K.L. Rekhi, Member (T)

1. We have heard both sides. The respondents manufactured liquid Chlorine. They supplied it to their customers in Tonners and Cylinders made of steel. The department accepts that these are durable and returnable containers and that their cost is not includible in the assessable value of Chlorine as per Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. The dispute in this appeal of the department is on the deduction of Rs. 100/- in the case of Tonners (800 to 1,000 Kgs. capacity) and Rs. 150/- in the case of cylinders (20 to 100 Kgs. capacity) which the respondents claimed as cost of packing. It is stated in the appeal by the department that this cost of packing claimed by the respondents "was nothing but expenses said to have been incurred by them on account of maintenance of Cylinders/Tenners, service charges etc. which were recovered from the customers by them separately". The department pleads for dis-allowing the deduction of such maintenance and service charges for the containers only on one short ground -

The assessee was already enjoying deduction on the cost of packing under Section 4(4)(d)(i) on the cost of containers which are durable and returnable. There are no provisions to allow any further deductions for any expenditure on the cost of packing as claimed by the assessees which on verification was found to be the expenses for maintenance of the Cylinders/Tenners in which goods were supplied.

The department is conscious that on the same issue an earlier appeal of the department in the present respondents' own case was dismissed by this Tribunal (MANU/CE/0124/1986 : 1986 (26) ELT 265 (Tribunal). Yet, the department has come up with the present appeal for the reason that the Government of India had filed an appeal against the earlier order of the Tribunal before the Hon'ble Supreme Court.

2. on careful consideration, we find no merit in the department's appeal. Once the department accepts that the containers in the present case were durable and returnable and, for that reason, their cost was deductible from the assessable value, the cost has to be the full cost of packing which should take in not only the initial purchase price of the container but also the further expenses on its maintenance and repairs. We find it admitted in the department's own show cause notice dated 2-11-1983, impugned in the present proceedings, that "maintenance and service charges are cost of packing". The department cannot, therefore, reasonably plead that only a part of the cost of packing of durable and returnable containers should be deducted and not their full cost. All that the department can insist on is that in the guise of cost of packing a part of the real, value of the goods should not be kept out of the assessment, by inflating the cost of packing. We find nothing in the record to suggest that the cost of decking was inflated by the respondents.

3. In the circumstances, we dismiss the appeal.