Packing charges and excise valuation under the unamended regime were treated as outside assessable value after manufacture ended.

Under the unamended Section 4 of the Central Excises and Salt Act, the assessable value for central excise was to be based on the wholesale cash price at removal, with only manufacturing cost and manufacturing profit treated as relevant. Packing dry cell batteries in cartons and wooden cases was characterised as a post-manufacturing step done for convenience, protection and transport, not as part of manufacture. The text also notes that, where a taxing provision admits two reasonable constructions, the interpretation favourable to the subject should be preferred. On that basis, packing charges were treated as outside assessable value and the resulting additional excise demand was regarded as unsustainable.

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Issues: Whether, under the unamended Section 4 of the Central Excises and Salt Act, 1944, the cost of packing dry cell batteries was includible in their assessable value for levy of central excise duty.

Analysis: The assessable value under the old Section 4 was to be determined by reference to the wholesale cash price at the time of removal, and the charging provision had to be construed on the footing that only manufacturing cost and manufacturing profit were relevant. The packing of the dry cell batteries in cartons and wooden cases was found to be a post-manufacturing step done for convenience, protection and transport, and not a process that completed manufacture. The view was also taken that, where two reasonable interpretations of a taxing provision are possible, the construction favourable to the subject should be adopted, particularly where the contrary view was not supported by any conflicting authority.

Conclusion: The cost of packing was not includible in the assessable value under the old Section 4, and the additional excise demand based on packing charges was unsustainable.

Final Conclusion: The petitions succeeded, the impugned additional demands were quashed, and refund of amounts recovered under those demands was directed.

Ratio Decidendi: Under the unamended excise valuation provision, post-manufacturing packing charges are not part of assessable value where manufacture of the goods is already complete before packing.

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