1997 (2) TMI 99 - SC - Central Excise

Court rules in favor of assessee in excise duty assessment dispute on value of corrugated cartons.

The Court ruled in favor of the assessee in a dispute over the inclusion of the value of 7-ply corrugated cartons in the value of goods packed for excise ... Whether value of 7-ply corrugated cartons be included in the value of the goods packed? Held that:- The factual situation considered by this Court in 1986 in Geep Industrial Syndicate [this very assessee] and the factual situation now obtaining is no different. It was held by this Court in the said decision that packing in wooden boxes was not necessary for putting the articles in the condition in which they are generally sold in the wholesale market at the factory gate and that it was done only for the purpose of protecting them from damage during the course of transport, i.e., transport after delivery. The 7-ply corrugated cartons have now taken the place of wooden boxes. But for this, there is no change in the factual situation since 1986. In such a factual situation, it would not be permissible for us to arrive at a different conclusion than the one arrived at in 1986. On this ground alone, we hold in favour of the assessee. Issues:Dispute over inclusion of value of 7-ply corrugated cartons in the value of goods packed for excise duty assessment.Analysis:The appeals were filed against the orders of the Central Excise and Gold [Control] Appellate Tribunal, with Civil Appeals by the assessee and the Revenue, all revolving around the same issue. The assessee, engaged in manufacturing batteries and torches, contested the inclusion of the value of 7-ply corrugated cartons in the value of goods packed. Differing views by different Tribunal Benches prompted the appeals (Para 1).The legal representatives argued citing previous judgments, with the assessee relying on Geep Industrial Syndicate Limited v. Union of India, asserting the decision as binding on the current issue. The Revenue contended that as per principles affirmed in Madras Rubber Factory, the value of 7-ply corrugated cartons should be included. The differing interpretations necessitated a clear understanding of the principle enunciated in Madras Rubber Factory (Para 2).The judgment delved into the definition of 'value' and the necessity of packing for excise duty assessment. Referring to previous decisions like Bombay Tyre International and Godfrey India Limited, the Court emphasized the importance of determining whether the packing is necessary for selling the goods in the wholesale market at the factory gate. The test focused on the marketability of goods and the nature of packing required for the same (Para 3-6).The Court stressed the significance of the word 'necessary' in the test and clarified that the packing must be essential for presenting the goods in the condition they are generally sold in the wholesale market. The judgment highlighted that manufacturers typically provide necessary packing for marketability, and unless proven otherwise, the cost of such packing should be included in the value of goods (Para 7).In analyzing the facts of the case, the Court found no substantial difference from a previous decision involving the same assessee. It was held that the 7-ply corrugated cartons, like the wooden boxes before, were not necessary for selling the goods in the wholesale market at the factory gate but served the purpose of protecting the goods during transport. Therefore, the Court ruled in favor of the assessee based on consistency with the previous decision (Para 8).Ultimately, the Court allowed the Civil Appeals by the assessee and dismissed the Revenue's appeal, citing the lack of changes in the factual situation and upholding the previous decision's conclusion. No costs were awarded in the judgment (Para 9).