Durable returnable packing excluded from assessable value where gunny bags were returnable under binding sale conditions.

Packing charges for cement sold in gunny bags were excluded from assessable value because the bags were of a durable nature and were returnable by the buyer under the binding sale conditions and regulatory scheme. The Cement Control Order, invoices and circulars showed that buyers were required to preserve serviceable bags and return them to the factory or collecting agent, with refund or adjustment of the packing value. Actual return at the stage of assessment was not necessary; the relevant test was whether the packing was returnable by the buyer. On that basis, the packing cost fell within the statutory exception and was not includible for excise duty.

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Issues: Whether the cost of packing in gunny bags used for cement was includible in the assessable value under section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, or fell within the exception for packing of a durable nature returnable by the buyer to the assessee.

Analysis: The packing consisted of gunny bags, which were of a durable nature. Under the Cement Control Order, the sale and disposal of cement were regulated, packing charges were fixed, and buyers were directed to preserve serviceable bags and return them to the factory or its collecting agent, with refund or adjustment of the packing value. The invoices, circulars, and the regulatory scheme showed that the bags were not merely theoretically recoverable but were returnable by the buyer under binding terms having statutory sanction. Actual return was not required at the stage of assessment; the relevant question was whether the packing was returnable by the buyer under the terms of sale.

Conclusion: The cost of packing in gunny bags was covered by the exception in section 4(4)(d)(i) and was not includible in the assessable value for excise duty. The demand for duty on that component was unsustainable, and refund was due.

Final Conclusion: The petitions succeeded on the statutory interpretation of the packing-value exception, and the impugned demands to the extent they included packing cost were set aside with consequential refund relief.

Ratio Decidendi: For purposes of section 4(4)(d)(i), packing is excluded from assessable value when the packing is of a durable nature and is returnable by the buyer under binding sale conditions; actual return of the packing need not be shown at the stage of clearance.

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