TMI Blog2011 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 24.11.2009 of the Customs, Excise and Service Tax Appellate Tribunal [for short "the Tribunal"], Chennai, whereby the Tribunal rejected the appeal filed by the appellant and upheld the order of the Commissioner of Central Excise [Appeals], Chennai. 2. The issue that arises for our consideration in the present case is as to whether the cost of packing charges expended/incurred by the appellant-company is liable to be included in the assessable value of the motorcycles manufactured by the appellant-company. 3. The appellant-company, previously known as M/s. Eicher Limited -unit Royal Enfield Motors, are manufacturing motorcycles falling under Chapter 87 of the Central Excise Tariff Act, 1985. The issue relates to non-inclusion of the value of packing charges by the assessee-company in the assessable value for motorcycles despite the fact that the said motorcycles were cleared by the assessee to the dealers located outside Chennai by sending them to their various depots on stock transfer basis and in packed condition from their factory during the period from April, 1999 to December, 1999. 4. At the time of removal from the factory to depot the motorcycles were cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich also was rejected by the impugned judgment and order dated 24.11.2009 and, therefore, the present appeal was filed in this Court by the appellant-company on which we heard the learned counsel appearing for the parties. 8. During the course of hearing our attention was drawn to Section 4 of the Central Excise Act, 1944 [for short "the Act"], the relevant portion of which is extracted below for better understanding and ready reference:- "Section 4. Valuation of excisable goods for purposes of charging of duty of excise - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: ........................................ ........................................ (4) For the purposes of this section, - (a) "assessee" means the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Philips India Ltd. and Ors. reported at 1985 (22) ELT 306 (SC) and Hindustan Polymers v. collector of Central Excise reported at 1989 (43) ELT 165 (SC). 10. Counsel appearing for the respondent, however, submitted that the aforesaid submissions are untenable in view of the settled position of law in the decision of this Court in the case of Government of India v. M/s. Madras Rubber Factory Limited [supra]. He also drew our attention to the fact that the appellant has been realizing Rs.190/-as packing charges from the buyers, therefore, the entire amount is passed on to the buyers by the appellant-company. He also submitted that the cases relied upon by the counsel appearing for the appellant are distinguishable on facts. In the light of the aforesaid submissions made on behalf of the counsel appearing for the parties we would proceed to discuss and answer the issue raised before us. 11. The provisions extracted hereinbefore from the Central Excise Act would indicate that there is express provision in Section 4 for including the cost of packing in the determination of value for the purpose of excise duty. Sub-Section 4 (d)(i) along with explanation has relevant bearing on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrapper or in a tin container, must be regarded as falling within Section 4(4)(d)(i). That is indeed conceded by learned counsel for the assessee. It is the cost of secondary packing which has raised serious dispute. Secondary packing is of different grades. There is the secondary packing which consists of larger cartons in which a standard number of primary cartons (in the sense mentioned earlier) are packed. The large cartons may be packed into even larger cartons for facilitating the easier transport of the goods by the wholesale dealer. Is all the packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods to be considered for including the cost thereof in the "value"? Or does the law require a line to be drawn somewhere? We must remember that while packing is necessary to make the excisable article marketable, the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself. It seems to us that the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate is the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re International Ltd. case [supra], which is not possible to be wished away and is merely a refinement and is not borne out by the express language of the enactment and, therefore, the same is to be resorted to with care and circumspection. Thereafter, the Court proceeded to discuss the case of Bombay Tyre International Ltd. [supra] and also the decision in Godfrey Philips India Ltd. and Ors. [supra]. Having discussed both the cases, this Court laid down the test in the following terms:- "43...........Whether packing, the cost whereof is sought to be included is the packing in which it is ordinarily sold in the course of a wholesale trade to the wholesale buyer. In other words, 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 liable to be included in the value of the goods; and if it is not, the cost of such packing has to be excluded. ......................." 15. The aforesaid decision was rendered by this Court with respect to "tyres" which also were sold at the factory gate in a packed condition for onward easy transportation. In t ..... 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