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TMI Blog1996 (1) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... h condition regarding deduction of secondary packing from the assessable value. It was further noticed by the Department that the small packs are mostly removed from the factory gate for marketing or to deliver it to the buyers of the goods in cartons, say, secondary packing which is most essential. Thus, the cost of such packing be it primary or secondary, which is required to make the article marketable would be includible in the assessable value and, therefore, the deduction claimed for secondary packing in the aforesaid price list was not allowable and required to be included in the assessable value. Therefore, in A. No. E/5117/92-A a Show Cause Notice, dated 27-9-1990 was issued to the appellants to show cause as to why the deduction of secondary packing claimed from assessable value in the price list No. 112/1-2-90, 117/12-2-90, 118/20-2-90 and 121/6-3-90 should not be disallowed and the Central Excise Duty on such cost of packing for the period from 1-3-1990 to 31-7-1990 be not recovered from them. The appellants contested the Show Cause Notice, inter alia, on the ground that normally they are selling their paints in metal containers and that the paints can be sold to the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is to say, Metal Containers and hence packing these primary containers in corrugated boxes is not a must or even essential in the case of the appellants. The primary packing, that is to say, Metal Containers were needed to be packed in secondary cardboard corrugated boxes for facilitating smooth transportation of the metal containers and to protect the metal containers from damage. The packing of Metal Containers containing paints in corrugated boxes is not required in the wholesale trade at the factory gate. In other words, his submission was that the appellants are generally packing and removing the goods in metal containers without secondary packing in the form of corrugated boxes/cartons and that only in rare cases that the secondary packing is used occasionally, at the instance of customers, and for the purpose of safety and facility in transit. To support his contention, he cited the case of Collector of Central Excise v. Pond's India Ltd. 1989 (44) E.L.T. 185 (SC): Geep Industrial Syndicate Ltd. v. Union of India, 1992 (61) E.L.T. 328 (SC): Orissa Cement Ltd. v. Collector of Central Excise, Calcutta, 1993 (63) E.L.T. 742 (Tri.) = 1993 (46) E.C.R. 623 (Tri.), and Racold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4 of Central Excises & Salt Act, 1944 provides that where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related person) each such price shall, subject to the existence of the other circumstances specified in Clause (a) be deemed to be normal price of such goods in relation to each of such class of buyers. The above would mean that the sales made to M/s. Berger Paints India Ltd., and M/s. Garware Paints Ltd., by the appellants are treated as sales in the course of wholesale trade. The smaller tins are packed in cardboard cartons for delivery to their buyers by the appellants. This packing is necessary to make the paints marketable, i.e. to say in which the paint is generally sold in the wholesale market at the factory gate with reference to M/s. Berger Paints India Ltd., and M/s. Garware Paints Ltd., I have already held that the sales made to M/s. Berger Paints India Ltd., and M/s. Garware Paints Ltd., as sales made in the course of wholesale trade. Section 4(4) provides where the goods are delivered at the factory gate in a packed condition, the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) has not adverted himself to these contentions in both his impugned Orders. Under these circumstances, we are of the opinion that both the cases should go back to the Collector (Appeals) to record a finding as to whether the packing of the metal containers containing paints in the corrugated boxes is the packing in which it is ordinarily sold in the course of wholesale trade to the wholesale buyer, that is to say, whether such packing is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate. If it is, then its cost is includible in the value of the goods and if it is not, the cost of such packing has to be excluded. 6. In the result, we set aside both the impugned Orders-in-Appeal and remand both these cases to the concerned Collector of Central Excise (Appeals), Ahmedabad, for fresh decision in accordance with law after giving reasonable opportunity of being heard to the appellants. Dated : 10-10-1995 Sd/- (G.P. Agarwal) Member (J) 7. [Contra per : S.K. Bhatnagar, Vice President]. - With due respects to Hon'ble Member (Judicial), my views are different from those expressed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods were being marketed at the factory gate by way of wholesale trade with M/s. Berger Paints in such packing in the normal course. 13. Further, it is apparent from Collector's order that this very practice of marketing in card board cartons, was being adopted by them in case of such sales to M/s. Garware Paints Ltd. also. Therefore, it is the price including the price of the corrugated boxes which has to be considered as the assessable value for the purpose of assessment of central excise duty for this class of buyers. 14. I, therefore, uphold the impugned order and reject the appeal Dated : 31-10-1995 Sd/- (S.K. Bhatnagar) Vice President 15. In view of the difference of opinion between Hon'ble Member (Judicial) and the Vice President, the matter is submitted to Hon'ble President for reference to a third Member on the following point :- "Whether in the facts and circumstances of the case, Section 4 of the Act has to be read as a whole and while doing so, the proviso (i) to Section 4(1)(a) has to be read alongwith 4(4)(d)(i) ; and applied to the declaration in Part II; If so whether the price including the price of the corrugated boxes has to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact had informed the Assistant Collector in their reply to the show cause notice that packing in corrugated boxes is not required in the wholesale trade at the factory gate. There has been no finding on the correctness of this claim either by the Assistant Collector or by the Collector (Appeals). It cannot therefore be said that it is an admitted fact that if there were any sales at the factory gate to M/s. Berger Paints they were in this packing. 21. I therefore propose to answer the question posed as follows. (i) Section 4 of the Act has to be read as a whole; proviso (i) to Section 4 has to be read with Section 4(4)(d)(i), and will apply to prices in part II. (ii) The matter is required to be remanded to determine, as opined by Member (J), whether such packing was essential to render the goods marketable, and whether such packing was used or not with regard to sales, if any, of the goods at the factory gate. Dated : 4-1-1996 Sd/- (Gowri Shankar) Member (T) FINAL ORDER In view of the majority opinion, it is held that :- (i) Section 4 of the Act has to be read as a whole; proviso (i) to Section 4 has to read with Sec. 4(4)(d)(i), and will apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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