Tribunal Confirms Remand Order: Assessable Value Must Include Packing Costs, Extra Amount as Cum-Duty Price.

CLARIANT (INDIA) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I

CLARIANT (INDIA) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I - 2006 (196) E.L.T. 353 (Tri. - Mumbai) Issues:
1. Duty on packing surcharge recovered from customers
2. Interpretation of Rule 7 of Central Excise Valuation Rules, 2000
3. Applicability of transaction value under Section 4(1) of Central Excise Act, 1944
4. Assessment of assessable value including cost of packing

Analysis:
1. The case involved a dispute regarding the duty on packing surcharge recovered from customers by the appellant. The department issued Show Cause Notices demanding duty on the packing surcharge and penalty under Rule 173Q of the Central Excise Rules, 1944. The appellant argued that as per Rule 7 read with Rule 4 of the Central Excise Valuation Rules, 2000, the assessable value should be the normal transaction value at which goods are cleared from the depot. The appellant relied on the interpretation of the phrase 'such goods' from a previous tribunal judgment and the Supreme Court's affirmation of the same. The Assistant Commissioner dropped the proceedings following the judgment of Savita Chemicals.

2. The interpretation of Rule 7 of the Central Excise Valuation Rules, 2000 was crucial in this case. The appellant contended that the expression 'such goods' referred to goods in larger packs removed from the factory, and value addition outside the factory should not be included in the assessable value. The appellant also cited relevant case law to support their argument. However, the Commissioner of Central Excise (A) disagreed and set aside the order of the Assistant Commissioner, remanding the case for fresh consideration.

3. The tribunal analyzed the applicability of the transaction value under Section 4(1) of the Central Excise Act, 1944. The law required excise valuation to be done according to the transaction value of the goods under assessment. The tribunal noted that the goods were sold from the depot after repacking into smaller packages, not directly from the factory. As the depot was considered a place of removal under the law, the transaction value of such packages, including the cost of packing, had to be adopted as the assessable value.

4. The assessment of the assessable value, including the cost of packing, was a key issue in this case. The tribunal ordered that the extra amount recovered towards the cost of packing should be added to the assessable value. However, the value needed to be recalculated by the adjudicating authority treating the amount as 'cum-duty-price.' Therefore, the tribunal upheld the remand order and rejected the appeal, emphasizing the determination of assessable value under Section 4(1)(a) of the Central Excise Act, 1944.