Durable and returnable packing only is excludible from assessable value when the sale terms require return.

Packing cost forms part of the assessable value of excisable goods unless the secondary packing is both durable and returnable by the buyer under the terms of sale. Mere physical possibility of return or a general trade practice is insufficient; the manufacturer must be contractually bound to accept the packing back when returned. On the facts, the assessee failed to show that tins, corrugated fibre containers and wooden boxes were returnable under the sale terms, so the cost could not be excluded and the excise demand was upheld.

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Issues: Whether the cost of secondary packing, namely tins, corrugated fibre containers and wooden boxes, was excludible from the assessable value only when such packing was of a durable nature and returnable by the buyer under the terms of sale.

Analysis: Section 4(4)(d)(i) of the Central Excises and Salt Act includes packing cost in the value of excisable goods, but excludes packing that is both durable and returnable by the buyer to the assessee. The Court held that the statutory phrase contemplates more than a mere physical capacity to be returned. The packing must be capable of reuse and, more importantly, returnability must arise from the contract or terms of sale so that the manufacturer is bound to accept the packing when returned. Mere trade practice or the possibility of return, without such contractual stipulation at the time of removal, is insufficient.

Conclusion: The assessee was not entitled to exclude the cost of the packing on the facts, because it had not shown that the packing was returnable under the terms of sale.

Final Conclusion: The demand for excise duty was upheld and the petition failed.

Ratio Decidendi: Packing cost is excludible from excisable value only if the packing is of a durable nature and is returnable by the buyer under the terms of sale.

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