JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2043 (NM) of 1989.

From the Judgment and Order dated 28.11.1988 of the Customs. Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E.A. No. 3302/87A in Order No. 558/88-A.

K. Parasaran, Attorney General, A.K. Ganguli and P. Parmeshwaran for the Appellant.

Soli J. Sorabji, S. Ganesh, R. Narain, P.K. Ram and D.N. Mishra for the Respondent.

The following Judgments of the Court were delivered

SABYASACHI MUKHARJI, J. This is an appeal under section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter called ’the Act’) from the judgment and order of the Cus- toms, Excise & Gold (Control) Appellate Tribunal, New Delhi, (hereinafter called ’the Tribunal’) date 28th November, 1988.

M/s. Ponds India Ltd., (hereinafter referred to as ’the respon- 482 dent’) used to manufacture talcum powder and face powder falling under tariff item 14F of the Central Excise Tariff, which are now under sub-heading No. 3304.00 and were clear- ing the same on payment of duty. The assessee claimed deduc- tion of cost of packing for transportation in respect of small packings of 15, 18, 20, 30, 40 & 100 gms. powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was approved provisionally by the office of the Asstt. Collector of Central Excise, Pondicherry. The said approval was by an order dated 10th December, 1985. It is alleged that it was later noticed that the small packs were first packed in dozen and then packed in secondary packings for easy transportation to the wholesale dealer, and it was found that the secondary packings were a must for delivery to the wholesale dealers, (emphasis indicated). The Asstt. Collector came to the conclusion that the amount as claimed by the respondent was not deductible as per this Court’s decisions in respect of postmanufacturing expenses. In the premises, a show-cause notice was issued to the respondent on October 30, 1986 and a demand was made for the differen- tial duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 for the period from December 2, 1985 to May 31, 1986. The Asstt. Collector by his order dated Febru- ary 27, 1987 disallowed the respondent’s claim for exclusion of the cost of packing of transportation and thus rejected its claim. He inter alia, observed as follows:

"Therefore, I consider that the cost of sec- ondary packings viz, card board cartons are rightly includible in the assessable value of items mentioned in PL No. 405/85-86 and 406/85-86 dated 10.12.85 under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, and the provisional assessments are to be finalised accordingly. The assessees are also liable for payment of differential duty of Rs.3,46, 15 1.92 as demanded in the show cause notice cited under Section 11A of the Central Excises and Salt Act read with rule 9B of the Central Excise Rules, 1944."

There was an appeal to the Collector of Customs which was disposed of by an order dated 15th September, 1987. It is necessary to set out the said observations of the Collec- tor, in view of the contentions sought to be raised in these matters. He, inter alia, observed as follows:

"I have carefully considered the submission of the appellants made in their grounds of appeal and repeated during 483 personal hearing. I find that the appellant’s claim is solely based on the judgment of the Hon’ble Supreme Court in the case of Godfrey Philips and which has been followed by differ- ent High Courts also from time to time. First of all, it is necessary to consider whether the goods sold by the appellants viz. talcum powder and face powder required an outer carton packing for purpose of safety in trans- it, which was the case before the Hon’ble Supreme Court in case of M/s Godfrey Philips. It cannot be disputed that talcum powder and face powder are packed either in metal con- tainers or in plastic packing also of card- board packings, which are inner cartons and contain one d