Per Justice K.K. Usha :

In this appeal at the instance of the assessee the only issue arising for consideration is whether the cost of packing has to be added for arriving at the assessable of the goods as per the provisions contained under Section 4 of the Central Excise Salt Act, 1944. Clause (d) of sub-section (4) of Section 4 provides that value in relation to any excisable goods will include cost of packing where the goods are delivered at the time of removal in a packed condition except the cost of packing which is of durable nature and is returnable by the buyer to the assessee. The contention raised by the assessee that the packing of the goods manufactured by it was of a durable nature and is returnable by the buyer to the assessee was accepted by the adjudicating authority. On appeal by the Revenue, the Commissioner (Appeals) took the view that the packing is not durable in nature and therefore, the cost of the same has to be added for arriving at the assessable value of the goods. It is the above order that is under challenge in this appeal.

2. The appellant is engaged in the manufacture of glass sheets in its factory. The glass manufactured in the factory of the appellant are removed from the factory on payment of excise duty thereon. The glass sheets were being packed in wooden crates to ensure its safety for long distance deliveries. There was an arrangement between the appellant and its customers that the appellant would return/pay back an amount of Rs. 2.50 per sq. mtr. if the wooden crates and wooden cases were returned to the customers. The assessee was claiming deduction of an amount of Rs. 6/- per sq. mtr. which comprised of Rs. 3.50 for freight and Rs. 2.50 for the above referred packing charges. The deduction as above, was shown in the price list filed by the assessee under Rule 173-C of the Central Excise Rules. While so, Excise department issued seven show cause notices proposing to recover different amounts of duties from the appellant on the ground that freight and packing charges were not permissible deductions under Section 4 of the Act. Under the seven show cause notices the total amount of Rs. 77,60,826/- was demanded as differential duty. The assessee contended that in view of the agreement between the assessee and its buyers for return of the wooden packing and in view of the fact that such packings of durable nature were being returned to the assessee, the cost of the same is liable to be deducted. The Assistant Commissioner of Central Excise (Audit) accepted the contentions raised by the assessee both on the packing as well as on the freight. It was held that the assessee is entitled to deduction of both as per the provisions contained under Section 4. The Revenue challenged that portion of the adjudication order where deduction was granted in respect of cost of packing, before the Commissioner (Appeals). The Commissioner (Appeals) took the view that the packing used by the assessee is not durable in nature and therefore, the assessee is not entitled to claim exemption taking recourse to the provisions contained under Section 4 (4) (d) (i) of the Central Excise Salt Act.

3. There cannot be any quarrel on the legal position that in order to claim deduction the packing must be of durable nature and is returnable by the buyer to the assessee. As mentioned earlier regarding the second part, there is no dispute in this case. But according to the Commissioner (Appeals) the wooden crates have to be opened/dismantled for taking glass sheets out of it and thereafter the packing is not capable of being used as packing material. Even though the Commissioner (Appeals) has referred to certain decisions in his order, we find that those decisions have no relevance to the issue concerned. Merely because the crates are to be opened for taking out of the glass sheets it cannot be held that thereafter crates cannot be put to use as a packing material at all. It is not a case where the packing is inside a m