1996 (5) TMI 190 - AT - Central Excise

Inclusion of Secondary Packing Cost in Assessable Value Upheld by Tribunal

The Tribunal upheld the inclusion of the cost of specially designed printed cardboard cartons supplied by a related person in the assessable value for ... Valuation - Packing Issues:- Determination of assessable value for excisable goods including cost of packing supplied by a related person.- Interpretation of Section 4 of the Central Excises and Salt Act, 1944 regarding related persons.- Inclusion of cost of secondary packing in the assessable value for excise duty purposes.- Application of precedents set by the Hon'ble Supreme Court in excise duty cases.Analysis:1. The appeals involved the determination of the assessable value for excisable goods, specifically focusing on whether the cost of specially designed printed cardboard cartons supplied by a related person should be included in the assessable value.2. The appellant argued that the cost of the cardboard cartons should not be included in the assessable value based on precedents such as the decision in Universal Glass Ltd. v. Collector of Central Excise and Hindustan Polymers Ltd. v. Collector of Central Excise.3. The respondent contended that as both the appellant and the related person were related entities, and the cardboard packing was necessary for putting the excisable article in the condition sold in the wholesale market, it should be included in the assessable value.4. The Tribunal noted the relationship between the appellant and the related person, the nature of the packing supplied, and the relevant provisions of Section 4 of the Act regarding the determination of assessable value for related persons.5. The Tribunal referred to the Supreme Court's decision in Bombay Tyre International Ltd. v. Union of India, emphasizing that the excise levy cannot be limited to manufacturing cost and profit, and the value for assessment is based on the wholesale cash price when the goods first enter the stream of trade.6. It was established that the primary packing for the excisable goods was the bottles, and the secondary packing of cardboard cartons was necessary for wholesale market sale, leading to the inclusion of the cost of secondary packing in the assessable value.7. The Tribunal differentiated the present case from Universal Glass Ltd., where empty glass bottles were involved, and Hindustan Polymers Ltd., where packing was not necessary for the completion of the excisable goods.8. Considering all relevant factors and precedents, the Tribunal found no merit in the appeals and rejected them accordingly, upholding the inclusion of the cost of cardboard cartons in the assessable value for excise duty purposes.