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TMI Blog2006 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... customers under which they had asked their customers to return empty gunny bags for being reused for the supply of soda ash. For example, in a letter dated 15th December, 1970, the appellant, said, "We would strongly urge our customers to reclaim the used bags and return the sound ones back to our Works at Mithapur for reuse. Such cyclic uses of bags, in the interim, would once again result in substantial benefit to the consumer as there will be no cost of packing material involved." In a letter dated 2-4-1971 written to its customers, the appellant again said, "In the interest of our consumers and conservation of jute supplies we once again very strongly urge the return of ours used bags to Mithapur for re-use. May we, therefore, reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Commissioner of Central Excise v. Hindustan National Glass & Industries Ltd., 2005 (3) SCC 489. According to the appellant, all these cases are authorities for the proposition that where there is an arrangement between the seller and the buyer under which the seller is under an obligation to take back the packing material, the value of the packing material should not be included in the cost of the excisable goods, irrespective of the fact whether the packing material is returned or not. 7.The submission of the appellant was not accepted by the Tribunal on the ground that the documents, which we have quoted earlier, did not show that there was any such arrangement regarding returnability of the gunny bags which would justify exclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king material must be returnable to the seller by the buyer. In such a case actual return would not have to be established. The reason for this is obvious. From the section it appears that if the packing material is obliged to be returned to the seller, the seller does not in fact transfer the title in the packing material to the buyer. The seller retains the property in the packing material. In such circumstances, irrespective of the actual return of the packing material by the buyer to the seller, the seller, not having effected the sale of packing material, was not required to include the cost of packing material in the cost of excisable goods. In the present case there was no obligation on the part of the buyers to return th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in Triveni Glass Ltd. (supra), it contends that irrespective of the actual return of the gunny bags, the Tribunal was bound to exclude the cost of the gunny bags from the value of the soda ash in all cases where there was an arrangement to return the packing material as a matter of law. 12.The decision in Triveni Glass Ltd. (supra) does appear to suggest that even if there is no obligation on the part of the buyer to return the packing material, but there is an obligation on the part of the seller to accept the packing material if the buyer chooses to return it, then in all cases the cost of the packing material must be excluded from the cost of the excisable goods. This view is, in our opinion, contrary to the ratios laid down in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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