Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Weikfield Products Co. (India) Pvt. ... on 2 February, 1987
Equivalent citations: 1989(22)ECC260, 1987(11)ECR368(TRI.-DELHI), 1987(28)ELT483(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The point of dispute in this appeal is whether the cost of the outer carton packing should be included in the assessable value of the respondents' products or not. The facts, in brief, are that the respondents manufactured prepared or preserved food and confectionery. These products are first packed in a cellophane small bag or pouch which is placed inside a unit carton. A number of such unit cartons are then packed in a bigger outer carton made of corrugated board. There is no dispute that the products manufactured and cleared by the respondents are invariably sold in outer carton packing. The period of the dispute is from 25.3.1982 to 31.10.1982. The Assistant Collector first approved price lists without including the value of the outer carton. Later, he issued a Show Cause Notice on 22.1.1983 demanding duty for the aforesaid period on the basis that cost of the outer cartons ought to have been included in the assessable value. On adjudication, he confirmed this basis but restricted the demand to six months because of the limitation factor. In appeal, the Collector (Appeals) set aside the Assistant Collector's order and, placing reliance on the Supreme Court judgment at 1985 (22) E.L.T. 306 (SC) - Union of India v. Godfrey Philips India Ltd. and Ors., held that the outer carton was used for the purpose of transport only and hence its cost was not to be included in the assessable value. The department is in appeal before the Tribunal against this order.
2. We have heard both sides and have carefully considered the matter. We shall first deal with two legal pleas of the respondents. Their first argument was that having once approved the price lists without including the cost of the outer carton, the Assistant Collector was not competent to review his own order and demand duty for the past period and that he could take a different view only prospectively when a fresh price list was filed before him. The respondents relied on the judgment of this Tribunal reported at 1986 (25) E.L.T. 94 (Tribunal) - Collector of Central Excise, Chandigarh v. Gurumkh Singh & Sons. The relevant paragraph in this judgment reads as under :-
"25. It is also quite clear that re-opening the question of classification must necessarily relate to prospective periods. So far as past periods are concerned, there is no authority, under this Rule, to undo the effect of any decision already taken. Provision in respect of any errors as regards past periods is made elsewhere under the law."
We find that all that the aforesaid paragraph says is that the provision for re-opening the question of classification for the past period does not exist in Rule 173 B of the Central Excise Rules, 1944 but elsewhere under the law. Thus, this paragraph does not say that past assessment cannot be re-opened at all. It only says that for such re-opening, re-course should be had to other provisions by the law. Such other provisions are Sections 11A and 11B of the Central Excises and Salt Act, 1944. Previously, such provisions existed in Rules 10, 10A and 11 of the Central Excise Rules, 1944. There is a more specific judgment of this Tribunal dealing with this aspect of the matter and it is based on High Court judgments cited therein, chiefly - 1981 E.L.T. 114 (Delhi)- Bawa Potteries. This judgment of the Tribunal is reported at 1985 (22) E.L.T. 795 (Tribunal) - Rainbow Industries Pvt. Ltd., Vadodara v. Collector of Central Excise, Vadodara. The majority view arrived at in this judgment of the Tribunal was that demand contrary to approved price list was permissible by the same or successor authority if the earlier approval was found to be erroneous due to non-consideration of material facts or provisions. We respectfully agree with this view. Otherwise, provisions of Sections 11A and 11B in the Act, which provide for demanding duty or giving refund for the past period, would be rendered nugatory. We, therefore, do not accept this argument of the respondents.
3. Their second plea was that the demand related to the period prior to 9.5.1983. By that time, the Supreme Court judgment in the, case of Bombay Tyre International 1983 E.L.T. 1896 (S.C.) had not yet become available and the High Courts, by and large, had taken the view that packing being a post manufacturing activity, the cost of packing was not includible in the assessable value. The respondents pleaded that they should be given the benefit of these High Courts judgments, since the relevant period in their cases was prior to Supreme Court judgment.
We do not agree. It is a settled position in law that all pending disputes have to be resolved in the light of the latest authoritative pronouncement. Since the Supreme Court judgment aforesaid overruled the view taken earlier by the High Courts, it is not open to us to decide the present appeal in the light of those obsolete High Court judgments.
4. Coming to the point on merits, the learned representative of the Department stated that the Collector (Appeals) has mis-read the Supreme Court Judgment in the case of Godfrey Philips India Ltd. and that the respondents' case was clearly distinguishable from that of Godfrey Philips India Ltd.. inasmuch as while wholesale buyers of cigarettes did not require the outer C.P.C. cartons but such cartons had to be used for the purpose of smooth transport of cigarettes from the factory, in the respondents' case the outer cartons were necessary for wholesale sales throughout. We agree with him. The products sold in the present case are food articles. From the point of view of hygiene and preservation, they have to be protected from exposure to elements as well as from contamination with dust, dirt etc. Such protection is not only necessary during transport but also during storage and handling. The outer carton which provides such protection is thus essential for marketing of the respondents' product. They admitted before us that their products are invariably sold in outer carton packing only in all wholesale transactions right down the line. In such circumstances, the ratio of paragraph 19 of the more recent Supreme Court judgment dated 20.12.1986 in the case of Madras Rubber Factory (Civil Appeal No. 3195 of 1979 and others) is applicable and not that of the Godfrey Philips case. Accordingly, we hold that the cost of the outer cartons was includable in the assessable value of the respondents' products.
5. In the result, we allow this appeal, set aside the impugned order-in-appeal and restore the order of the Assistant Collector.