Packing cost deduction includes container maintenance and repair charges where durable returnable containers are used.

Maintenance and service charges for durable and returnable containers were treated as part of the full cost of packing under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. Because the containers were accepted as durable and returnable and their initial cost was already deductible from assessable value, the deductible packing cost was held to include both the container cost and subsequent maintenance and repair expenditure. The record also showed that the department itself had treated these charges as packing cost, and there was no basis to say the packing cost was inflated to reduce assessable value. The departmental appeal therefore failed.

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Issues: Whether the maintenance and service charges recovered in respect of durable and returnable containers were deductible as part of the cost of packing under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.

Analysis: The containers used for supply of the goods were accepted as durable and returnable, and their cost was already treated as deductible from assessable value. On that basis, the deductible packing cost was held to comprise the full cost of packing, including the initial cost of the containers as well as further expenditure on their maintenance and repairs. The record also showed that the department's own show cause notice treated maintenance and service charges as cost of packing, and there was nothing to indicate that the packing cost had been inflated to exclude part of the real value of the goods from assessment.

Conclusion: The maintenance and service charges were deductible as part of the cost of packing, and the departmental appeal failed.

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