1985 (8) TMI 210 - AT - Central Excise

Tribunal rules cans non-returnable, affecting assessable value for excise duty. Importance of contractual agreements highlighted.

The Tribunal dismissed the appeal, ruling that the cans were not returnable within the meaning of Section 4(4)(d)(i) of the Central Excises and Salt Act, ... Valuation - Packing - Durable and returnable Issues:1. Interpretation of Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944 regarding the inclusion of the cost of durable and returnable packing material in the assessable value of excisable goods.2. Determination of whether the cans used for packaging bakery products were returnable and if their cost should be included in the assessable value.3. Analysis of previous judgments by the Bombay High Court and the Appellate Tribunal in similar cases.Issue 1: Interpretation of Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944:The Tribunal examined the provisions of Section 4(4)(d)(i) which state that the cost of durable and returnable packing material should not be included in the assessable value of excisable goods. Citing judgments from the Bombay High Court and the Gujarat High Court, it was established that if the packing is durable and returnable under the contract between the manufacturer and buyer, its cost can be excluded from the assessable value for excise duty purposes.Issue 2: Returnability of the cans and inclusion in assessable value:The dispute centered on whether the cans used for packaging bakery products were returnable as per Section 4(4)(d)(i). The appellants argued that the cost of cans should not be included in the assessable value, claiming they were returnable. However, the Senior Departmental Representative contended that the cans were not returnable, as there was no agreement for their return, and the buyer became the owner of the cans from the first day of sale.Issue 3: Analysis of previous judgments:The Tribunal considered previous judgments, including those by the Bombay High Court and the Appellate Tribunal, to determine the applicability of returnability criteria. It was noted that in cases where there is an actual return of packing material, the existence of a contract for return is not necessary. The Tribunal distinguished the present case from precedents cited by the appellants, emphasizing the lack of a contract or agreement for the return of cans in the current scenario.In conclusion, the Tribunal dismissed the appeal, ruling that the cans were not returnable within the meaning of Section 4(4)(d)(i) of the Act, and their cost was includible in the assessable value of the goods. The judgment highlighted the importance of contractual arrangements for returnability and the actual return of packing material in determining assessable value under the Central Excises and Salt Act, 1944.