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TMI Blog1991 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Central Excise, Chittorgarh was approved on 21-10-1975. However, the Superintendent, Central Excise, Chittorgarh vide letter dated 31st October, 1975 (Annexure D) revised the price list to the extent of cost of packing charges, i.e., Rs. 40.98 were also included in the net assessment value for determining the central excise duty. Consequently, the assessee started paying central excise duty at the enhanced rate w.e.f. 1-11-1975 "under protest" and continued to pay the duty on the enhanced rate upto 8th January 1976. Admittedly a notification dated 9-1-1976 has been issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and under that notification, the Central Government has exempted grey portland cement from so much of the duty as is equivalent to the duty leviable with reference to that part of the value hereof which represents the cost of packing in which such cement is delivered at the time of removal from the factory. Thus, from 9th January1976 cost of packing is not included in the value of cement for charging excise duty. The assessee, therefore, has claimed that since he has paid enhanced rate of duty for the period 1-11-1975 to 8-1-1976, which according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be appropriate to reproduce relevant extract of Section 4(4)(d)(i) as under : ****** 6.In this case, the controversy has been narrowed down only to the question of interpretation of clause (i) of Section 4(4)(d) of the Act - whether the goods of the assessee come within the exception provided in this clause. In order to invoke this exception, i.e., whether the cost of packing should not be included for levying excise duty, the following two conditions must be satisfied :- Packing(i) material is of durable nature; and It is returnable by the buyer to the assessee.(ii) Insofar as the first condition is concerned, there is no dispute that this condition, that the gunny bags which are used for packing cement are of durable nature, stands fully satisfied. In fact Mr. Madan Lokur, Counsel for the respondents, does not raise this question and rightly so. But what is seriously disputed by him is that these gunny bags which are used for packing of portland cement are not `returnable' by the buyer to the assessee and, therefore, conditions of clause (i) of Section 4(4)(d) of the Act are not satisfied, therefore, the said provision is inapplicable in the present case. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasers, if they so choose, can return the cement bags and the assessee on the return of such bags are obliged to purchase these bags at the rates specified. This clearly establishes an arrangement between the assessee and the purchasers of cement, under which the gunny bags can be returned by the purchasers to the assessee. Further, in case the buyers choose to return the packing, the assessee will be obliged to accept the same and refund the stipulated amount. In order to attract the provisions of Section 4(4)(d)(i) of the Act, it is not necessary to show that gunny bag packing has actually been returned, and that it is only necessary to show that the packing is returnable by the purchasers to the assessee. 11.The word `returnable' used in Section 4(4)(d)(i) of the Act has been the subject matter of interpretation by the Supreme Court. In K. Radha Krishaiah v. Inspector of Central Excise, Gooty Others - 1987 (27) E.L.T. 598 (SC), the Supreme Court has laid down that Section 4(4)(d)(i) excludes from computation the cost of packing which is of durable nature and is returnable by the buyer to the assessee. Thus, the packing must be one which is returnable by the buyer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not ascertainable at the time of assessment and clearance, whether the same material is returned or not is erroneous. Similarly, it would be wrong to deny the benefit of exemption on the ground that it is the petitioner who collects the packing from open market through its authorised agent because the practice of the factories to appoint collection agents for collection of bags is only a convenient mode of giving effect to the term that packing is returnable which does not mean that purchaser cannot otherwise return the packing, if he likes. The Division Bench of Karnataka High Court in Mysore Cements Ltd. v. Union of India - 1988 (37) E.L.T. 556 (Kar.) has relied upon the aforementioned judgment of Madhya Pradesh and has also expressed the same view: That is, that the arrangement should exist for returning of the bags, and the proof of actual return of such bags, is not required. 13.It may be noticed in Century Cement v. Union of India and Others - 1987 (30) E.L.T. 81 (MP), it appears from Paragraph 2 thereof that against the decision of Madhya Pradesh High Court in Birla Jute Manufacturing Co. Ltd. v. Union of India and Others (supra) a special leave petition was filed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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