Customs, Excise and Gold Tribunal - Mumbai
Packart Glass vs Commissioner Of Central Excise on 14 October, 1998
Equivalent citations: 1999(105)ELT414(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. M/s. Packart Glass manufactured glass and glass vials. These were packed in cardboard boxes which boxes were supplied to them by M/s. Sarabhai Chemicals during the period September, 1982 to October, 1985.
2. The issue of deduction of post manufacturing charges had been raised by M/s. Ambalal Sarabhai Enterprises Ltd. before the High Court of Gujarat. The High Court in their order dated 25-9-1987 referred to the judgments given by the Supreme Court and directed the Petitioners to submit the statement of deductions, etc., in respect of price lists already filed for proper determination of the duty liability in accordance with the observations made by the Supreme Court. The assessee were permitted to file revised price lists in certain cases. The Excise authorities were directed to finalise the assessments during a particular period. The department was permitted to raise demand for differential duty and the Petitioners were directed to pay the demand so raised within 6 months from the date of Court's order. On the other hand the Petitioners were also entitled and permitted to file refund claim and the Excise authorities were directed to finalise the same within a certain time frame. In pursuance of these directions of the High Court assessee filed a statement. In the statement, deduction had been claimed of the value of packing materials used in packing the glass and glass vials which was delivered to Packart by M/s. Ambalal Sarabhai Enterprises Ltd. In the show cause notice this post deduction was sought to be rejected on the grounds that the earlier approval accorded by the Superintendent to prices inclusive of packing charges was correct. No demand was raised in the show cause notice. The Assistant Collector in his order dated 17-5-1988 considered the claim of deduction. Before him the claim was made that the suppliers of packing material were "an outside party under the provisions of Companies Act, 1956 prior to 30-4-1978" but observed that there was no documentary evidence placed to justify this claim. He observed that duty leviable on the brands by which the goods are cleared from the factory. Where the goods which cleared in a packed condition, the value of packing had to be included. On this ground he upheld the approval of the price lists and confirmed the differential duty amounting to Rs. 12,99,916.72. The assessee then filed an appeal before the Collector, wherein case law was cited. The Collector accepted that value of packing material supplied by the buyer was not includible in the assessable value of the goods. He however, observed that in the present case the buyer and the manufacturer were both the divisions of M/s. Ambalal Sarabhai Enterprises Ltd. and could not be held to be independent entities. On this ground he held that the value of the packing material was includible and upheld the lower order. Against this order the present appeal has been filed.
3. Shri Willingdon Christian, learned Advocate arguing for the Appellants claimed that the manufacturer of glass vials and buyer/supplier of packing material were independent entities inasmuch as they held different L-4 licenses. He further urged that the goods were sold by M/s. Packart to M/s. Sarabhai Chemicals. Since the relationship was of that of a buyer and seller he submitted that the ruling given by the Supreme Court in the case of Hindustan Polymers v. Collector, 1989 (43) E.L.T. 165 was squarely applicable. He further submits that the show cause notice did not raise any demands and did not invoke the provisions of Section 11A of the Central Excises and Salt Act, 1944.
4. Shri S.V. Singh, the learned DR submitted that the supplier of the packing and the manufacturer of the glass vials were two divisions of the same corporate entity and could not be called to be independent of each other nor can their relationship be called as that of a buyer and seller. It is his submission, therefore, that the law laid down by the Supreme Court will not apply. Referring to the statement filed by the assessees he pointed out that some price-lists were filed in Part VIA or VIB which speaks of captive consumption. In the case of such price-lists, question of outside buyer cannot arise. On the aspect of necessity for issue of show cause notice under Section HA, Shri Singh referred to the High Court's order wherein directions were made for raising of demand and for payment of the resultant duty by the High Court without reference to any provisions of law. It is his submission that the High Court's order is sufficient authority for raising the demands.
5. We have carefully considered the rival submissions and have also seen the documents and the citations.
6. The cited law in the case of Hindustan Polymers Ltd. v. Collector will necessarily apply except where the buyer and supplier of the packing material are not independent entities. Then the packing material although supplied by the buyer may be includible in the assessable value. Shri Willingdon at this stage seeks to make a distinction between separate corporate entities and separate entities in terms of the Central Excise law. He has submitted that as long as the two units are holding different L-4 licenses they should be deemed to be not only separate assessees but also separate entities for interpretation of Section 4.
7. We find that no answers are forthcoming from the record on this aspect. Before the Assistant Collector certain submissions were made without showing any documentary evidence as to the relationship or lack thereof between these two units. The Collector made a categorical observation that these two units are merely two divisions and should not be termed to be independent entities. At the time of hearing also nothing has been shown in evidence to establish the separate existence of these two units either under the Central Excise law or under the law relating to the companies. The law on the subject would be applicable only when this aspect is clarified. In our opinion these issues would have to be gone into at length. Since neither of the lower orders is communicative on this aspect, we set aside both the lower orders and remand the proceedings back to the jurisdictional adjudicating authority who will examine and discuss the entire issue in the light of the observations made by us and shall pass a well reasoned speaking order after giving an opportunity to the assessees to have their say before him. The appeal is allowed by way of remand.