1998 (8) TMI 372 - AT - Central Excise

Tribunal excludes plain carton costs from assessable value, aligns with Supreme Court precedent

The Tribunal allowed the appeal, directing exclusion of the cost of plain cartons from the assessable value of vacuum cleaners. The decision was based on ... Valuation - Packing Issues:1. Inclusion of the cost of plain cartons in the assessable value of vacuum cleaners.2. Applicability of the Supreme Court's judgment in Government of India v. Madras Rubber Factory Ltd.3. Interpretation of the test laid down by the Supreme Court in the MRF judgment regarding the includibility of packing costs in the assessable value of goods.Analysis:1. The main issue in this case is whether the cost of plain cartons used for packing and transporting vacuum cleaners from the factory to depots should be included in the assessable value of the product. The appellant argued that these plain cartons are not the final packing in which the goods are sold, as they are discarded at the depots and replaced with printed cartons. The appellant contended that only the cost of plain cartons should be included in the assessable value, not the cost of the printed cartons used at the depots.2. The appellant relied on the Supreme Court's judgment in Government of India v. Madras Rubber Factory Ltd., emphasizing that the plain cartons are used for transport and protection, not for enhancing marketability. The appellant sought exclusion of the cost of plain cartons based on this argument.3. The Tribunal analyzed the test set by the Supreme Court in the MRF judgment regarding the includibility of packing costs in the assessable value of goods. The Tribunal found that the plain cartons were used solely for packing and transport, not for marketing the goods. Considering that the cost of printed cartons was already included in the declared price, the Tribunal accepted the appellant's plea to exclude the cost of plain cartons from the assessable value.4. Ultimately, the Tribunal set aside the impugned order and allowed the appeal, directing that any refund be subject to the provisions of Section 11B(2) of the Central Excise Act, 1944. The decision was based on the distinction between the plain cartons used for transport and the printed cartons used for sale, ensuring that only necessary packing costs were included in the assessable value of the goods.