The main legal point established in the judgment is that the provisions in the Cement Control Order for the return of empty cement bags to the manufacturer/seller constituted an arrangement for the return of the empty bags, fulfilling the conditions under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.

( 1 ) IN this writ petition presented by m/s Mysore Cements Ltd. , the following question of law arises for consideration :"whether the packing charges relating to the portland cement manufactured by the petitioner is liable to excise duty under the provisions of the Central excise and Salt Act, 1944. "

( 2 ) FACTS of the case, in brief, are as follow : Section 4 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) was amended in the year 1973 (See Act 22/1973-Ed.) The relevant part of Section 4 of the Act after its amendment, reads:"4. Valuation of Excisable goods for purpose of charging of duty of excise. (4) For the purposes of this section: (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 its returnable by the buyer to the assessee. Explanation : In this sub-clause "packing" means the wrapper, container, bobbin, prin, spool, reel or wrap beam or any other thing in which or on which the excisable goods are wrapped, contained or wound ; (ii) does not include the amount of the duty ot excise, sales tax and other taxes, if any payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods or contracted for sale. "according to clause (4) (d) (i) of Section 4 of the Act generally the cost of packing is to be taken into account while computing the cost of the goods at the stage of manufacture and levy of excise duty. But there is an exception. The exception is, the cost of packing should not be included for levying excise duty if (i) packing material is of a durable nature, and (ii) it is returnable by the buyer to the assessee.

( 3 ) AFTER this section came into force, on the ground that the gunny bags in which the portland cement manufactured by the assessee was being packed, was a durable packing material and was also returnable by the purchaser to the petitioner o excise duty was paid by the petitioner during the period commencing from 1-10-1975 to 27-11-1975. However, when the department demanded the payment of excise duty even on the packing material the petitioner paid the excise duty in respect of the packing charges also under protest from 28-11-1975 to 8-1-1976. On and after 9-1-1976 by the issue of a Notification by the Central government under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, a clear exemption was granted to the cost of packing in respect of grey portland cement. The said notification reads :"g S. R In exercise of the powers conferred under sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the central Government hereby exempts grey portland cement falling under item no. 23 of the First Schedule to the central Excise and Salt Act 1944 (1 of 1944} from so much of the duty as is equivalent to the duty leviable with reference to that part of the value thereof which represents the cost of packing in which such cement is delivered at the time of removal from the factory. No. 8/76 the Assistant Collector, Central Excise, on 20-8-1976 issued a show-cause notice to the petitioner calling-upon it to show-cause as to why excise duty should not be collected from the petitioner for the period commencing from 1-10-1975 to 27-11-1975. Petitioner furnished its reply to the said show-cause notice. Relevant portion of the reply reads : "4. There can be no dispute that the gunny bags are durable in nature as conceded in the show cause notice. In the instant case gunny bags, in which cement is packed, are returnable by the buyers to the assessee in terms of the authorisation issued by the Regional cement Officer. This authorisation directs the purchaser of cement to "please preserve empty cemen