Assessable value of primary packing for cement includes gunny bag cost where packing is not proven durable and returnable

Primary packing used to make cement marketable in wholesale clearance is includible in assessable value under section 4, and the cost of gunny bags recovered as packing charges was therefore correctly added. The gunny bags were supplied with the cement, but the record did not show any agreement or statutory obligation making them durable and returnable in the relevant legal sense, nor proof of actual return of the bags or refund of the packing charges. On those valuation principles, only genuinely durable and returnable packing is excluded, so the challenge to inclusion of the packing cost failed.

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Issues: Whether the cost of gunny bags used for packing cement was includible in the assessable value, and whether such packing could be treated as durable and returnable.

Analysis: The cement was cleared in packed condition and was sold to wholesale buyers with the gunny bags. The packing was necessary to make the cement marketable at the factory gate, and the cost of packing was recovered from the buyers as packing charges. The materials on record did not establish any agreement or statutory obligation making the gunny bags returnable in the relevant legal sense, nor was there proof of actual return of bags or refund of packing charges. On the principles governing valuation under section 4, primary packing used for sale in the wholesale market is includible in assessable value, while only truly durable and returnable packing is excluded.

Conclusion: The cost of the gunny bags was correctly included in the assessable value and the assessee's challenge failed.

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