Important point
Costs of wooden crates would be includible in value of goods to be packed in crates for assessing excise duty but if as per terms if there was an obligation on seller to take back the crates if buyer chose to return them, value of crates was not to be included.

Judgment

S.N. Variava, J.—This Appeal is against the Judgment dated 14.10.1999 passed by the High Court of Allahabad at Allahabad.

2. Briefly stated the facts are as follows :

The Appellants are manufacturers of sheet glass. The question for consideration is whether the costs of wooden crates, in which the sheet glass is packed, is includible in the assessable value of sheet glass.

3. The relevant portion of Section 4 of The Central Excises and Salt Act, 1944 (hereinafter referred to as ‘the Act’) reads as follows: ­

“SECTION 4. Valuation of excisable goods for purposes of charging of duty of excise.—(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be–

(a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale:

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(4) For the purposes of this section, -

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(d) “Value”, in relation to any excisable goods,-

(i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.

Explanation.—In this sub-clause, ­“packing” means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound.

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4. Thus, as per the statutory provision the cost of packing is includible in the value of the goods unless the packing is of the durable nature and is returnable by the buyer to the assessee.

5. In this case the Appellants filed a price list in which the cost of wooden crates was not included. The Assistant Collector passed orders including the costs of the wooden packing in the assessable value of the glass sheets. The Appeals filed by the Appellants were allowed by the Collector (Appeals) and it was held that the special packing was not necessary for making them marketable and thus the costs is not includible in the value of the glass sheets.

6. It appears that the Assistant Collector still approved the price list only by including the costs of the wooden crates. The Appellants thus filed a Writ Petition in the Allahabad High Court claiming that the action of the Assistant Collector was in defiance of the Order of the Collector (Appeals) and that the Assistant Collector be directed to exclude the costs of wooden crates.

7. It must be mentioned that against the Order of the Collector (Appeals) the Department had filed Revisions before the Central Government. With the constitution of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) the Revisions were transferred to CEGAT. CEGAT disposed off these Revisions by concluding that the cost of wooden crates was not to be includible in the assessable value of glass sheets.

8. However, in the Writ Petition filed by the Appellants the High Court has, by the impugned Judgment, held that the costs of the wooden crates was includible in the value of the glass sheets as it was necessary to put the glass sheets in a condition in which they can be sold in the wholesale trade. The High Court also held that the wooden crates were not durable and returnable. Thus this Appeal.

The questions arise for consideration by us :

(i) Whether the costs of wooden crates is includible in the value of glass sheets; and

(ii)