Customs, Excise and Gold Tribunal - Delhi
Bihar Extrusion Co. (P) Ltd. vs Collector Of Central Excise on 21 May, 1990
Equivalent citations: 1990ECR624(TRI.-DELHI), 1990(50)ELT355(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s. Bihar Extrusion Co. Pvt. Ltd. had filed a revision application to the Additional Secretary, Government of India, Ministry of Finance, Department of Revenue, New Delhi being aggrieved from the order passed by the Appellate Collector of Central Excise, Calcutta. After coming into existence of the Tribunal, the said revision application stands transferred to the Tribunal in terms of provisions of Section 35-P of the Central Excises and Salt Act, 1944 to be disposed of as an appeal.
2. Briefly the facts of the case are that M/s. Bihar Extrusion Company Pvt. Ltd., Jamshedpur are manufacturers of aluminium extruded shapes and sections falling under Tariff Item 27 (e) and had filed a price list No. 43 dated 4th November, 1988. The appellants did not include the cost of the packing. A show cause notice was issued to the appellants and in reply the appellants pleaded that the cost of packing should not be added to the assessable value and it was pleaded that in most of the outstations despatches, the goods were sent in hessian cloth, while local consumers resold them without packing and in support of the same an invoice of M/s. Jindal Aluminium Ltd. was shown. The Assistant Collector did not accept the contention of the appellant and had observed that mostly the goods were sent in hesssian cloth which were not of durable nature and were not returnable to the manufacturer and he had rejected the claim of the appellant and had ordered that the value of the hessian cloth has to be added for ascertaining the assessable value.
3. Being aggrieved from the aforesaid order, an appeal was filed before the Appellate Collector of Central Excise, Calcutta. The Appellate Collector of Central Excise had confirmed the findings of the Assistant Collector and being aggrieved from the aforesaid order, the appellant has come in appeal before the Tribunal.
4. Shri K.P. Chaudhry, the learned advocate who has appeared on behalf of the appellant pleaded that the appellant's case is covered by the Tribunal's decision in appeal No. E/2547/87-A vide Order No. 469/88-A dated 9th September, 1988 in the case of Collector of Central Excise, Patna v. M/s. Bihar Extrusion Co. (P) Ltd. Shri Chaudhry pleaded that the Tribunal had remanded the matter to the Assistant Collector in view of the decision of the Supreme Court in the case of M/s. Wood Crafts Product Ltd. reported in 1988 (35) ELT 495 (Tribunal) and M/s. Indian Oxygen Ltd. reported in 1988 (36) ELT 723 (SC). He pleaded that in view of the earlier decisions, the matter may be remanded to the Assistant Collector.
5. Shri Gandhi Dass, the learned JDR who has appeared on behalf of the respondent stated that in view of the earlier decision of the Tribunal, he has got no objection to the remand of the matter to the Assistant Collector.
6. We have heard both the sides and have gone through the facts and circumstances of the case. In para No. 6 the Tribunal in its earlier order No. 469/88-A dated 9th September, 1988 in the case of Collector of Central Excise v. M/s. Bihar Extrusion Co. (P) Ltd. appellant's own case, had observed that: "As regards packing, the record shows that the respondents made their local deliveries in loose condition and used the packing only for long distance transport. If it is established that packing was not essential for deliveries at the factory gate, the packing used for long distance deliveries would have to be excluded." In view of the observations of the Tribunal, we would like to observe that there is no evidence on record to the effect that whether packing was essential for deliveries at the factory gate or not. In view of the earlier decision of the Tribunal, we are of the view that the matter should be remanded to the Assistant Collector having jurisdiction. Hon'ble Supreme Court in the case of Collector of Central Excise v. Pond's India Ltd. reported in 1989 (44) ELT 185 (SC) had held that "the question is not for what purpose the particular kind of packing is done but the test is whether the particular packing is done in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate. In other words, the correct position seems to be that the cost of that much of packings, to be either primary, secondary or even subsequent to secondary, which are required to make the articles marketable would be in-cludible in the assessable value of the goods for assessment to excise duty." Paras No. 12, 13 and 14 of the said judgment are reproduced below: -
"12. Section 4(4)(d)(i) of the Act lays down that where goods are delivered at the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary packing and secondary or further subsequent packing. However, a restriction was read into the wide language of the clause by this Court in the Bombay Tyres International case (1984 I SCR 347). Posing the question whether the cost of all packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods, should be included in determining the assessable value or a line should be drawn somewhere, the Court indicated that while the cost of primary packing was indisputably includible, the position would be different in regard to secondary packing. The Court observed that "the degree of secondaray packing which is necesssary 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. "If any special secondary packing is provided by the assessee", the Court observed, "at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such packing shall be deducted from the wholesale cash price." The exclusion indicated by these words is very limited and clearly does not extend to the cost of any packing in which the goods are generally sold by the manufacturer in the wholesale market.
13. "However, the reference in Bombay Tyres (supra) to secondary packing "which is necessary" led to a further refinement in Godfrey Philips and Geep. In these cases, the conclusion of the Court was that the cost of packing of the goods in "corrugated fibre containers" and "wooden boxes" respectively was not includible in arriving at the assessable value. Had the matter been free from authority, one might have been inclined to agree with the reasoning of Bhagwati, C.J., that the condition of packing in which the goods are usually placed in the wholesale market would be conclusive of the issue and that, the condition in which the goods are generally placed in the wholesale market notwithstanding, at the theoretical enquiry by the excise authorities into the purpose of such packing or as to whether such packing was "necessary" or not would be totally uncalled for. Indeed, this was the test applied by one of us (Mukharji, J.) in Hindustan Polymers (supra) for holding that the cost of drums for packing fusel oil was not includible in the assessable value because the goods viz. fusel oil was generally sold in the wholesale market in the raw state, without any packing whatever, leaving it to the wholesale consumer to draw it from the manufacturer's tanks into his trucks, containers or drums. It will be appreciated that if this position were not to be accepted and an enquiry were to be made as to whether such general packing is "necessary" or not, such an investigation might operate both ways. For example, on that basis, it could be argued, in the Hindustan Polymers case that though the goods were actually sold wholesale in a free condition, a container is "necessary" from a theoretical stand point to place the fluid goods on the market and that, therefore, the cost of the drums would have to be included in the assessable value. But this was not the view taken by this Court. There is, therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assesssable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market.
14. It is, however, urged for the respondent that such an enquiry has been held necessary by Godfrey Philips. But, as pointed out by my learned brother, even the majority decision in that case does not go to the length suggested on behalf of the appellant and justify an investigation as to the state of packing in which the goods could be placed in the market. That would only be an exercise in theoretical speculation. On that basis, for instance, in the present case, it could be said, for the same reasons as have been given by the Tribunal, that the goods could be collected from the factory even in units of tin containers, leaving it free to the purchasers to make their own arrangements to pack them in cardboard cartons to convey them to their place of business. This would render even the cost of the first outer packing of cardboard containers irrelevant in the determination of the assessable value. That was not the contention even of the respondents and indeed, if carried to its logical conclusion, would render the cost of all packing, other than primary packing, excludible from the assessable value. It seems to me, therefore, that what is to be really seen is this: What is the condition of packing considered by the manufacturers, having regard to the nature of the business, the type of goods concerned, the unit of sale in the wholesale market and other relevant considerations, to be generally necessary for placing the goods for sale in the wholesale market at the factory gate. In Godfrey Philips and Geep, this Court was concerned with a special type of packing which seemed intended more to protect the packed goods against injury or damage rather than to enable it being placed on the market. Indeed, in Godfrey Philips, this was a factual position that had been accepted by the departmental authorities earlier for a period of a little over six years which they later wanted to go back upon. Can the same be said of the goods and the packing with which we are concerned here is a question to be decided on the facts, as the Appellate Controller did and not as a proposition of law settled by, or the automatic consequence of the decision in the Godfrey Philips case, as seems to have been done by the Tribunal and as is being argued for the respondents. I would, therefore, agree that the matter should be remanded to be reconsidered in the light of our observations."
7. In view of these observations, we set aside the impugned order and remand the matter to the Assistant Collector having jurisdiction to readjudicate the same in view of our above observations.
The appeal is allowed by way of remand.