Returnable gunny bag packing excluded from assessable value; actual physical return was unnecessary under the pricing and return arrangement.

The cost of packing in gunny bags was excluded from assessable value under Section 4(4)(d)(i) because the bags were returnable within the meaning of the provision. The controlled commodity regime separately fixed the price of cement and packing charges, and the governing orders required serviceable empty bags to be preserved and returned to the factory or its collecting agent on payment. Actual physical return of each bag was not necessary; the decisive test was the existence of a return arrangement. The packing cost therefore could not be included in the assessable value, and the duty collected on that basis was refundable subject to verification.

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Issues: Whether the cost of packing in gunny bags was excludable from the assessable value under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, and whether the assessee was entitled to refund of the duty collected on that basis.

Analysis: The exclusion under Section 4(4)(d)(i) applies where the packing is of durable nature and is returnable by the buyer to the assessee. The evidence showed a controlled commodity regime in which the price of cement and the packing charges were separately fixed, and the governing orders required serviceable empty bags to be preserved and returned to the factory or its collecting agent on payment. On that basis, the arrangement between seller and buyer made the gunny bags returnable within the meaning of the provision. Actual return of each bag was not required; the relevant test was the existence of a return arrangement, not proof of physical return in fact. The cost of such packing therefore could not be included in the assessable value, and the demand raised on that footing was unsustainable.

Conclusion: The cost of gunny bag packing was not includable in the assessable value, and the assessee was entitled to refund of the duty paid under protest with respect to the excess collection, subject to verification.

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