IMPORTANT POINT
It is only the cost of packing ordinarily required for selling the goods in the course of wholesale trade to a wholesale buyer at the factory gate which would be includible in the value of the goods and not the cost of any additional or special packing.

JUDGMENT

D.K. Jain, J. —

1.This appeal, by special leave, is directed against the judgment and order dated 10th July 2002, passed by the High Court of Judicature at Bombay, whereby the High Court has dismissed the writ petition filed by the appellant (for short “the assessee”) and affirmed the order passed by the Assistant Commissioner of Central Excise, Bombay-II (“the Adjudicating Authority” for short), rejecting the claim preferred by the assessee for refund of the excess amount of excise duty paid by them as time barred as also on merits on account of disallowance of post manufacturing expenses for the purpose of valuation of the goods in terms of Section 4 of the Central Excise Act, 1944 (for short “the Act”) as it existed at the relevant time.

2.The background facts, giving rise to this appeal, are as follows:

The assessee was engaged in the manufacture of coated fabrics. The price of goods declared by the assessee in the price list, as required under Rule 173C of the Central Excise Rules, 1944 (for short “the Rules”), was approved by the Revenue from time to time. However, for the first time, in the two revised price lists, both dated 12th November 1980, the assessee indicated that prices declared by them earlier contained certain post manufacturing expenses, which had to be excluded while computing the value of the fabric for the purpose of assessment to excise duty. The claim was rejected by the Adjudicating Authority vide order dated 7th January 1981. Thereafter, the assessee, vide their letter dated 7th July 1981, made a claim of consolidated refund, amounting to Rs.40,18,805.60, for the period from 13th November 1977 to 12th November 1980, representing differential excess duty paid by them on various elements of post manufacturing expenses. One of the deductions so claimed, with which we are concerned in this appeal, was on account of cost of material used for packing the final product. Having failed to get any response, the assessee filed a Writ Petition (No.1001 of 1981) in the Bombay High Court seeking appropriate directions for refund along with interest thereon. On 8th February 1982, the assessee revised their refund claim to Rs.40,59,856.40/-. During the pendency of the petition, certain interim orders regarding deposit of the said amount by the revenue and submission of documentary evidence by the assessee before the Adjudicating Authority were passed by the High Court. Eventually, upon consideration of the evidence adduced by the assessee, vide order dated 12th April 1984, the Adjudicating Authority rejected their claim for excluding the cost of polythene bags, printed as well as plain, and hessian cloth used for packing the fabrics. The Adjudicating Authority was of the view that the packing of coated fabrics in polythene bags for delivery to the customers located in Bombay as also packing of three such rolls in hessian cloth and stitching them into one bundle for dispatch to up-country customers was in the normal course of trade and, therefore, there was nothing special about such packing so as to exclude its cost from the value of the fabric. The Adjudicating Authority also held that the refund claim was barred by time.

3.On rejection of the claim, the assessee amended the writ petition in order to challenge the validity of order dated 12th April 1984. As stated above, the order of the Adjudicating Authority has been affirmed by the High Court. Rejecting the plea of the assessee that additional packing of three rolls of fabric in hessian cloth was done at the specific request of the up- country customers in order to protect the packed fabric from damage during the course of transportation and, therefore, at least the cost of such secondary packing should be excluded from the assessable value, the High Court held as follows:

“...in view of the clear finding given by the adjudicating authority to the effect that the Assessee has been uniformly using hessian cloth for all the delivery to the up-country customers