Returnable durable packing and customer-supplied packing are excluded from excise assessable value under valuation rules.

Durable packing is excluded from excise assessable value where the buyer has a legally enforceable right to return it and the seller is bound to accept it; actual return is not necessary if returnability forms part of the sale arrangement. Under the cement control and delivery scheme, serviceable cement gunny bags were treated as returnable, so their cost was not includible. Packing supplied by the customer also fell outside assessable value because it was not part of the assessee's price for the goods. The note states that both exclusions were applied in favour of the assessee.

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Issues: (i) Whether the cost of cement gunny bags, being durable packing, was includible in the assessable value where the bags were returnable under the statutory pricing and delivery arrangement. (ii) Whether the cost of packing supplied by the customer could be included in the assessable value of the goods packed therein.

Issue (i): Whether the cost of cement gunny bags, being durable packing, was includible in the assessable value where the bags were returnable under the statutory pricing and delivery arrangement.

Analysis: Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944 excludes the cost of durable packing only when such packing is returnable by the buyer to the assessee. The statutory scheme under the Cement Control Order, 1967, the release orders, and the pricing circular created an arrangement under which serviceable used bags could be returned and repurchased, with the buyer having the right to return them and the seller bound to accept them in accordance with the prescribed terms. Actual return was held to be immaterial; what mattered was that returnability existed as part of the sale arrangement, whether created by contract or by statute. The material further showed that the mode of return, including through collecting agents, did not alter the legal character of the packing as returnable.

Conclusion: The cost of the cement gunny bags was not includible in the assessable value, and this issue was decided in favour of the assessee.

Issue (ii): Whether the cost of packing supplied by the customer could be included in the assessable value of the goods packed therein.

Analysis: Where the packing material is supplied by the customer, its cost is not part of the price of the goods supplied by the assessee and cannot be treated as part of the assessable value of the goods merely because they are cleared in packed condition. The assessable value under the excise valuation scheme is confined to the value of the goods as assessable goods and does not extend to packing not supplied by the assessee.

Conclusion: The cost of packing supplied by the customer could not be included in the assessable value, and this issue was decided in favour of the assessee.

Final Conclusion: The Tribunal upheld exclusion of the cost of returnable cement gunny bags and customer-supplied packing from the assessable value, resulting in relief to the appellants in all appeals.

Ratio Decidendi: Durable packing is excluded from assessable value when the buyer has a legally enforceable right to return it and the seller is bound to accept it, even if actual return does not occur.

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