1997 (12) TMI 199

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....either durable nor returnable. Price lists were filed from time to time showing the wholesale price inclusive of the cost of packing materials and on approval thereof appropriate excise duty was being paid on clearances. The dispute in this appeal relates to the period from 10-3-1987 to 31-10-1987. Verification of records showed that appellant was availing Modvat credit in respect of the cost of metal containers and also the benefit of exemption Notification 34/83, dated 1-3-1983 in respect of the finished product. The department took the view that this was a case where the cost of packing materials or containers was not included in the assessable value of the final product under Section 4 of the Act as contemplated in exclusion Clause (iii....

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....or payment of duty of excise leviable on the final product. This Rule is subject to the provisions of Section AA and the conditions and restrictions that may be specified in the notification. The Explanation to the Rule contains an inclusive and exclusive definition of the expression "input". The inclusive definition is found in clauses (a) to (e) and the exclusive definition is contained in clauses (i) to (iv). Clause (ii) reads thus - "For the purpose of this rule, `inputs' does not include - .................................................................................................................................. (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on....

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....mption is to determine the assessable value under Section 4 of the Act, calculate the excise duty payable on the basis of the tariff rate of duty and determine the element of exemption, namely the tariff duty payable on the part of the value which represents the cost of containers. The effective amount of duty would be arrived at by deducting this exempted part from the total duty payable as per tariff. For calculating the exemption the cost of metal containers is relevant. However, since no deduction was available in respect of the cost of containers under the Scheme of Section 4 of the Act, the assessable value for the purpose of Section 4 of the Act should necessarily include the cost of containers. The price lists before us also indicat....