Excluding buyer-supplied containers from excise duty assessable value

The Appellate Tribunal CEGAT, New Delhi held that the cost of containers supplied by the buyer should not be included in the assessable value of vegetable products for excise duty determination. The Tribunal emphasized that if the packing material is durable and returnable, it should be excluded from the assessable value of the goods. The Department's argument that the containers were not durable was rejected due to lack of evidence, leading to the dismissal of the Department's appeal.

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Issues:
1. Inclusion of the price of containers supplied by the buyer in the value of vegetable products for excise duty determination.

Detailed Analysis:
The central issue in this appeal before the Appellate Tribunal CEGAT, New Delhi was whether the cost of containers supplied by the buyer should be included in the assessable value of vegetable products manufactured and sold by the respondents for the purpose of determining excise duty. The Department argued that regardless of who supplied the product, the value of the container should be part of the assessable value of the goods cleared by the Assessee (manufacturer). The Learned SDR contended that if goods are typically sold in a packed condition, as in this case, the origin of the packing material cost is irrelevant, and the value of containers should be included in the assessable value of the product. The Respondent's Advocate, on the other hand, relied on previous judgments, including a Supreme Court decision, to argue that the cost of packing material supplied by the buyer should not be included in the assessable value of the goods.

The Respondent's Advocate cited the Supreme Court decision in Hindustan Polymers case, where it was held that the cost of cylinders/drums supplied by the buyer should not be included in the assessable value of the gas manufactured by the assessee. Similar views were upheld by the High Courts of Bombay and Karnataka, and affirmed by the Supreme Court in the Hindustan Polymers case. The Advocate highlighted that the legislation does not provide for the inclusion of packing costs supplied by the buyer to the assessee, emphasizing that the cost cannot be included in the value of excisable goods. The Departmental Representative argued that the containers supplied in this case were not durable, unlike the cases cited by the Respondent.

After careful consideration, the Tribunal noted that the tins used for delivering the vegetable product belonged to the buyer, and the manufacturers only sold the vegetable products, not the containers. The Tribunal referred to previous judgments to support its decision that the cost of packing material supplied by the buyer, if durable and returnable, should be excluded from the assessable value of the goods. The Tribunal rejected the Department's argument that the containers were not durable, as no evidence was presented. Consequently, the Tribunal dismissed the appeal filed by the Department, concluding that the cost of containers supplied by the buyer should not be included in the assessable value of the vegetable products for excise duty determination.

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