K.L. Rekhi, Member (T)

1. A common issue is involved in these 8 appeals and they were heard by us together. This common order will dispose of all of them.

2. The short point in dispute is whether the cost of gunny bags should be included while determining the value of cement packed therein for the purpose of assessment of Central Excise Duty.

3. Before we start the discussion, it would be helpful to state the background of the problem. In regard to determination of value for purposes of assessment of Central Excise Duty, Section 4(4)(d)(1) of the Central Excises and Salt Act, 1944 lays down as under :

"(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 is returnable by the buyer to the assessee"

There is no dispute between the appellants and the department that gunny bag was a durable packing since it was capable of being re-used. The dispute is on the point whether it was returnable by the buyer to the appellants.

4. The period to which the controversy before us relates is from 1-10-1975 to 8-1-1976. During this period, cement was a controlled commodity by virtue of the Cement Control Order, 1967 promulgated by the Central Government under Section 18G and Section 25 of the Industries (Development and Regulation) Act, 1951 for the declared "purpose of securing the equitable distribution and availability at fair prices of cement, the supply and distribution of, and trade and commerce in, cement." Clauses (4) and (8) of the Cement Control Order are relevant for our purpose. We reproduce them below :-

"4. Power to direct sale or transport :

The Central Government may, by order, require any producer to sell cement to such person or class of persons or to transport cement to such destinations by such modes of transport, and on such terms and conditions, as may be specified in the order."

"8. Price at which producer may sell :

No producer shall, himself or by any person on his behalf, sell :-

(a) water-proof (hydrophobic) cement at a price exceeding Rs. 246.65 per metric tonne;

(b) rapid hardening cement, low heat cement, and grey cement of specific surface not less than 3500 cm/g at a price exceeding Rs. 237.65 per metric tonne; and

(c) any other variety of cement at a price exceeding Rs. 214.65 per metric tonne,

free on rail destination railway station plus the excise duty paid thereon :

Provided that in case of packed cement, there shall be added to the price referred to in this clause such charges as may be fixed by the Central Government in respect of packing in jute bags or in any other containers, and different charges may be fixed for the use of new and serviceable second-hand jute bags and for the use of different containers in such packing :

Provided further that in the case of packing of cement in jute bags the producer shall not use serviceable second-hand jute bags in excess of the limit specified by the Central Government from time to time."

On 1-10-1975, the Cement Controller in the Ministry of Industries and Civil Supplies, Government of India, issued a circular as under :-

xxx xxx xxx

Dear Sirs,

The Ministry of Industry Civil Supplies (Department of Industrial Development) have intimated that the charges for packing one metric tonnes of cement in 20 new as well as old bags in the ratio of 50 and 50 per cent respectively for the period 1-10-1975 to 31-12-1975 will be Rs. 40.98 (Rupees forty and paise ninety eight) only. Accordingly, the price of cement packed F.O.R. destination railway station per metric tonne during the aforementioned period will be as under :

X X X

The serviceable second hand jute bags may be collected by the Bag Collecting Agents of the respective cement factories (to be collected by them at the consumers' work site on 'Cash and Carry' basis) and the resale price for the period 9-11-1975 to 31-12-1975 is Rs. 92.54 (Rupees ninety two and p