9911796707
TMI Blog1994 (11) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... e list and claimed certain deductions from the assessable value of the goods manufactured and cleared from their factory at Aurangabad. These deductions included distribution cost (warehousing expenses) and secondary packing. The appellants have depots and warehouses all over India and do not make any factory gate sale to their stockists. They were issued show cause notice on 7-3-1992 asking them to show cause as to why the deductions claimed by them in the various price lists filed since 1988 should not be disallowed as they were not considered admissible. The appellants submitted reply to the show cause notice vide their letter dated 17-5-1992. Thereafter, the appellants were issued two further show cause-cum-demand notices dated 20-5-1992 which were issued in respect of period January 1990 to February, 1992 and October, 1990 to February, 1992 respectively whereby the appellants were called upon to show cause why the duty demanded therein should not be recovered from the appellants in respect of said deductions claimed by the appellants. The show cause notices were adjudicated by the Assistant Collector, who vide his order-in-original dated 28th August, 1992 allowed deductions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) E.L.T. 599 (S.C.) permitted exclusion of cost of warehousing and distribution cost in determining the assessable value. It was, further, argued that if after considering the Supreme Court decision in the case of Union of India v. Bombay Tyre International, reported in 1983 (14) E.L.T. 1896 (S.C.), particularly paras 49 50), the Supreme Court has allowed post removal expenses, such as loading and handling charges, then on the same analogy the ld. Sr. Counsel urged there is no reason for disallowing expenditure on the warehousing which are the expenses incurred after the goods are removed from the factory gate. He cited, in this context, the Supreme Court decision in the case of Indian Oxygen Ltd. v. Collector of Central Excise, reported in 1988 (36) E.L.T. 723. The ld Sr. Counsel then referred to certain decisions of the Tribunal in which it has been held that the cost of distribution and remuneration to CIF agents is deductible from the assessable value. The ld. Sr. Counsel submitted that these decisions are holding the field and have not been recalled. These are - Hindustan Gas Industries Ltd. v. Collector of Central Excise - 1992 (59) E.L.T. 306; Plyboard v. Collector of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985 (22) E.L.T. 306. Their torches and batteries were first packed in polythene boxes and such boxes were then placed in cardboard cartons and the cartons were then placed in wooden boxes. The Supreme Court also held that the use of the wooden boxes is not necessary for putting the goods in wholesale market at the factory gate and that the cost of wooden boxes is excludible even if such boxes are used for delivery of goods in all cases. The ld. Sr. Counsel submitted that what is important is to ascertain the purpose of the packing which is the test laid down by the Supreme Court in the above cases. The Collector (Appeals) in the impugned order has also failed to consider another order of the Collector (Appeals), which being the order of the Coordinate Authority, has to be followed being based on the Supreme Court decision in the case of Ponds India Ltd. (supra). 6. Ld. D.R., Shri Singhal, referred to Section 4(2) of Central Excises Salt Act, 1944 which lays down that where the price of any excisable goods for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is, in fact, evident from the submissions of the appellants made before the Collector (Appeals) as recorded by that authority in the impugned order that if the packing as employed by them was not done, the tins containing goods will get dented and scratched and would become unmarketable. Similarly, without the corrugated cartons the soap would get dented and the wrappers would get torn. There is no evidence of special packing of the articles by the buyer and according to Section 4 of the Central Excises Salt Act, 1944, only durable and returnable packing cost is to be excluded. It has been laid down that the degree of the packing necessary to put the goods for sale in the wholesale market, is only the criterion and it is evident from the appellants own submission, as above, that the cartons and the packings are necessary for marketing. The ld. D.R. also referred to the Bombay High Court decision in the case of Patel Aluminium v. Union of India - 1991 (56) E.L.T. 303 (Bom.) wherein it has been held that wooden or hessian packing is necessary for the marketing of the goods and, therefore, not to be reduced from the assessable value. So also in the case of Mopeds India Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wholesale trade at the factory gate. In such a context, the ratio of the above said decisions is clearly attracted and it will not be an argument to say that the Bombay High Court judgment in Garware Paints (supra) did not take into consideration the decision of the Bombay High Court as confirmed by the Supreme Court in the case of Duphar Interfran (supra). This is because the Bombay High Court in Garware Paints case (supra) has clearly considered the ratio of the Bombay Tyre International decision of the Supreme Court, which till date holds the field and the Supreme Court judgment in the case of Bombay Tyre International was not available to the Bombay High Court while deciding Duphar Interfran case because that case was decided by the High Court in June, 1980 earlier to the Bombay Tyre International decision. Moreover, the Duphar Interfran case was one where there was only clearance from the bonded store-room to places outside the factory gate. It was in that context that the decision was given. Hence, factually, it is not parallel to the present case where there is no sale at all at the factory gate and all the sales are only at depot away from the factory. Since the conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ize of the tooth powder tin, the larger cartons contain a varied number of one dozen packages. The wrapped soap is directly packed in the large corrugated cartons. The appellants submitted that their clients were only claiming a deduction in respect of cost of the larger cartons and this carton was only used for sale transportation of the tooth powder and the soap. It was explained that if one dozen packs are placed in a truck, such a truck would contain over 3000 of such packs and the small cartons in which they are placed would not take the weight and would disintegrate the tins would get dented and scratched and would become unmarketable. Similarly, without the corrugated cartons, the soaps would get dented and the wrappers would get torn. The packing, therefore, is only for the purpose of safety in transport." 10. From the above, it is seen that the tooth powder tins are packed in a small carton and thereafter packed in larger cartons. In the case of soaps, which are wrapped, are directly packed in the larger corrugated cartons. The goods are then transported in these larger cartons. It we compare the nature of packing considered by the Supreme Court in Geep Industrial Syndic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
