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TMI Blog1988 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... amended in the year 1973. The relevant part of Section 4 of the Act, after its amendment, reads : * * * * * * According to clause (4) (d) (i) of Section 4 of the Act generally the cost of packing is to be taken into account while computing the cost of the goods at the stage of manufacture and levy of excise duty. But there is an exception. The exception is, the cost of packing should not be included for levying excise duty if (i) packing material is of a durable nature, and (ii) it is returnable by the buyer to the assessee. 3. After this section came into force, on the ground that the gunny bags in which the portland cement manufactured by the assessee was being packed, was a durable packing material and was also returnable by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable in nature as conceded in the show-cause notice. In the instant case gunny bags, in which cement is packed, are returnable by the buyers to the assessee in terms of the authorisation issued by the Regional Cement Officer. This authorisation directs the purchaser of Cement to "please preserve empty cement bags in serviceable condition and return them to the factory of origin or its collecting agent for payment". A zerox copy of a specimen authorisation dated 7th Feb. 1975 is annexed herewith and marked as Annexure 'A'. The assessee submits that gunny bags in question are collected by itself or at times by its agents. In any event, they are not collected by independent agencies. The independent agencies do not sell them to the agencies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case show-cause notice itself proceeds on the basis that the packing material viz., gunny bag is durable, therefore returnable packing material Therefore, the first condition is satisfied. 6. As far as the second condition is concerned, learned counsel relied on the price fixation order issued by the Assistant Controller, Southern Region, dated 27.10.1975. It reads: "ALL CENTRAL/STATE CO-ORDINATING/SPONSORING AUTHORITIES IN-DENTORS/ALL FEDERATIONS/ASSOCIATIONS SPONSORING CEMENT DEMANDS. Dear Sirs, Sub: F.O.R. destination price of cement and resale price of second-hand serviceable jute bags during the period from 1.10.75 to 31.12.75. The Ministry of Industry Civil Supplies (Department of Industrial-Development) has intimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) and the re-sale price for the period 1.10.1975 to 31.12.1975 is Rs.92.54 (Rupees ninety two and paise fifty four only) for 100 bags. Sales-tax, where leviable is extra. Yours faithfully, for CEMENT CONTROLLER" Learned counsel pointed out that the control order itself fixed the rate of bags and also made provision for return of the bags and even fixed the rate for the bags returned. Learned counsel for the petitioner submitted that as the cement was a controlled commodity and its sale was regulated by the Cement Control Order, the manufacturer was bound to sell the cement to the person in whose favour a release order was issued by the Cement Controller. A copy of one such order issued by the Cement Controller (Southern Region) in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1.1976. 8. The Madhya Pradesh High Court, on a consideration of a similar question, has come to the conclusion that the condition to be fulfilled for non-levy of excise duty on bags was the existence of an arrangement to return and not the proof of actual return. The court further held that the provisions in the Cement Control Order for return of empty cement bags to the manufacturer/seller did amount to an arrangement for the return of the empty bags and therefore the second condition to bring the case under the Explanation under section 4 (4)(d)(i) of the act has been fulfilled. (Sec : Birla Jute Manufacturing Co., v. Union of India -1980 E.LT.593 at 596, Paragraph - 9). We are in respectful agreement with the view of the Madhya Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sale was that the gunny bags were returnable as the statutory condition constitutes an arrangement between the seller and the purchaser of portland cement to the effect that the gunny bags were returnable. Hence we do not find any justification to issue only a direction to the authorities as requested by the learned counsel for the respondents. 11. So far as the belief is concerned, the petitioner has sought for the issue of a writ of mandamus directing the respondents to refund the sum of Rs.7,74,432.84 collected by way of excise duty on packing charges from the petitioner during the period commencing from 28.11.1975 upto 8.1.1976.This prayer has got to be granted. 12. As regards the amount which is the subject matter of the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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