that are not for sale, or when not yet packed. 16. It cannot be said that in this case the carbouys are not unit containers merely because they hold large quantity of the product or that the carbouys are returnable. Nor are we persuaded to agree that merely because, as claimed, the contents of such carboys can vary, therefore it has to be held that the product is sold loose, thus taking it out of classification under Item 1B of Central Excise Tariff. For classification under 1B Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not correct in view of the fact that under Tariff Item 1B containers are an essential part of the goods because of the very description of the Tariff Item. In other words because the Tariff description of Item 1B of the Central Excise refers to PP Foods put up in unit containers therefore, it is submitted that the price of such unit containers should constitute a part of the assessable value of PP Foods, even if such containers are returnable. This logic is not acceptable. Classification is to be determined as per the Tariff description; valuation of the goods presented for clearance has to be undertaken as per Section 4 of the Central Excises and Salt Act, 1944. The two issues have not to be mixed up. In this case, for reasons already discussed supra, classification of apple juice concentrate sold in carboys is appropriate under Item 1B of Central Excise Tariff. However, in undertaking valuation due regard must be had of Section 4(4)(d)(i) according to which, where the goods are delivered at the time of removal in a packed condition, value is to include the cost of such packing except the cost of packing which is of a durable nature and is returnable by the buyer to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff; and (ii) The value of the carboys in which the apple juice concentrate was being supplied to the customers was not liable to be included in the assessable value of the juice concentrate since these carboys were durable and returnable and were being returned. These two orders were passed on appeal against the orders, dated 22-6-1984 and 18-1-1985 of the Assistant Collector concerned. In passing his order, dated 30-3-1985, the Collector (Appeals) relied on his earlier order (No. 896-CE/CHG/84, dated 30-10-1984) wherein he had held that the juice concentrate was not classifiable under Tariff Item 1B of Central Excise Tariff. This order, dated 30-3-1985 is order No. 269/CE/CHG/85. The Collector (Appeals) had, in passing his order, dated 7-11-1985, relied on order No. 896 as well as order No. 269 mentioned supra. Thus in effect the two orders of the Collector (Appeals) now under consideration in these two appeals were based on his order No. 896, dated 30-10-1984. That order was in an appeal against an order, dated 10-8-1983 passed by another Assistant Collector on a refund claim, dated 4-12-1979 of the respondents. That refund claim had been initially rejected on 23-4-1980 as ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this conclusion and pointed out that after all the juice concentrate had to be supplied in some container and that the view taken by the Assistant collector was not correct. He observed, if the view taken by the Assistant Collector were to be correct, I wonder if there would be any case which would not be covered under Item 1B since juice concentrate must necessarily be removed in some container or other. 23. I am satisfied that this view of the Collector (Appeals) in his order No. 896 was correct. The assertion of the respondents that though the carboys in which juice concentrate was being supplied to the customers were of uniform size they were not always completely filled up and that such quantity as was required by the customer was alone to be filled in each carboy for supply to customer has not been denied or disproved by the Department. Item 1B relates to sales in unit containers in which alone the goods were ordinarily intended to be sold though the unit containers may be of any particular but uniform size. The primary requirement (for classification under Tariff Item 1B) would be that the sales should be of such unit quantities (of whatever size) packed in unit contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s), that the goods in issue were classifiable under Item 1B Central Excise Tariff, it has become necessary to make a reference to the President in terms of Section 129C(5) of the Customs Act as made applicable to proceedings under the Central Excises and Salt Act. 29. The points of difference to be referred to the President, therefore, are - (i) Is the product of the respondents classifiable under Item 1B Central Excise Tariff ?; (ii) If so, is the value of the carboys liable to be included for arriving at the assessable value of the product ?; and (iii) Are the appeals to be dismissed or allowed in part ? 30. [per : K. Prakash Anand, Member (T)]. - I agree with the points formulated above. 31. [Order per : S. Venkatesan, President]. - I have heard the learned representatives of both sides on the points of difference, which are the following :- (i) Is the product of the respondents classifiable under Item 1B Central Excise Tariff ?; (ii) If so; is the value of the carboys liable to be included for arriving at the assessable value of the product ?; and (iii) Are the appeals to be dismissed or allowed in part ? 32. For the Appellant Collector, Smt. Dolly Saxena br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the first two questions, as advocated by her, the reply to the third question followed. She did not explain how the Department would benefit by this Bench upholding the view of the learned Technical Member, because as regards the question of inclusion or exclusion of the value of the carboys, both Members had agreed - though for different reasons -that it should be excluded. However, from what was said later by Shri Bedi, it appears that if classification was held to be under Item 68, the respondents would be entitled to exemption as a small scale unit on the basis of the quantum of their clearances, whereas if it was under Item 1B they would be liable to duty. 36. For the respondents, Shri Bedi submitted that the dispute was not centred on the size of the container, but on what was meant by a unit container . He stated that the product, namely apple juice concentrate, was sold on the basis of weight. On the one hand it was sold in bottles containing 1/2 kg and 1 kg of the concentrate. These fulfilled the requirements under the F.P. Order. The bottles were labelled and they showed the net quantity of the contents and the maximum price. The concentrate was also sold lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessable value. Shri Bedi submitted that the provisions of Section 4(4)(d)(i) were quite general, and did not admit of variation in respect of any particular tariff item. 39. Shri Bedi cited the decision of the Government of India in the case of Malabar Coast Products (1982 E.L.T. 512). That case related to the inclusion of the cost of glass containers for food products. It had been held that since the glass containers were not returnable, their cost could not be excluded from the assessable value. It followed by implication that if they had been returnable, their cost would have had to be excluded. 40. In reply, Smt. Saxena submitted that all the concentrate made by the respondents was intended for sale. The mere fact that in some cases they supplied in carboys the particular quantity wanted by their consumer did not mean that the concentrate so supplied was not intended for sale. 41. I have carefully considered the orders recorded by the two learned Members, and the arguments advanced at the hearing before me. The first, and indeed the main question to be decided is whether the product of the respondents is classifiable under Item 1B Central Excise Tariff. The wording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of manufacture and date of expiry (where applicable), the maker s name, the recommended maximum retail price, and so on. There are often two or three different sizes of packs for the same product. For instance, in the case of instant coffee it could be 50 gms, 200 gms and 500 gms. The standardised nature of the packing greatly facilitates and speeds up the choice and purchase of the products by the ordinary customer. He may be guided by his previous experience, or by the advice of the shopkeeper, or even by his inspection of the goods. But usually he has little difficulty in making up his mind as to what product to buy. As regards the size of the pack also, depending on his needs and the nature of the product, it is easy for him to decide whether he needs a 50 gms pack or a 100 gms pack or a 500 gms pack. Once having decided, the further advantage of the unit container comes in. He does not have to wait while the product is laboriously (and perhaps incorrectly) weighed out and packed. Nor does he have to worry whether this is done in a hygenic manner; nor yet whether the contents will get damaged by moisture, ants etc., if he keeps in on his own shelf for a few days or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents in carboys containing varying quantities as required by the buyers in each particular case cannot be considered as prepared or preserved foods put up in unit containers within the meaning of Tariff Item IB. They would therefore fall under Item 68. 48. A word may be said about the argument that it is sufficient for the purposes of Item 1B that the containers should be uniform, even if the contents vary. As explained in Para 15 above, the situation of variable contents in uniform containers is not to be expected in the type of goods sought to be taxed, as seen from the examples in Para 14. Further, as pointed out by the Appellate Collector, such an interpretation would render the word unit in unit containers superfluous and therefore, in accordance with well-known principles of construction, should be avoided. 49. Reference has been made by the learned Technical Member to the decisions of the Tribunal in the cases of Foremost Dairies Ltd. [(1986) 10 ECC T 148] and H.M.M. Ltd., Calcutta (1985 ECR 2021). These cases do not deal with the point covered by the preceding discussion. In my view the decisions in these cases are not in conflict with the view I have tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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