The cost of packing in gunny bags is not includable in the assessable value under Section 4 (4) (d) (i) of the Central Excise and Salt Act, 1944, if the gunny bags are returnable by the buyer to the assessee under an arrangement between them.

( 1 ) THE short question involved in this writ petition is whether the cost of packing of cement in gunny bags is not includable in the assessable value under Section 4 (4) (d) (i) of the Central Excise and Salt Act 1944 (hereinafter REFERRED TO to as the Act ).

( 2 ) THE facts giving rise to this petition are that the petitioners, Ms. J. K. Cement Works (hereinafter REFERRED TO to as the Assessee) manufacture ordinary Portland Cement and clear the same duly packed in gunny bags of 50 Kgs. each on payment of appropriate Central Excise duty on ad valorem basis in terms of Section 4 of the Act (as amended in 1973 and which amendment came into force on 1st October, 1975 ). It appears that a revised price list w. e. f. 1. 10. 1975 in pursuance of the amended Section 4 (4) (d) (i) of the Act for ordinary portland cement, without including cost of packing charges on account of gunny bags at the rate of 40. 98 per metric tonne submitted by the assessee to the Superintendent, Central Excise, Chittorgarh was approved on 21. 10-1975. However, the Superintendent, Central Excise, Chittorgarh vide letter dated 31st October, 197 5 (annexure D) revised the price list to the extent of cost of packing charges, ie. . Rs. 40. 98 were also included in the net assessment value for determining the central excise duty. Consequently, the assessee started paying central excise duty at the enhanced rate w. e. f. 1,11. 1975 "under protest" and continued to pay the duty on the enhanced rate upto 8th January, 1976 Admittedly a notification dated 9. 1. 1976 has been issued under sub Rule (1) of Rule 8 of the Central Excise Rules, 1944 and under that notification, the Central Government has exempted grey portland cement from so much of the duty as is equivalent to the duty leviable with reference to that part of the value hereof which represent the cost of packing in which such cement is delivered at the time of removal from the factory. Thus, from 9th January, 1976 cost of packing is not included in the value of cement for charging excise duty. The assessee, therefore, has claimed that since he has paid enhanced rate of duty for the period 1. 11. 1975 to 8. 1. 1976, which according to him amounts to Rs. 11,16,270,31, it is entitled to refund of this amount. The assessee has further challenged the demand amounting to Rs. 5,23,204. 25 for the period 1,10,1975 to 31. 10. 1975. According to the Assistant Collector, this amount of Rs. 5,23,204. 25 for the aforementioned period was not paid as excise duty by the assessee as it has not included the cost of packing charges in the value of the ordinary portland cement and it has paid the excise duty earlier on the revised price list earlier erroneously approved by him on 21. 10. 1975. It may be mentioned that an appeal filed by the assessee against this order of the Assistant Collector to the Appellate Collector was also dismissed on 4. 7. 1977 (annexure-J) and the demand made by the Assistant Collector was confirmed. The Assistant Collector and the Appellate Collector were of the view that the assessee is not entitled to exclude the cost of packing gunny bags in the value of the cement for assessing the central excise duty under Section 4 (4) (d) (i) of the Act as the gunny bags are not returnable by the dealers of cement to the assessee as these are not necessarily to be returned by the purchasers to the assessee and the assessee is not obliged to accept them.

( 3 ) IN counter affidavit, the respondents have, in substance, adopted the same reasoning of the Assistant Collector and the Appellate Collector and stated that the gunny bags cannot be considered as returnable by the purchasers to the assessee and as such Section 4 (4) (d) (i) of the Act is not attracted in this case.

( 4 ) SHRI Ravinder Narain, learned Counsel for the petitioner, submitted that under Section 4 (4) (d) (i) of the cost of packing in gunny bags has to be excluded from the value of the cement as such packing is returnable by the