1990 (5) TMI 122 - AT - Central Excise

Summary

Issues:
- Inclusion of cost of packing in the assessable value of cotton fabrics manufactured by the appellants.
- Interpretation of the term "returnable" in Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.

Analysis:
The primary issue in this case revolves around determining whether the cost of packing, including wooden boxes, hessian, and alkathene paper, used for packing cotton fabrics manufactured by the appellants should be included in the assessable value of the fabrics. The Collector (Appeals) rejected the appellants' contentions that packing is not a process of manufacture and that the packings were returnable by the buyer to the assessee. The Collector (Appeals) held that the packing formed an integral part of the manufacture itself, relying on precedents such as the judgment of the Allahabad High Court and the Gujarat High Court. The Tribunal, after considering the written submissions of the appellants, concurred with the Collector (Appeals) and upheld that the packing is indeed an integral part of the manufacture. The Tribunal referred to Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, which states that the assessable value should include the cost of packings unless they are of a durable nature and returnable by the buyer to the assessee.

Regarding the interpretation of the term "returnable" in Section 4(4)(d)(i) of the Act, the Tribunal cited the judgment of the Hon'ble Supreme Court in the case of A. Radha Krishaiah v. Inspector of Central Excise, emphasizing that the packing must be returnable by the buyer to the assessee under an arrangement between them. The Tribunal noted that the appellants failed to establish any such arrangement with their customers for the return of durable packings. Consequently, in line with the Supreme Court's interpretation, the Tribunal held that the cost of packings was correctly included in the assessable value of the fabrics. Therefore, the impugned order was upheld, and the appeal was dismissed.