Deductibility of packing charges and credit-sale interest from assessable value confirmed where customer-specific terms and evidence supported the claims.

Packing charges were excludible from assessable value where the goods were packed in corrugated boxes, cardboard cartons or shrink packs at customers' specific request, and Modvat credit on the packing materials had not been availed. Interest attributable to agreed credit sales was also deductible where purchase orders and price lists showed contractual credit periods and the claimed interest matched prevailing bank-linked rates, with no rebuttal by the department. The order allowing both deductions was therefore upheld and the Revenue challenge failed.

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Issues: (i) Whether packing charges for packing done at the specific request of customers were deductible from the assessable value; (ii) Whether interest attributable to credit sales was deductible from the assessable value.

Issue (i): Whether packing charges for packing done at the specific request of customers were deductible from the assessable value.

Analysis: The deduction was supported by evidence showing that the goods were not sold in the ordinary gunny-bag packing but were supplied in corrugated boxes, cardboard cartons, or shrink packs as specifically required by customers. The record also showed that Modvat credit on the packing materials had not been availed, and the factual findings of the Commissioner (Appeals) on this aspect were not rebutted by contrary evidence.

Conclusion: The packing charges were rightly allowed as deduction from the assessable value, in favour of the assessee.

Issue (ii): Whether interest attributable to credit sales was deductible from the assessable value.

Analysis: The purchase orders and price lists showed agreed credit periods, and the rate of interest claimed was linked to the prevailing bank rates for cash credit and bill discounting. The department did not dispute the figures furnished, and the finding that the interest claim matched the contractual credit terms was supported by the evidence on record.

Conclusion: The deduction for interest on credit sales was rightly allowed, in favour of the assessee.

Final Conclusion: The order allowing both deductions was upheld and the Revenue challenge failed.

Ratio Decidendi: Where packing is undertaken at the specific instance of customers and the assessee has not availed Modvat credit on the packing materials, the related charges are excludible from assessable value, and interest charged for agreed credit sales is also deductible when supported by the contractual terms and evidence on record.

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