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2015 Supreme(SC) 777
SUPREME COURT OF INDIA
V.GOPALA GOWDA, DIPAK MISRA, JJ.
M/s. Tata Chemicals Ltd. – Appellant
Versus
Collector of Central Excise, Ahmedabad – Respondent
CIVIL APPEAL NOs. 7251-7302 OF 2000
Decided On : 06-08-2015
Headnote:Per Dipak Misra, J.
(a) Central Excise Act, 1944 – Section 4(4)(d)(i) – Returnable – Cost of Packing if returnable exempted – Packing would not be returnable unless there is an arrangement – Physical return of the packing material not necessary – Physical capability of packing to be returned is not the determining factor – What matters is the condition that if the buyer chooses to return the packing, the seller is obliged to accept it and refund the stipulated amount. (Para 10, 14, 17)
(1987) 2 SCC 457; 1988 (Supp) SCC 601; (1989) 4 SCC 323; (2005) 3 SCC 484 – Relied upon
(b) Central Excise Act, 1944 – Section 4(4)(d)(i) – Arrangement – Need not be in writing or in a particular form – It can even be oral – Acceptable if proved and established – When in writing, it should be genuine – Cannot be ignored and held non est merely because it is by means of written communications. (Para 18)
(1989) 4 SCC 323 – Relied upon
(2005) 3 SCC 489 – Referred
Per V.Gopala Gowda, J,
(c) Central Excise Act, 1944 – Section 4(4)(d)(i) – Gunny bags used for packing soda ash by appellant – Have to be returnable in nature and it has to be done under an arrangement between the buyer and the appellant – Value of gunny bags included in final sale price of soda ash – Appellant’s letters not showing any express arrangement with the buyers for return of gunny bags – If the bags are not returned, the alleged arrangement would run contrary to Mahalakshmi Glass Works and K. Radha Krishnaiah – Return of a few bags would not entitle appellant to benefit of exclusion of the cost of all the gunny bags. (Para 6, 7)
(1987) 2 SCC 457; 1988 (Supp) SCC 601 – Relied upon
(d) Central Excise Act, 1944 – Section 4(4)(d)(i) – Burden to prove that the value of the gunny bags is not inclusive and not excisable with the value of the soda ash, lies on the appellant – Appellant has miserably failed to do so. (Para 9)
(2005) 3 SCC 489 – Relied upon
(e) Central Excise Act, 1944 – Section 4(4)(d)(i) – Arrangement to return the gunny bags – Appellant’s letter not containing any terms and conditions which are pre-requisite of any arrangement – Letters also suggesting that buyers are sending their own packing material for which no extra charge is incurred by the assesee – Held, appellant is bound to include the cost of the gunny bags in the overall value of soda ash. (Para 10, 11, 13)
1988 (Supp) SCC 601 – Relied upon
Fact of the case:
The appellant claimed that it had made arrangements for return of the gunny bags in which soda ash were packed, for reuse.
The Tribunal found the argument unacceptable and unsustainable.
Finding of the Court:
The Hon’ble Judges differed in their views.
JUDGMENT
Dipak Misra, J.
In this batch of appeals, the appellant calls in question the assailability of judgment and order dated 6.9.2000 passed by the Customs, Excise and Gold Control (Appellate) Tribunal, New Delhi (for short ‘the tribunal’) in Appeal Nos. E/1073-1090/90-A, E/4285-4289/90-A, E/4293-4294/91-A, E/4296-4322/91-A, whereby the tribunal has not accepted the letters dated 15.12.1970, 01.02.1971 and 02.04.1971 to bring out the arrangement for the return of durable packing, namely, gunny bags, for reuse as packing material for selling the soda ash in bulk. The tribunal has further opined that assessee’s effort to establish that there was an arrangement between the manufacturer and their customers to return the durable packing, namely, gunny bags, and accordingly the claim put forth by them that the value of gunny bags used for packing soda ash manufactured by them should be excluded in finding out the assessable value was unsustainable and hence, unacceptable.
2. The controversy, to be appreciated, requires narration of certain background facts. Dispute with regard to these gunny bags between the assessee and revenue have arisen for the period from 1970 to 1985. As is evident, proceedings for the entire period were taken in three compartments, namely, 1970-75, 1976-1980 and 1981-1985. Initially the dispute related to payment of duty of excise on the value of goods manufactured i.e. soda ash, after exclusion of post-manufacturing expenses. Subsequently, it was settled as a proposition that post-manufacturing expenses as such were not deductible and that the deduction/exclusions could only be in terms of specific provisions contained in Section 4 of the Central Excise Act, 1944 (for brevity, ‘the Act’). On the basis of the aforesaid law laid down, the matters were remanded by this Court for reconsideration.
3. Be it noted, it was for the first period, that is, 1970-75, the matter was remanded to the Assistant Commissioner to decide the issue relating to exclusion/inclusion of cost of packing in determining the value of goods for payment of excise duty under Section 4 of the Act. The claim of the assessee was eventually rejected by order no. 194/2006-Ex-PB dated 14.2.2006 in appeal No. E-480/04. That compelled the assessee to prefer Civil Appeal No. 2988/2006. The said appeal has been disposed of by this Court vide judgment and order dated 21.8.2014. This Court had referred to certain paragraphs of the order passed by the tribunal and thereafter passed the following order:-
“The aforesaid paragraphs clearly demonstrate that the Tribunal has followed the reasoning that it had followed for the period 1981 to 1985. Mr. B.L. Narasimhan, learned counsel for the appellant would contend that the claim of the assessee before the authorities we absolutely different inasmuch as two contentions were raised before the authorities, namely, that excise duty was not leviable on the packing materials supplied by the buyer, and the second, the same was durable and returnable, but, the Tribunal has adverted to the second aspect by expressing its view on the basis of the decision rendered by it pertaining to the assessment years 1981 to 1985 and not adverted to the issue that no levy could have been imposed on packing material, if it is supplied by the purchaser and the said fact proven to the satisfaction of the authorities that it has been used for packing.
Learned counsel for the appellant fairly submitted that he does not intend to press the issue with regard to durability and returnability. He has confined his submission with regard to levy of excise duty on the packing material supplied by the buyer.
Mr. Rohtagi, learned Attorney General, we must appreciably state submitted with all fairness at his command that as far as the first aspect is concerned, if the packing materials are supplied by the buyer, the levy could not have been impsed. The said contention is absolutely correct in view of the law laid down in M/s. Hindustan Polym
