TMI Blog2000 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ed "in HDPE bags" on payment of duty on the basis of assessable value derived from Hindustan Lever's (hereinafter referred to as trader) sale price. Admitted position is that there is no buyer at the time when goods are removed from the assessee (appellant) factory. The issue involved is the claim of deduction of the cost of HDPE bags under Section 4(4)(d)(i). The invoices issued by the traders from their depot to their customers bear following remarks :- "Deliveries of Detergent Powder, and scourer powder will be made in High Density Polyethelene HDPE bags. The HDPE bags being durable in nature are capable of being reused by us. On return of these bags to us in old but reusable condition the cost thereof recovered as part of the price of the goods sold to you will be reimbursed by us to you". 3. We have heard both the sides. The ld. Advocate for the Appellants submitted :- (a) Relying upon K. Radha Krishaniah case 1987 (27) E.L.T. (598) (SC) and Mahalaxmi Glass, 1908 (36) E.L.T. 727 (SC), Bombay High Court decision in Ajit Glass Works, 1987 (31) E.L.T. (615) and Mysore Cement 1988 (37) E.L.T. 556, Birla Jute Manufacturing Co., 1980 (6) E.L.T. 593 (MP), J.K. Cement Works, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting agent on payment". (vii) Guljag Chemicals Plastics (P) Ltd. v. CCE, 1993 (63) E.L.T. 710 (Tri). "Deliveries of wheel detergent powder, sunlight detergent powder, Vim and Surf 500 gms. carry bag will be made in High Density Polyethylene (HDPE) Bags. The HDPE Bags being durable in nature are capable of being returned to us if therefore, these bags are returned to us in old but reusable condition, the cost thereof recovered as part of the price of the goods sold to you will be reimbursed by us to wholesaler". (viii) How the return ability has been interpreted by the Hon'ble Supreme Court/High Courts and Tribunals:- Jayant Paper Mills Ltd. v. Collector Central Excise, Vadodara, 1996 (88) E.L.T. 545. The Show Cause Notices did not propound a case that the invoices or the rubber stamp endorsement on the invoices were the result of a subsequent manipulation, nor do the impugned orders contain any such suggestion. We, therefore, take it that the invoices with the endorsements are genuine documents. If that be so, they reflect an agreement between the parties regarding the return ability of the containers. Hence, the packing material in these cases would attract the exclusion c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied. This clearly establishes an arrangement between the assessee and the purchasers of Cement, under which the gunny bags can be returned by the purchasers to the assessee. Further, in case the buyer chooses to return the packing the assessee will be obliged to accept the case and refund the stipulated amount. In order to attract the provisions of Section 4(4)(d)(i) of the Act, it is not necessary to show that the gunny bag packing has actually been returned, and that it is only necessary to show that the packing is returnable by the purchasers to the assessee. (xii) The Hon'ble Bombay High Court in the case of Sathe Biscuits and Chocolate Company Ltd. and Another v. Union of India and Others, 1984 (17) E.L.T. 39 (Bom.) has held as follows :- "The proposition at first sight appears to be quite attractive. But as already pointed out, in the context in which the word "returnable" is used and is preceded by the word "is" it positively indicates that there has to be a term of the contract which makes it obligatory on the manufacturer to accept the container of the packing when the same is returned if it is of a durable nature and is returnable by the buyer, the Legislature was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acking which is of a durable nature and is returnable by the buyer to the assessee". (Emphasis supplied) This would admit the coverage to all kinds of packing material which is of a durable nature and which is returnable, the exact actual return is not envisaged. However the return should be from the buyer of such packed excisable goods to the assessee by such buyer at the time of removal of the goods. In the present case, there is no arrangement or an agreement for actual return from the buyer at the time of removal to the assessee. The arrangement or agreement is only between the 'trader' who had got the goods manufactured from another processor and such trader's buyer (customer) and the assessee's buyer is not returning the goods. Therefore, the benefit of coverage under Section 4(4)(d)(i) and subsequent deduction of amount on account of HDPE bags returned/returnable by the buyer (customer) of the Trader to the Trader as per the 'Terms' on the invoice of a contract between them (Traders and his customers) will not be covered by the provisions of Section 4(4)(d)(i) : Since 'Time of Removal' in the Section would determine the nature of buyer and would therefore exclude 'any subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other subsequent profit or expenses. It is necessary to include the processor's expenses, cost and charges plus profit, but it is not necessary to include the trader's profit who gets the fabrics processed, because those would be post manufacturing profits". Therefore, deductions only on account of traders profit would be only eligible. No other deductions would be permissible, if value is to worked out from the Traders Sale price, as in this case. Any deduction given on account of refund of cost of HDPE bags to a buyer (customer) by a Trader would be eating into the 'Traders' profit as it would be a cost. Any deduction allowed on this account would be granting deductions of cost of manufacture of excisable goods in such cases. Since the goods at the factory gate are always, admitted to delivered, packed in HDPE bags this packing is essential packing where cost, whatever they may be, have to be added, to arrive at the value at the time of removal by a processor will have to be included. Thus the deductions on the account of HDPE bags costs are not permissible. 6. In view of the findings herein above, the reference is answered as follows : - The cost of HDPE bags, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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