Packing cost included in assessable value where gunny bags were not shown to be returnable by the buyer.

Cost of packing is generally included in assessable value under Section 4 of the Central Excises and Salt Act, 1944 where goods are sold in packed condition. The exclusion for durable packing applies only if there is an arrangement showing that the packing is returnable by the buyer to the assessee and that its cost is refunded or not included. As cement was sold in gunny bags and no agreement or supporting material showed that the bags were returnable within the exclusion clause, the cost of the gunny bags remained includible in the assessable value.

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Issues: Whether the cost of gunny bags used as primary packing material for cement was includible in the assessable value under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.

Analysis: The assessable value under Section 4 is ordinarily the normal price, and where goods are sold in packed condition the cost of packing is included unless the packing is of a durable nature and is returnable by the buyer to the assessee. The exclusion applies only when there is an arrangement between the assessee and the buyer for return of the packing and refund or non-inclusion of its cost. On the facts, cement was sold in gunny bags under a controlled price regime, but no agreement or material was shown to establish that the bags were returnable by the buyer to the assessee within the meaning of the exclusion clause.

Conclusion: The cost of gunny bags was held includible in the assessable value, and the assessee was not entitled to exclusion of packing cost.

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