CEGAT Tribunal clarifies assessable value for excisable goods packing costs

The Appellate Tribunal CEGAT, New Delhi modified the order of the Collector of Central Excise (Appeals), Bombay, in the case involving M/s. CEAT Tyres of India Ltd. and the Revenue. The Tribunal held that the cost of wooden boxes and drums for packing vulcanising cement in bags above 200 liters should not be included in the assessable value, while the cost of corrugated boxes, fibre containers, tins, and cloth bags should be included. The judgment clarified the inclusion of packing costs in the assessable value of excisable goods based on the type of packing materials used.

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Issues:
Assessable value of packing materials in relation to excisable goods.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved two appeals filed by M/s. CEAT Tyres of India Ltd. and the Revenue against a common order-in-appeal by the Collector of Central Excise (Appeals), Bombay. The appeals were related to the inclusion of the cost of various packing materials in the assessable value of excisable goods. The primary issue revolved around the packing of tubes and other products, including the cost of cloth bags, corrugated boxes, fibre containers, wooden boxes, and returnable drums.

In the case, it was argued that the cost of cloth bags for packing tubes should be included in the assessable value of the tubes when they are cleared duly packed in cloth bags. The Tribunal considered various precedents, including the Supreme Court decisions in the cases of Geep Industrial Syndicate and Bombay Tyre International, to determine the inclusion of packing costs in the assessable value. It was established that the cost of primary and secondary packing materials should be included in the assessable value of excisable goods if they are generally cleared from the factory with such packing.

Regarding wooden boxes, the Tribunal applied the Supreme Court decision in the case of Geep Industrial Syndicate and concluded that their cost is not includible in the assessable value of certain products. The judgment also addressed the issue of returnable drums for packing vulcanising cement, emphasizing that the cost of such drums is not includible in the assessable value if they are brought by the customer and are returnable to the assessee.

Ultimately, the Tribunal modified the order of the Collector of Central Excise (Appeals), Bombay, and held that the cost of wooden boxes and drums for packing vulcanising cement in bags above 200 liters should not be included in the assessable value. However, the cost of corrugated boxes, fibre containers, tins, and cloth bags, being primary or secondary packing, was deemed includible in the assessable value of the respective goods. Both appeals were disposed of accordingly, along with the cross-objections.

This judgment provides a detailed analysis of the inclusion of packing costs in the assessable value of excisable goods, citing relevant legal precedents and considerations to determine the applicability of such costs based on the nature of packing materials and their relationship to the cleared goods.

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