1987 (11) TMI 248 - AT - Central Excise

Inclusion of Secondary Packing Costs in Assessable Value: Tribunal Decision

The Tribunal ruled that the cost of secondary packing should be included in the assessable value of goods under Section 4 of the Central Excises and Salt ... Valuation - Packing Issues:Whether the cost of secondary packing should be excluded while determining the value of goods under Section 4 of the Central Excises and Salt Act, 1944.Detailed Analysis:The case involved a dispute regarding the exclusion of the cost of secondary packing while determining the value of goods under Section 4 of the Central Excises and Salt Act, 1944. The goods in question were electric bulbs, fluorescent tubes, and MV lamps, all excisable under Item 32 of the First Schedule of the Act. The primary issue was whether the cost of secondary packing should be considered in the assessable value of the goods. The department contended that all goods manufactured by the respondents were cleared in secondary packing, and after a Supreme Court judgment, the respondents had been paying duty on the value of such secondary packing. The department referred to a previous Tribunal order in the case of Rakesh Bulb Industries, which held that the cost of secondary packing for electric bulbs could not be excluded due to the fragile nature of the commodity and the necessity of adequate protection during storage and transport.The respondents, while not conceding the point, acknowledged the Tribunal's previous decision but had no specific submission to make. They confirmed that there was no agreement with buyers on the returnability of the secondary packing. The Tribunal, after careful consideration, found that the reasoning applied in the Rakesh Bulb Industries case regarding the inclusion of the cost of secondary packing was equally applicable to the electric bulbs, fluorescent tubes, and MV lamps manufactured by the respondents. The Tribunal noted that the nature of the goods necessitated the use of carton or wooden box packing for protection, even for local or short deliveries. The respondents consistently sold their goods in the wholesale market in such packing, indicating its essential nature for the protection of the goods. Therefore, the Tribunal held that the cost of secondary packing should be included in the assessable value of the goods.As a result, the Tribunal allowed the appeal, set aside the impugned order-in-appeal concerning the secondary packing issue, and reinstated the Assistant Collector's order that included the cost of secondary packing in the assessable value of the goods.