2000 (5) TMI 1092 - AT - Customs

Tribunal excludes railway packing charges from assessable value of iron and steel products

The Tribunal rejected the Revenue's appeals regarding the inclusion of P-41 packing charges in the assessable value of rolled products of iron and steel. ... P-41 packing - packing charges and assessable value - packing necessary for putting goods in the wholesale market at the factory gate - packing undertaken at the behest of the transporter - non-inclusion of packing charges under Section 4(4)(d)(i) of C.E.T.A., 1944 where packing is at the instance of the transporter - precedential application of M.R.F. and Bombay Tyre International and CCE, Jamshedpur v. TISCO P-41 packing - packing charges and assessable value - packing necessary for putting goods in the wholesale market at the factory gate - packing undertaken at the behest of the transporter - Whether P-41 packing charges collected from buyers for packing required by Railway Authorities, done only when goods are transported by rail, are includible in the assessable value of the respondent's final rolled iron and steel products. - HELD THAT: - The Tribunal accepted the undisputed factual position that P-41 packing is carried out only when goods are transported by rail and is not a general packing required to put the excisable goods in the condition in which they are ordinarily sold in the wholesale market at the factory gate. Relying on the settled principle in the Supreme Court's decision in M.R.F. and Bombay Tyre International , only packing costs which are necessary to put the goods in the wholesale market at the factory gate are includible in assessable value. Packing undertaken at the behest of the transporter for safeguarding consignments during rail transit does not alter that principle. The Tribunal further followed its earlier decision in CCE, Jamshedpur v. TISCO , holding that P-41 packing mandated by Railway rules and regulations for rail transport is not includible in the assessable value of the final product. Applying these authorities, the court found no merit in the Revenue's contention that P-41 packing charges must be added merely because the requirement is statutory for rail transport or because most consignments travel by rail; the determinative test remains whether the packing is necessary for placing the goods in the market at the factory gate, which P-41 packing is not. [Paras 3]P-41 packing charges collected from buyers for railway-mandated packing are not includible in the assessable value of the respondent's final rolled products; Revenue's appeals rejected.Final Conclusion: Appeals dismissed; P-41 packing charges mandated by Railway Authorities for rail transport cannot be added to the assessable value of the final product because such packing is not necessary to put the goods in the wholesale market at the factory gate. Issues:1. Inclusion of P-41 packing charges in the assessable value of rolled products of iron and steel.Analysis:The primary issue in this judgment revolves around the inclusion of P-41 packing charges in the assessable value of rolled products of iron and steel. The Commissioner (Appeals) had allowed the packing charges and haulage charges, stating that the packing was done as per railway regulations and not necessary for selling the goods from the factory gate. The Revenue, however, contended that the packing charges should be included in the assessable value as they were done at the instance of the railway authorities, not the buyer, and thus not deductible under Section 4(4)(d)(i) of C.E.T.A., 1944. The Revenue referred to the statutory requirement for P-41 packing by railways for flat products of iron and steel, emphasizing that the packing charges were collected from buyers even though the packing was mandatory. The Tribunal noted that the packing was specific to railway transportation and not essential for selling goods at the factory gate, citing the Supreme Court's precedent that only packing necessary for market delivery should be included in assessable value. Additionally, the Tribunal referenced a previous decision where it was held that P-41 packing charges for goods transported by railways, as per railway regulations, should not be part of the assessable value. Consequently, the Tribunal rejected the Revenue's appeals, aligning with the previous ruling and emphasizing that the P-41 packing charges were not required to be included in the assessable value of the final product.