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1998 (8) TMI 372
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....ner in a plain brown carton, two such cartons being further packed together in a larger plain brown carton. At the depots, the Vacuum Cleaners were removed from the plain cartons and each cleaner was packed in a printed carton in which sales were made. The plain cartons in which the goods were transported from the factory to the depots were discarded. The cost of the plain cartons as also that of the printed cartons was included in the price of the vacuum cleaner. Appellant filed price list claiming deduction of the cost of the plain cartons which was disallowed by the Assistant Collector vide his order dated 29-1-1992. That order having been upheld on appeal by the Collector of Central Excise (Appeals) vide order-in-appeal dated 30-11-1992....
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....eaded for the dismissal of the appeal. 4.  We have considered the submissions. We have perused the record. The issue for decision is whether the cost of the plain cartons in which the excisable commodity, vacuum cleaner, is removed from the factory is to be included in the assessable value of the said product. The Collector (Appeals) has observed in his impugned order that when goods are normally sold after being repacked in the printed coloured cartons, the entire expenditure incurred prior to such final packing is includible in the assessable value. This has been questioned by the appellant, contending that the plain brown cartons are not the packing in which the vacuum cleaners are sold in the wholesale trade and hence the cost o....
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....hich would be the case if they are used for the first stage despatch itself. The claim in the appeal is for the exclusion of the cost of the plain cartons used in the first stage of removal of the goods from the factory on the ground that the goods are not sold to the buyers in that packing while the alternative claim is for the exclusion of the cost of the printed cartons on the ground that such packing is done after the clearance of the goods from the factory and is a post removal exercise not liable to excise levy. Taking both these pleas together, the claim of the appellant is for the exclusion of the cost of one or the other type of packing from the assessable value of the goods while the department's stand is for the inclusion of the ....
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....which it is generally sold in the wholesale market at the factory gate. If it is, then its cost is liable to be included in the value of the goods; and if it is not, the cost of such packing has to be excluded. 7. Examining the present case, in the light of the above test laid down by the Supreme Court in the MRF judgment we find that the goods are sold in the wholesale trade, packed in the printed cartons, but such sale is at the outside godowns and not at the factory gate. As seen above, the test is not only that sale should be to the wholesale buyer but such sale should be at the factory gate. At the factory gate the goods are removed packed in plain cartons, to the appellant's depots not by way of sale. When sale is effected sub....
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....luded. Consequently where the sale is effected at the factory gate, expenses incurred by the assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organisation expenses and after-sales service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation a....
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....ing is necessary to make the excisable article marketable, the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself. In paragraph 38 of the MRF judgment at para 461 of the report, the observations in Collector of Central Excise v. Ponds (India) Ltd. - 1989 (44) E.L.T. 185 are referred to as follows : "Packing which is primarily done or mainly done for protecting the goods and not for making the goods marketable should not be included." 9. For applying this criterion the contention of the appellant is to be considered. Their claim, as already referred to earlier, is that the plain cartons are required for protection of the goods during transport and to a....