Packing material supplied by buyers should not be included in the assessable value of excisable goods, as per the interpretation of Section 4(4)(d)(i) of the Central Excise and Salt Act, 1944.

K. S. PUTTASWAMY, J.

( 1 ) M/s Alembic Glass Industries Ltd. , Baroda, a public limited company, incorporated under the companies Act, which is the petitioner before us, is engaged in the manufacture and sale of 'glass and glassware' at its two factories, one situated at Baroda and the other situated at whitefield on the outskirts of the City of Bangalore. We are concerned in this case with the whitefield factory.

( 2 ) 'glass and Glassware' manufactured by the petitioner are dutiable to excise duty under the central Excise and Salt Act, 1944 (Central Act No. 1 of 1944) ('the Act' ). In conformity with the act and the Rules made under the Act, the petitioner filed four price-lists before the superintendent of Central Excise, Bangalore, for the period commencing from 1-10-1975 (Exhibit-A1), inter alia, claiming that 'cartons' or 'packing materials' supplied by its buyers and their cost thereto was not includible in the assessable value of excisable goods manufactured and supplied to its wholesale purchasers. On an examination of the said price-lists, the superintendent provisionally accepted the same and allowed the clearance of good without payment of excise duty on the packing material supplied by the buyers.

( 3 ) BUT, the Assistant Collector of Central Excise, IDO No. 23, Bangalore-1, ('assistant collector') on a further examination has issued show cause notice No. C. No. V. 23a (17)18/75 (Exhibit-B) to the petitioner proposing to withdraw or revoke the provisional approval accorded by the Superintendent and subject the cost of such packing material in the assessable value and consequent payment of excise duty under the Act for the reasons stated therein. In this petition under Article 226 of the Constitution, the petitioners has challenged the constitutional validity of section 4 (4) (d) (i) of the Act and the aforesaid show cause notice issued by the Assistant collector.

( 4 ) THE petitioner has urged that Section 4 (4) (d) (i) of the Act as amended by Central Act No. 22 of 1973 was beyond the legislative competence of the Union Parliament. On the show cause notice, the petitioner has urged that the cost of packing material supplied by the buyers was not includible in the assessable value of the manufactured goods supplied by it to its buyers.

( 5 ) IN their return, the respondents have justified the Act and the show cause notice.

( 6 ) IN Union of India and Others v. Bombay Tyre International Ltd. and others AIR1984 SC 420 , (1983 )2 Complj4 (SC ), 1984 (2 )ECC102 (SC ), 1983 ECR653d (NULL ), 1983 (12 ) ELT869 (SC ), 1983 (1 )SCALE521 , (1983 )4 SCC210 , the Supreme Court has rejected the very challenge and has ruled that Section 4 (4) (d) (i) of the act was within the legislative competence of the Union Parliament. In this view, the challenge to section 4 (4) (d) (i) of the Act is liable to be rejected.

( 7 ) ON its case for excluding the 'packing material' supplied by the buyers, the petitioner in para 2 of its petition has stated thus : "the products manufactured by the petitioners are purchased by different industries such as those mentioned above for their use. They are also purchased by independent wholesale merchants dealing in glass and glassware. It is not necessary to pack the glassware for the purpose of sale as they can be sold 'naked'. In fact, to some customers like United Breweries ltd. , Kisan Products Ltd. , Hindusthan Milk Food Manufacturing Co. Ltd. (manufacturers of horlicks) and a few others, these articles are sold by petitioners at the factory gate in the form in which they are 'naked' condition. Some buyers supply packing materials of their own and ask and despatch them. Other buyers require the goods to be packed by petitioners themselves in their packing and dispatch them. The type of packing depends on the customers requirements and instructions. The packing cost at petitioner's factory in Whitefiled ranges between 3. 5% to 16% of the value of the goods depending upon the nature of packi

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