Packing charges and excise valuation: durable returnable packing may be excluded, and interim recovery restraint does not suspend levy.

Packing charges are includible in excise assessable value only when the packing is ordinarily required for wholesale sale at the factory gate; where glass bottles were generally sold loose and the packing was not necessary for such sale, the durable and returnable packing exclusion applied and the charges were not includible to that extent. On limitation, an interim restraint on recovery did not suspend levy or prevent issuance of notices, and provisional assessment could not be assumed without the prescribed legal basis. The disputed show cause notices beyond the statutory period were therefore time-barred, and the assessments were not shown to be provisional.

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Issues: (i) Whether packing charges realised from customers were includible in the assessable value of glass bottles under the excise valuation provision, including whether the exclusion for durable and returnable packing applied; (ii) Whether the show cause notices issued in relation to the disputed period were barred by limitation and whether the assessments were provisional.

Issue (i): Whether packing charges realised from customers were includible in the assessable value of glass bottles under the excise valuation provision, including whether the exclusion for durable and returnable packing applied.

Analysis: The valuation provision included the cost of packing where goods were delivered in packed condition, but excluded packing that was of a durable nature and returnable by the buyer to the assessee. The relevant test was whether the packing was ordinarily required to place the goods in the condition in which they were generally sold in wholesale trade at the factory gate. The Tribunal's factual finding was that the goods were ordinarily sold in loose condition and the packing in question was not necessary for such sale. The Court also noted that the expression used by the statute is "returnable" and that actual return is not the decisive test; an arrangement for return is sufficient. On the facts found, the revenue had not shown any perversity in the Tribunal's conclusion.

Conclusion: The packing charges were not includible in the assessable value to the extent accepted by the Tribunal, and the exclusion for durable and returnable packing operated in the assessee's favour.

Issue (ii): Whether the show cause notices issued in relation to the disputed period were barred by limitation and whether the assessments were provisional.

Analysis: The Court distinguished levy from collection and held that an interim order restraining recovery did not amount to a stay on levy. The High Court orders only protected payment/recovery aspects and did not prevent issuance of notices. The plea of provisional assessment also failed because provisionality required the necessary legal basis and procedure, which had not been established. Accordingly, the notices falling beyond the statutory period could not be saved on the theory advanced by the revenue.

Conclusion: The Tribunal was right in holding that the relevant show cause notices were time-barred and that the assessments were not shown to be provisional.

Final Conclusion: The revenue's challenge failed on both valuation and limitation, and the assessee succeeded in resisting the excise demand.

Ratio Decidendi: Under the excise valuation provision, packing cost is includible only when the packing is ordinarily required for wholesale sale at the factory gate and is not durable and returnable under an arrangement for return; a mere interim restraint on recovery does not suspend levy or justify treating assessments as provisional absent the prescribed legal basis.

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