Secondary packing cost for transport is not includible in excisable value where goods are already marketable at factory gate.

Section 4 of the Central Excise Act, 1944 includes packing costs in assessable value, except durable packing returnable by the buyer. The governing test is whether the packing is ordinarily required for wholesale sale at the factory gate and whether it is necessary to make the goods marketable. Applying that test, coated fabrics sold at the factory gate in polythene bags were already in marketable form, and the additional hessian cloth was used only for transportation to up-country customers. The cost of that secondary packing is therefore not includible in the assessable value for excise duty.

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Issues: Whether the cost of secondary packing in hessian cloth used for transporting coated fabrics to up-country customers is includible in the assessable value for levy of excise duty.

Analysis: Section 4 of the Central Excise Act, 1944 includes the cost of packing in the value of excisable goods, except packing of a durable nature and returnable by the buyer. The governing test is whether the packing is ordinarily required to sell the goods in wholesale trade at the factory gate and whether it is necessary to put the goods in a marketable condition. The goods were admittedly sold at the factory gate in polythene bags, and the additional hessian packing was used for convenience in transportation to up-country customers rather than as packing ordinarily required for wholesale sale.

Conclusion: The cost of the hessian cloth secondary packing is not includible in the assessable value.

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