Returnable packing cost excluded from assessable value where contract obliges buyer to return gunny bags

The cost of durable, returnable gunny bags is excluded from the assessable value of glass bottles where the packing arrangement creates a contractual obligation to return the bags to the supplier. Mere physical possibility of return is insufficient; returnability must arise from the agreement itself. As the contract schedule provided that the bottles would be supplied in gunny bags and the bags would be returned after emptying, the exclusion applied and the Revenue's challenge failed, leaving the assessee's valuation treatment undisturbed.

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Issues: Whether the cost of gunny bags claimed to be durable and returnable was includible in the assessable value of glass bottles.

Analysis: The decisive question was whether there existed an arrangement obliging the buyer to return the gunny bags to the supplier, since returnability for exclusion from assessable value depends on a contractual obligation and not merely on the physical possibility of return. The contract schedule specifically stated that the bottles would be supplied in gunny bags and that the bags would be returned to the supplier after emptying, establishing an agreement for return of the packing.

Conclusion: The cost of the gunny bags was not includible in the assessable value. The Revenue appeals failed and the order in favour of the assessee was upheld.

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