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Issues: (i) Whether the cost of corrugated fibre board containers used for packing cigarettes at the stage of delivery to wholesale buyers formed part of the assessable value under section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. (ii) Whether the respondents were entitled, for the period 24 May 1976 to 2 November 1982, to exclusion of that packing cost on the basis of exemption or promissory estoppel arising from the representation of the excise authorities.
Issue (i): Whether the cost of corrugated fibre board containers used for packing cigarettes at the stage of delivery to wholesale buyers formed part of the assessable value under section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
Analysis: The inclusive definition of value in section 4(4)(d)(i) extends to the cost of packing in which the goods are delivered at the time of removal. The packing concept in the Explanation is wide enough to include outer containers as well as secondary packing. The majority held that the relevant test is whether the goods are generally sold in the wholesale market at the factory gate in the packed condition in question. Since corrugated fibre board containers formed part of the normal packed condition in which the cigarettes were delivered to wholesale buyers, their cost was includible in value.
Conclusion: The cost of corrugated fibre board containers was includible in the assessable value, and the contention of the assessee on this issue failed.
Issue (ii): Whether the respondents were entitled, for the period 24 May 1976 to 2 November 1982, to exclusion of that packing cost on the basis of exemption or promissory estoppel arising from the representation of the excise authorities.
Analysis: The letter issued by the excise authorities could not be treated as a general exemption under Rule 8(1) or as a special order in each case under Rule 8(2). However, the representation was made by the excise administration with governmental approval, the respondents acted upon it, and their position was altered in reliance on it. The majority held that promissory estoppel applied against the Government and public authorities, and that no overriding equity or statutory prohibition defeated its operation for the relevant period.
Conclusion: The respondents were entitled to exclusion of the packing cost for the period 24 May 1976 to 2 November 1982 on the basis of promissory estoppel.
Final Conclusion: The assessable value of cigarettes generally included the cost of corrugated fibre board containers, but the respondents obtained relief for the specified period because the revenue was bound by its earlier representation.
Ratio Decidendi: Packing cost is includible in excisable value when the goods are ordinarily delivered and sold in the relevant wholesale packed condition, but a governmental representation within competence may bind the State under promissory estoppel until validly withdrawn or overridden by law.
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