Customs, Excise and Gold Tribunal - Hyderabad
Eveready Industries India Ltd. vs Cce on 6 January, 1999
Equivalent citations: 1999(83)ECR410(TRI.-HYDERABAD)
ORDER S.L. Peeran, Member (J)
1. In the supplementary appeals, the application for Condonation of delay is allowed in terms of the Tribunal's practice.
2. For the purpose of hearing these appeals, appellants are required to pre-deposit Rs. 56,96,846/-. The short issue involved in these appeals is as to whether secondary packing in terms of 7-ply corrugated boxes should be granted the benefit of the judgments rendered by Hon'ble Supreme Court in the case of Geep Industrial Syndicate Ltd. as and for the same party rendered in 1992 (61) ELT 384 (SC) 1995 (58) ECR 247 (SC). These judgments have since been followed by the East Region Bench in the party's own case in Order No. A-766 & A-767-768/98 dated 12.8.1998 and in A-644-646-Cal./98 dated 18.6.1998.
3. Ld. Advocate submits that the issue is no longer res integra and the entire aspects of the matter including the reasoning adopted by Collector (Appeals) has since been noted by the Tribunal in their own case in Order No. A-644-646-Cal./98 dated 18.6.1998 and has held in para (4) as follows:
4. We have considered the submissions of both the sides. We find that the dispute is in respect of the outer packing made up of 5 ply corrogated boxes in which a number of card board boxes are placed containing a standard number of batteries. In the first case Geep Industrial Syndicate Ltd. which came up before the Hon'ble Supreme Court, the question of inclusion or exclusion of cost of wooden boxes was before their lordships. In the subsequent case of the same appellants these wooden boxes were replaced by 7 ply corrugated boxes. Following the said two decisions, the Apex Court in the appellants' own case in civil Appeal No. 8921/1996 has held that the price of the wooden boxes containing the card board cartons is not to be included for the purpose of Excise Duty. The fact that in the instant case wooden boxes have been substituted and replaced by corrugated boxes will not make much difference in as much as the place of packing remains the same. We also note that this fact of replacing of wooden box by the corrugated boxes has been held to have not made any difference by the Hon'ble Supreme Court in the case of Geep Industrial Syndicate Ltd., the facts of which case are similar to the facts of the instant case. Accordingly following the above Supreme Court decisions, we set aside the impugned Order-in-Appeal in so far the same relates to the question of inclusion of cost of secondary packing into the assessable value of the batteries.
Referring to this portion of the Tribunal's Order and also to the argument of the Senior Advocate appearing for Revenue N.C. Roy Chaudhary which is in para 3 is noted below:
3. Appearing for the Revenue Shri N.C. Roy Chowdhury, Ld. Senior Advocate does not dispute the above factual position. He, however, submits that there is a clear finding by the adjudicating authority to the effect that this outer packing is not meant for safe transportation of the goods. On the other hand, the appellants are undertaking this packing in hundred percent cases. In fact the normal practice adopted by the appellants is to sell their product in standard case lots and they accept order in this standard case lots with minimum of 10 lots, as per condition No. 2 of their terms and condition of sale. He submits that this factor by itself shows that the packing in question is necessary for putting the goods in the wholesale market and is not meant for the safe transportation of the goods. He submits that this facts were not brought to the notice of the Supreme Court and as such have not been dealt by the Apex Court. He says that keeping in view this factual position, the impugned order may be upheld by the Tribunal.
Ld. Counsel submits that arguments of the Sr. Counsel has been dealt with in para 4 noted above and it clearly brings out that the item in question being 7-ply corrugated box is required to be given the benefit of Supreme Court judgments. He submits that Commissioner (Appeals) has attempted to distinguish the Supreme Court judgments rendered in Geep Industrial Syndicate Ltd. and that of Government of India v. MRF. Ld. Counsel submits that both the judgments have been dealt with by Hon'ble Supreme Court; in the case of Geep Industrial Syndicate and the points raised by the Commissioner (Appeals) pertaining to the marketability of the goods packed in the 7-ply corrugated box have also been dealt with. Therefore, he submits that the Commissioner (Appeals) was miscarried in applying the judgment and as the issue is fully covered in their favour and units of the appellants at Madras, Calcutta & Allahabad are being granted the benefit, therefore the same benefit is required to be extended to the unit at Hyderabad. Ld. Advocate submits that applying the ratio, the appeal itself can be taken up and disposed of finally as there is no question left for further adjudication or clarification.
4. On the other hand, Ld. D.R. points out to the specific findings given by the Commissioner (Appeals) in para 19 and 20 of his order distinguishing the feature laid down by the Commissioner (Appeals). He submits that Commissioner (Appeals) has applied his mind and it is not a case of misapplication of the any of the ratios. The Commissioner has referred to the observations of Justice Mukherjee in Ponds (India) Ltd. wherein specifically it has been laid down that where packing is required whether primary or secondary to make the article marketable, the cost of which would be includible in the value. The Hon'ble Supreme Court had further observed that how much packing is necessary to make the goods marketable is a question of fact that should be determined by application of correct approach. Noting this point, the Commissioner (Appeals) had given detailed findings in para 20 in which he has analysed that the assessee packed 25 batteries in an outer carton and such 12 cartons are then put into the Master carton (corrugated box) for the purpose of delivering to the wholesale dealers. The batteries are invariably packed in master boxes (corrugated boxes). Further in the master carton, the name of appellants, number of batteries, month and year of manufacture, batch number and other relevant details are printed to comply with the statutory provisions of Rule 51. He has observed that it is very clear that the goods were delivered in wholesale market at the factory gate on such condition which is also necessary and as such the cost of such packing would be included in the assessable value for charging Central Excise Duty. Therefore, the Commissioner observed that on this ground alone, the decision of MRF case is more applicable than the decision in Geep Industrial Syndicate Ltd. case. Therefore, Ld. DR points out that the finding is based on the factual situation and in keeping with the observation given by Ponds India Ltd. still holds goods and so also MRF. He submits that the judgment of Geep Industrial Syndicate Ltd. is distinguishable. The Commissioner (Appeals) has therefore noting the Hon'ble Supreme Court judgment of Geep Industrial Syndicate Ltd. as reported in 1992 (61) ELT 328 : 1995 (58) ECR 247 (SC) has observed that there is a clear distinction between the pattern of packing.
5. Ld. Advocate specifically took us through the judgment of Geep Industrial Syndicate Ltd. as rendered in 1992 (61) ELT 328 : 1995 (58) ECR 247 (SC) and pointed out to the short findings which are extracted as below:
[Order], - The short question that arises for determination in this appeal is whether the cost of secondary packing in wooden boxes is liable to be added in determination of the value of batteries and torches for the purpose of excise duty. The torches and batteries manufactured by the appellants are first packed in Polythene boxes and then these Polythene boxes are placed in Cardboard Cartons. There are certain varieties of batteries which are packed directly in Cardboard Cartons. There is no doubt that packing in Polythene bags and Cardboard Cartons is includible in the determination of the value of batteries and torches for the purpose of levy of excise duty. The question arises only in regard to the wooden boxes in which the Cardboard Cartons are placed at the time of delivery at the factory gate. There is some dispute between the parties whether the Cardboard Cartons are packed in wooden boxes in all cases. It is stated that when they are delivered in the course of the wholesale trade at the factory gate, they are not packed in wooden boxes as a matter of course but they are packed in wooden boxes only in those cases where delivery is taken by wholesale dealers outside the city of Allahabad. It is not necessary for the purpose of these appeals to decide this disputed question of fact. Even if the Cardboard Cartons are packed in wooden boxes in all cases, it is clear that the cost of such secondary packing in wooden boxes is not includible in determination of the value of batteries and torches. This question is no longer res integra. It stands concluded by the majority decision of this Court in Union of India v. Godfrey Philips India Limited . The question which arose in that case was in regard to secondary packing of cigarettes in corrugated fibre board containers. The cigarettes were manufactured and packed in cardboard packets, each containing 10 to 20 cigarettes and those packets were packed in Cartons or Outers and finally, Cartons and Outers were themselves packed in corrugated fibre board containers. This Court took the view by a majority of two against one that corrugated fibre board containers were used as secondary packing only in order to ensure cartons or outers against injury or damage during transport and that it was not necessary for putting the cigarettes in the corrugated fibre board containers for their sale in the wholesale market at the factory gate and the cost of such secondary packing was therefore not liable to be included in determination of the value of the cigarettes for the purpose of excise duty. The same reasoning must apply in the present case and we must hold that Cardboard Cartons were placed in wooden boxes for the purpose of protecting torches and cells against injury or damage during transport and that packing in wooden boxes was not necessary for putting the torches and batteries in the condition in which they are generally sold in the wholesale market at the factory gate.
2. We therefore reach the conclusion that the cost of wooden boxes is not liable to be included in the value for levy of excise duty. We accordingly allow the appeal, set aside the order made by the High Court in the Writ Petition as also the order made by the Appellate Collector and direct the assessing authority to proceed to make assessment in accordance with the view taken in this Judgment and on such assessment being made, the assessing authority will refund to the appellants any excess amount which may be found to have been recovered by the Revenue. This direction will be carried out by the assessing authority within six months from today.
Pointing to the above findings Ld. Advocate submits that the Hon'ble Supreme Court's notings above has clearly brought out the features which are required to be seen for excluding the cost of the secondary packing. He submits the points raised by Commissioner (Appeals) has been answered in the above paragraph and therefore nothing remains for further elucidation or clarification. He points out that extracted portion of the Tribunal orders clearly indicate that this point was agitated by the Revenue through their Sr. Counsel as extracted above and the Tribunal has also given its findings, therefore he submits that the issue is no longer res integra as observed Hon'ble Supreme Court itself in the noted paragraph and hence he fervently prays for disposing of the appeal itself. Ld. Advocate submits that appellants themselves raised this issue before Hon'ble Supreme Court and the Supreme Court has finally decided the issue in terms of the order rendered by it in civil appeal No. 8921/96 by a 3-Judge bench and the order is extracted below:
In similar circumstances this Court in Geep Industrial Syndicate Ltd. v. Union of India 1992 (61) ELT 328 : 1995 (58) ECR 247 (SC) has held that the price of wooden crates was not to be included for the purpose of excise duty. The said decision was followed in Geep Industrial Syndicate Ltd. v. Collector of Central Excise, Allahabad . This appeal is fully covered by the aforesaid decisions and for the same reasons the appeal is allowed, the impugned judgment of the Tribunal is set aside and it is held that the price of the wooden crates containing the cardboard cartons is not to be included for the purpose of Excise duty. No costs.
He submits that facts in that case rendered by Supreme Court in their case is identical and the facts are not changed in the present case as well.
6. On a careful consideration of the submissions and on a perusal of the entire records and all the judgments referred to including the specific paragraphs which are extracted in the order, we are of the considered opinion that the issue is no longer res integra and therefore, while granting waiver of pre-deposit and staying the recovery, we take up the appeals themselves for disposal.
7. On further consideration, we notice that the doubt and analysis raised by Ld. Collector (Appeals) was adjudicated in the appellants' own case before the Eastern Regional Bench, and the bench dealt with the arguments of Sr. Advocate N.C. Roy Chaudhary which are extracted as above. From the perusal of the paragraph 3 of the Final Order of the Calcutta bench (A-644 to 646-Cal/98 dated 18.6.1998) this point was raised by the Commissioner (Appeals). The Tribunal by its finding in para 4 has analysed and held that the judgment of Geep Industrial Syndicate Ltd. has fully covered the issue in respect of 5-ply corrugated box. At this point Ld. Advocate submitted that there is typographical error and it is not 5-ply corrugated box, but 7-ply corrugated box. Be that as it may, the aspect pertaining to the secondary packing of 7-ply corrugated box has been dealt with by the Tribunal in the light of the Supreme Court judgment and a conclusion has been arrived at that its cost is not required to be added. Further, a perusal of the extracted portion of the Geep Industrial Syndicate case as reported in 1992 (61) ELT 328 : 1995 (58) ECR 247 (SC) we notice that this point has been dealt with and examined at great length and clarified by Supreme Court itself. Therefore, nothing subsists for further consideration of the matter as all the points have been answered both by the Hon'ble Supreme Court and by the Tribunal. Therefore, even the judgment of MRF and Ponds India Ltd. would apply to the facts and from that point also the appellant's case is excluded from the applicability of the ratio of the Ponds India case. Therefore, the cost of secondary packing in terms of 7-ply corrugated box is required to be excluded and in that view of the matter, respectfully following the judgments cited, we set aside the impugned order and allow the appeals.
(Pronounced and dictated in open Court).