Assessable value deductions: interest on book debts allowed, but special secondary packing treated as part of manufacture cost.

Deduction from assessable value was allowed for interest on book debts and interest on finished goods at depot, the claim being treated as covered by the Supreme Court ruling in MRF Ltd., which recognised such interest charges as deductible. Deduction for special secondary packing was disallowed because the packing was found to be only protective packing used to prevent damage and facilitate delivery, with no distinct special character shown apart from normal packing; its cost was therefore treated as part of the cost of manufacture and not a separate deductible item. The appeal succeeded only to that limited extent.

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Issues: (i) Whether deduction from assessable value was allowable on account of interest on book debts and interest on finished goods at depot; (ii) whether deduction was allowable on account of special secondary packing.

Issue (i): Whether deduction from assessable value was allowable on account of interest on book debts and interest on finished goods at depot.

Analysis: The claim was held to be covered by the Supreme Court decision in MRF Ltd., under which such interest charges were treated as deductible.

Conclusion: The deduction was allowed in favour of the assessee.

Issue (ii): Whether deduction was allowable on account of special secondary packing.

Analysis: The packing shown on the facts was only protective packing used to prevent damage and enable delivery of the goods, and no special character distinct from normal packing was established. Its cost was therefore treated as part of the cost of manufacture and not as a separate deductible item.

Conclusion: The deduction was rejected against the assessee.

Final Conclusion: The appeals succeeded only to the extent of allowing deduction for interest on book debts and interest on finished goods at depot, while the claim for special secondary packing was disallowed.

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