Custom, Excise & Service Tax Tribunal
M/S.Shakti Organic Chemical ... vs Cce, New Delhi on 18 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Decision:18.05.2016
Excise Appeal No.1771/2008-EX(DB)
[Arising out of Order-in-Appeal No.61/CE/DLH/2008 dated 14.05.2008 passed by the Commissioner of Central Excise (Appeals), New Delhi]
For Approval and Signature:
Honble Smt. Archana Wadhwa, Member (Judicial)
Honble Shri B. Ravichandran, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.Shakti Organic Chemical Industries Pvt.Ltd. Appellant
Vs.
CCE, New Delhi Respondent
Appearance: Rep. by Shri T.R. Rastogi,Advocate (Adj.request)for the appellant.
Rep. by Shri S.Nanthuk, Joint CDR for the respondent.
Coram : Honble Smt. Archana Wadhwa, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 51850/2016 /Dated:18.5.2016 Per Archana Wadhwa:
The appellants are engaged in the manufacture of Glycol. In some cases, the same is further cleared by the appellant after packing, in which case the duty is paid by them on the total value of the goods inclusive of the amortized value of the packing materials. However, in some cases, their customers bring the packing materials i.e. plastic containers themselves, in which case the appellant is charging only the cost of the Glycol. In such cases, the duty is being paid by the assessee only on the price of Glycol.
2. Revenue, by entertaining a view that even in such cases i.e. where their customers bring their own plastic containers, the amortized cost has to be added in the assessable value of the Glycol, initiated proceedings against them by way of issuance of show cause notice dated 6.9.2004 raising demand of duty to the extent of Rs.2.33 lakhs approximately for the period 2001-04. The Original Adjudicating Authority observed as under:-
The main issue involved in the subject case is whether cost of the Plastic containers supplied by the Buyers is includible in the assessable value of the product manufactured by the party. The contention of the Department is that the party in some cases used their own containers for packing the finished goods and included the cost of such packing material (containers) in the assessable value of the goods. But did not include the cost of containers, supplied by the buyers, in the assessable value.
There are number of judgements of Tribunal and Honble Supreme Court wherein the similar issue is settled. I quote gist of some of these judgements as under:-
i) In the case of M/s.Packart Glass Vs. CCE, Vadadora 2002 (139) ELT 393 (T), the Honble Tribunal has held that the cost of the packing supplied by the buyer cannot be included in the value, irrespective of whether it is durable or not.
ii) In the case of M/s. Hindustan Polymers Vs. CCE 1989 (43) ELT 165 (SC), the Honble Supreme Court gave a detailed verdict that if the containers are supplied by the buyer, it is illogical to include the cost of such containers in the assessable value.
iii) In the case of M/s.Juass Polymers Ltd. Vs. CCE, Meerut 2003 (157) ELT 626 (SC), the Honble Supreme Court has held that the cost of containers supplied by the buyer could not be included.
The ratio of the above said judgements applies squarely in the instant case.
Order:
In view of the above discussions, I drop the proceedings against the party.
3. Revenue being aggrieved with the said order, filed an appeal before the Commissioner (Appeals). The Appellate Authority held that the said decisions relied upon by the Original Adjudicating Authority cannot be held applicable when there was a change in the provisions of Section 4. He further observed that brining of the packing material by the customers themselves amounts to flow back of the money to the manufacturer and as such, it can be concluded that the price was not the sole consideration, in which case the provisions of Section 6(3)(i) of the Valuation Rules, 2002 would apply. He accordingly reversed the order of the Original Adjudicating Authority and allowed the appeal filed by the Revenue. Hence the present appeal.
4. On going through the orders passed by the Asstt. Commissioner and the Commissioner (Appeals), we find that the Asstt. Commissioner has relied upon the precedent decisions of the higher authorities in dropping the demand. The Appellate Authority has not disputed the fact that the said decisions relied upon by the Asstt. Commissioner fully apply in respect of the valuation of the goods where the packing materials itself is being supplied by the customers, but has decided not to follow the same on the ground that the provisions of Section 4 were amended w.e.f. 1.7.2000.
5. However, we find that the very same decisions stand considered by the Tribunal in a recent decision in the case of Commissioner of Central Excise Vs. Grasim Industries Ltd. 2014 (304) ELT 310 (Tribunal-Delhi) and it stands observed as under:-
* The above judgment has been followed by the Apex Court in the cases of Jauss Polymers Ltd., reported in 2003 (157) E.L.T. 626 (S.C.) and CCE v. Superior Products, reported in 2008 (230) E.L.T. 3 (S.C.). Though these judgments are in respect of the provisions of Section 4 of Central Excise Act, 1944, as it stood during the period prior to 1-7-2000 and in which clause d(ii) of Section 4(4) was about packing charges, while Section 4 w.e.f. 1-7-2000 and the definition of Transaction Value in it, is totally silent about the packing charges, in our view the principle laid down by the Apex Court in cases of Hindustan Polymers (supra), Jauss Polymers Ltd. (supra) and CCE v. Superior Products (supra) is also applicable to Section 4, as it stands w.e.f. 1-4-2000, as the Apex Court in para 51 of its judgment in case of Bombay Tyre International (supra) has held that the statutory provision regarding inclusion of packing charges calls for strict construction, as levy is sought to be extended beyond the manufactured article itself and accordingly the cost of only that packing would be includible in the assessable value which is necessary to make the goods marketable and this principle would be applicable while interpreting the provision of Section 4, as it stands w.e.f. 1-7-2000, as the nature of the levy of Central Excise duty has not changed. Therefore, if some goods are marketable without being put into the containers, the cost of containers including their testing charged would not be includible in the assessable value. As is seen from the above paragraph, amendment to Section 4 w.e.f. 1.4.2000 has been held to be irrelevant for the purpose of deciding the issue involved, which stands decided in the precedent decisions of the Honble Supreme Court and the applicability of the same for the period subsequent to 1.4.2000 has been upheld. As such, we find no merits in the observation made by the ld. Commissioner (Appeals). Accordingly, we set aside the impugned order and restore the order of the Original Adjudicating Authority. In other terms, the appeal is allowed with consequential relief to the appellant.
[Order dictated & pronounced in open court] ( Archana Wadhwa ) Member (Judicial) ( B. Ravichandran ) Member (Technical) Ckp.1