Tribunal rules on branded chewing tobacco value for excise purposes

The appeal was partially allowed by the Tribunal. It held that the value of branded chewing tobacco for the purpose of Notification No. 35/79 should be determined as per Section 4 of the Central Excises and Salt Act, 1944. The value should include the cost of primary and secondary packing but exclude the cost of polythene, gunny bags, and cartons for notification purposes. The assessable value should be calculated by dividing the gross price by the gross weight of the branded packets. Deductions for Dharmada charges and forwarding charges were not allowed due to procedural issues.

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Issues Involved:
1. Determination of the value of branded chewing tobacco for the purpose of Notification No. 35/79.
2. Inclusion of packing material costs in the assessable value.
3. Validity of deductions claimed for Dharmada charges and forwarding charges.
4. Application of Section 4 of the Central Excises and Salt Act, 1944 for determining the assessable value.

Issue-wise Detailed Analysis:

1. Determination of the Value of Branded Chewing Tobacco for Notification No. 35/79:
The primary issue was whether the value of branded chewing tobacco should be determined as per Section 4 of the Central Excises and Salt Act, 1944, for the purpose of Notification No. 35/79, which prescribes concessional rates of duty based on the value per kilogram of the tobacco. The Tribunal observed that the Hon'ble Supreme Court in the case of Bata Shoe Co. v. C.C.E. held that where the rate of duty is dependent upon the value of the goods under a notification, the provisions of Section 4 get attracted. Therefore, the value for the purpose of Notification No. 35/79 must be determined as per Section 4.

2. Inclusion of Packing Material Costs in the Assessable Value:
The respondents argued that the value of the branded chewing tobacco should be calculated by dividing the gross price (including all packing materials) by the gross weight. The Tribunal noted that the Supreme Court had previously affirmed that the cost of primary and secondary packing should be included in the assessable value. However, for the purpose of Notification No. 35/79, the value should be determined after abating the cost of polythene, gunny bags, and cartons. The value of the chewing tobacco in the primary packing bearing the brand should be divided by the total weight of all the branded packets to obtain the value per kilogram.

3. Validity of Deductions Claimed for Dharmada Charges and Forwarding Charges:
The respondents claimed deductions for Dharmada charges collected for charity purposes and forwarding charges. The Tribunal noted that the respondents had filed a cross-objection for allowing these deductions, but the cross-objection was dismissed due to procedural issues and was not pressed by the respondents. Therefore, these charges were included in the assessable value for notification purposes.

4. Application of Section 4 of the Central Excises and Salt Act, 1944:
The Tribunal reiterated that the value for the purpose of Notification No. 35/79 should be based on the value as set out under Section 4. This includes the cost of packing materials used to put the goods in the market stream. The Tribunal followed the Supreme Court's decision, emphasizing that the value should be determined in a manner that avoids anomalous results and reflects the true value of the excisable product.

Conclusion:
The appeal was partially allowed. The Tribunal held that the value of branded chewing tobacco for the purpose of Notification No. 35/79 should be determined as per Section 4 of the Central Excises and Salt Act, 1944. The value should include the cost of primary and secondary packing but exclude the cost of polythene, gunny bags, and cartons for notification purposes. The assessable value should be calculated by dividing the gross price by the gross weight of the branded packets. The deductions for Dharmada charges and forwarding charges were not allowed due to the dismissal of the cross-objection.

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