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TMI Blog2023 (4) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate for the Appellant Shri G. Kirupanandan, Assistant Commissioner ( AR ) for the Respondent ORDER C L MAHAR The brief facts of the matter are that the appellant assessee are engaged in the manufacture of metal containers falling under Central Excise Tariff Heading 73 of Central Excise Tariff Act, 1985. During the course of the departmental audit, it was noticed that the assessee has not included cost of packing material received by them from their buyers free of cost. It is a matter of record that the buyers of the appellant assessee have been supplying corrugated boxes for packing and delivery of metal containers which were purchased by the buyers for further packing of various products of the M/s. Amul Dairy. 02. It has been the contention of the department that the cost of the packing material received free of cost by the appellant from their buyers should have formed part of the transaction value for the purpose of payment of central excise duty. The department is of the view that the additional consideration has flown back to the manufacturer from their buyers in the form of free supply of the corrugated boxes resulting in under invoicing of the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of packing material supplied Free of Cost for the purpose of packing of final product by the appellant there is no ambiguity in the law. For the ease of reference we reproduce the new Section 4. 1[4. Valuation of excisable goods for purposes of charging of duty of excise.- (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall- (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. 2[Explanation.-For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable, shall be treated to be the amount of money value of additional consideration flowing directly or indirectly from the buyer to the assessee in relation to sale of the goods being valued and aggregated accordingly, namely :- (i) value of materials, components, parts and similar items relatable to such goods; (ii) value of tools, dies, moulds, drawings, blue prints, technical maps and charts and similar items used in the production of such goods; (iii) value of material consumed, including packaging materials, in the production of such goods; (iv) value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods. Explanation 2. - Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the corrugated box and the same duly packed are cleared for sale to their customers. Therefore, since the goods are cleared in the packed form, the cost of packing material needs to be included in the Assessable value. Hence the argument of the appellant that the packing of the Metal container is beyond the stage of manufacturing will not help as long as the Valuation of goods for the purpose of charging Excise Duty in the form it is cleared. As regard the judgment of the Hon ble Gujarat High Court in the appellants own case. We find that the said judgment was given with reference to the old Section 4 and the judgments delivered in that reference. We agree that with reference to the old Section 4, as per the various judgments of the Hon ble Supreme Court in the case of JAUSS polymers Ltd., Hindustan Polymers Ltd. 1989 (43) E.L.T. 165(SC), the cost of packing material supplied Free of Cost by the buyer was not included in the Assessable Value. The legislature to overcome the judgment of the Hon ble Supreme Court on the issue of inclusion of cost of packing material amended the Section 4 and made new Valuation Rules of 2000 according to which no scope was left for interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided under Rule 6 of Central Excise Valuation Rules, 2000. Therefore, the facts of the present case is completely different from the facts of the Hon ble Supreme Court judgment in the case of Grasim. Moreover, as per Rule 6 of Central Excise Valuation Rules, 2000 it is explicit wherein, the provision for inclusion of cost of packing material supplied Free of Cost by the customer is provided. The Hon ble Supreme Court in the case of Grasim (supra) have not dealt with the provision of Rule 6 of the Central Excise Valuation Rules, 2000. It is also pertinent that the Central Excise Valuation Rules, 2000 have not been struck down by the Hon ble Supreme Court in the case of Grasim s judgment (supra). It is also observed from the judgment that the Hon ble Supreme Court in Para 18 referring to the Bombay Tyres International Ltd. on principle agreed that the Cost of primary packing needs to be included. This provision was not under dispute even in the old Section 4. In the present case there is no dispute that the corrugated box even though supplied by the buyer was used as primary packing. For this reason also the judgment of Hon ble Supreme Court of Grasim would not adversely affect the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o observed that the appellant have never suppressed any fact as regard non-inclusion of the Cost of corrugated box supplied Free of Cost by their buyer for the reason that this facts was noticed by the Audit Officer from the records which was existing at the time of Audit. It is also observed that the appellant have made a specific declaration about the fact that they are receiving corrugated cartons Free of Cost from their customers. It is also mentioned in the declaration that there is no impact on the assessable value and the value of such corrugated box was not included in the Assessable Value. Therefore, when the supply of corrugated box Free of Cost by the customer to the appellant was declared by the appellant to the department, it was open for the department to make out a case if they desire and issue the Show Cause Notice well within the stipulated time period of one year but despite all the details available with the department the Show Cause Notice was not issued in the normal period. In this fact the demand for the period before one year of the date of Show Cause Notice is time barred and we set aside the demand for extended period. 15. As per our discussion and fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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