Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Windsor Foods Ltd. on 17 May, 1988
Equivalent citations: 1988(17)ECR669(TRI.-DELHI), 1988(37)ELT297(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The appellants manufactured biscuits. The point of dispute in this appeal is whether the cost of corrugated boxes, in which the biscuits were packed for sale, should be included in the value of the goods for the purpose of assessment of Central Excise duty under Section 4 of the Central Excises and Salt Act, 1944. The period of controversy is from February, 1982 to July, 1982.
2. As regards the manner of packing of the biscuits, we reproduce below from paragraph (3) of the department's counter affidavit dated 9-5-1988. The respondents have accepted these facts as correct during the hearing before us today:
"The biscuits are initially wrapped in a glassine/PP/waxed wrapper and then packed in air tight pouches or printed waxed paper. These packets are packed In poly bags and such poly bags are packed in corrugated boxes. Out of some 36 varieties of biscuits only nine varieties are being packed in poly bags and only Windsor Glucose biscuits meant for local market are supplied in poly bags."
The remaining 27 varieties were sold after packing in tins and corrugated boxes.
3. The Assistant Collector's finding is that the respondents usually sold their biscuits in the wholesale market after packing them in tins and corrugated boxes and hence, as per the principle laid down in 1983 ELT 1896 (SC) - Bombay Tyres International Ltd. and Ors. v. U. O. I., the cost of tins and corrugated boxes was includible in the assessable value. Reliance is also placed by the department on -1984 (i 7) ELT 39 (Bom.) - Sathe Biscuits & Chocolate Company Ltd. and Anr. v. U.O.I. and Ors. and 1984 (18) ELT 96 (Tribunal) Lucky Biscuits Company v. Collector of Central Excise, Patna. Both these judgments dealt with the specific commodity biscuits and held that the tin and corrugated box packing was in the nature of essential packing for marketing of the biscuits and hence their cost was Includible in the assessable value. The respondents presented fresh evidence for the first time during the hearing today. It is in the form of a certificate signed by the respondents themselves and claims to be based on audited sales figures for the three years period -1979 to 1982. It certifies that during this period 80-85% of the total sales of the respondents were of Glucose biscuits only. Based on the certificate, the respondents claimed that since Glucose biscuits were delivered in the local wholesale market in poly bags, it showed that corrugated box was used for long distance transport only. Reliance was placed by the respondents on the later judgment of the Supreme Court in the case of Godfrey Phillips (India) Ltd. -1985 (22) ELT 306 (SC) which, it is pleaded, came subsequent to the Bombay High Court judgment in the case of Sathe Biscuits and the Tribunal's order in the case of Lucky Biscuits and hence the High Court judgment and the Tribunal's order need not be taken as binding by the present Bench.
4. The learned representative of the department wanted the certificate of sales figures now furnished by the respondents to be subjected to verification. From what follows, we do not consider it necessary to do so.
5. We have given the matter our earnest consideration. Biscuits are an item of food and a delicate one at that. They would need adequate packing not only to save them from damage during transport but also to protect them from dirt, dust and contamination and to preserve their freshness. The facts of this case show that the respondents had, for the purpose of deciding as to how much packing was adequate, divided their biscuits into two categories - (I) the cheaper and fast moving biscuits, such as Glucose biscuits, for which they considered the 3 stage wrapping/packing upto the poly bag stage quite adequate for deliveries in the local markets; and (2) other varieties which they invariably sold in tins and corrugated boxes. Since sizeable quantities of cheaper Glucose etc. biscuits were sold in the local wholesale market without the use of corrugated boxes, it is demonstrably clear that corrugated boxes used for out-station deliveries of such category of biscuits were necessitated solely by the consideration of safety of the biscuits in the long distance transport. Therefore, following the principle laid down in the later Judgment of the Hon'ble Supreme Court in the Godfrey Phillip's case, we order that the cost of corrugated boxes should not be included in the assessable value of Glucose etc. varieties of biscuits which were in fact sold in the local wholesale market in poly bag only. Following the same principle, we 'order that in respect of the remaining varieties of biscuits which were sold, whether locally or to out-station buyers, only after packing in tins and corrugated boxes, the cost of tins and corrugated boxes would be includible in the assessable value.
6. We modify the impugned order-in-appeal accordingly and allow the department's appeal in part in the above terms. Consequential effect shall be given to this order by both parties.