Exemption for wrapping paper and deduction of excise duty from cum-duty price shaped the cess valuation dispute.

Notification No. 217/86 was held applicable to wrapping paper used for wrapping other varieties of paper, as no separate ground was shown to depart from the reasoning already applied in the connected matter. For cess under the Industries (Development and Regulation) Act, 1951, the Tribunal followed earlier decisions that central excise duty included in the cum-duty price must be deducted when working out the value of goods, so cess is not computed on a value that includes excise duty. The Revenue failed on both issues, while the assessee succeeded on the valuation question.

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Issues: (i) Whether Notification No. 217/86 was available in relation to wrapping paper used for wrapping other varieties of papers; (ii) whether, for computing cess under the Industries (Development and Regulation) Act, 1951, central excise duty form part of the value or is deductible from the cum-duty price.

Issue (i): Whether Notification No. 217/86 was available in relation to wrapping paper used for wrapping other varieties of papers.

Analysis: The issue had already been considered in the connected matter and the same reasoning applied here. No independent ground was shown to take a different view on the availability of the exemption for the wrapping paper used in the manufacturing process.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Issue (ii): Whether, for computing cess under the Industries (Development and Regulation) Act, 1951, central excise duty form part of the value or is deductible from the cum-duty price.

Analysis: The Tribunal followed earlier decisions holding that, for the purpose of levy of cess, the value of goods is to be worked out by deducting central excise duty from the cum-duty price where such duty is leviable and included in the wholesale cash price. The cess is therefore not to be computed on a value that includes excise duty.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's appeal failed, while the assessee's appeal succeeded on the valuation question relating to cess.

Ratio Decidendi: For the purpose of levy of cess on goods, central excise duty included in the cum-duty price is deductible in arriving at the assessable value.

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