TaxTMI 
TaxTMI 
2011 (8) TMI 40
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....Tariff Act, 1985. The issue relates to non-inclusion of the value of packing charges by the assessee-company in the assessable value for motorcycles despite the fact that the said motorcycles were cleared by the assessee to the dealers located outside Chennai by sending them to their various depots on stock transfer basis and in packed condition from their factory during the period from April, 1999 to December, 1999. 4. At the time of removal from the factory to depot the motorcycles were cleared in fully packed condition. It is also established from records that Rs.190/- is being charged as packing charges by the appellant and, therefore, the said amount which was collected as packing charges must have been passed on to the buyers. The appellant-company filed price declaration in Annexure-II for the vehicles sold from their depots and therein declared the depot sale price per vehicle and claimed abatement of Rs.190/- per vehicle towards packing charges. 5. A show cause notice dated 4.10.1999 was issued by the respondent to the appellant-company for the period from April, 1999 to September, 1999 directing them to show cause as to why the aforesaid abatement clai....
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.... value, shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: ........................................ ........................................ (4) For the purposes of this section, - (a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, From where such goods are removed; (ba) "time of remov....
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....refore, the entire amount is passed on to the buyers by the appellant-company. He also submitted that the cases relied upon by the counsel appearing for the appellant are distinguishable on facts. In the light of the aforesaid submissions made on behalf of the counsel appearing for the parties we would proceed to discuss and answer the issue raised before us. 11. The provisions extracted hereinbefore from the Central Excise Act would indicate that there is express provision in Section 4 for including the cost of packing in the determination of value for the purpose of excise duty. Sub-Section 4 (d)(i) along with explanation has relevant bearing on the present case. According to the said provision where goods are delivered at the time of removal from the factory gate in a packed condition the value would include the cost of such packing but would not include such cost of packing which is of a durable nature and is returnable by the buyer to the assessee. 12. In Union of India and Ors. V. Bombay Tyre International Ltd. reported at 1983 (14) ELT 1896 (SC): (1984) 1 SCC 467 this Court had an occasion to deal with the said provision and in paragraph of the said judgm....
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....e easier transport of the goods by the wholesale dealer. Is all the packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods to be considered for including the cost thereof in the "value"? Or does the law require a line to be drawn somewhere? We must remember that while packing 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. It seems to us that the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate is the degree of packing whose cost can be included in the "value" of the article for the purpose of the excise levy. To that extent, the cost of secondary packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate." 13. In Union of India and Ors. v. Godfrey Philips India Ltd. and Ors. reported at 1985 (22) ELT 306 (SC) this Court again considered a similar issue. What was decided by the majority of Judges in the said case was that the cost ....
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....lowing terms:- "43...........Whether packing, the cost whereof is sought to be included is the packing in which it is ordinarily sold in the course of a wholesale trade to the wholesale buyer. In other words, whether such packing is necessary for putting the excisable article in the condition in 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. ......................." 15. The aforesaid decision was rendered by this Court with respect to "tyres" which also were sold at the factory gate in a packed condition for onward easy transportation. In the background of the said case, it was held that the cost of such packing would be included in the assessable value. 16. Almost similar are the facts of the present case. The authorities below as also the Tribunal found that the facts of the present case entirely fit in the facts of the aforesaid decision in the case of Madras Rubber Factory Ltd. [supra]. The said three authorities as also the Tribunal on analyzing the records came to a finding t....