1. The appellants manufactured pressure cookers falling under Item 54 of the First Schedule to the Central Excises & Salt Act, 1944 (hereinafter called the Act). They submitted a price-list in respect of their products stating the values and this was approved on the basis of declaration made by the manufacturer and contained in the classification list. The departmental authorities later discovered that the party was claiming from their wholesale purchasers, packing charges in respect of corrugated boxes and wooden cases in which their products were packed at the time of clearance. The department alleged that the party collected a sum of Rs. 9,352.00 between 1-8-75 to 31-9-75 in the name of packing charges on the pressure cookers cleared during the said period. There was, therefore, alleged short levy of Rs. 935.20. A show cause notice was issued and it was held that the contentions of the party that packing is a post-manufacturing expense, excludible from the assessable values was not tenable. The demand was accordingly confirmed for Rs. 935.20. In the appeal it was held that packing charges formed an essential part of their assessable value. It was held that the goods are normally delivered in a packed condition. The appeal was rejected.
2. The appellants preferred a revision application which on transfer to the Tribunal is being dealt with as an appeal. In the memorandum of appeal and also before us the appellants have urged that the packing of pressure cookers was not a process incidental or ancillary to the completion of the manufacture and the packing of the cookers first in cartons and then in wooden cases/crates was intended to provide safety to the cookers in transport and the value of such packing should not be included in the assessable value. They sought to contradict the finding of the Appellate Collector that the pressure cookers manufactured by the petitioners are delivered duly packed and that isolated cases (of delivery without packing) cannot be sufficient to establish the contention of the appellants that the pressure cookers manufactured by them are capable of being delivered without packing. They submitted that packing was not a process incidental or ancillary to the process of manufacture, that the real value for levy of excise duty of manufactured product comprised its manufacturing cost plus the manufacturing profit and that packing of pressure cookers was a post-manufacturing operation and packing charges should be excluded for purposes of arriving at a assessable value. They stated that they were recovering the cost of the packing material (used for packing pressure cookers) and this was a post-manufacturing expenses. They further submitted that normally they sell the pressure cookers without wooden crates using only the cartons. Therefore, the cost of such wooden crates should not be included in the assessable value. They relied on two judgments of the Supreme Court, which were well known as Voltas and the Atic cases.
3. On behalf of the respondent, Shri Mahesh Kumar submitted that the value of both the cartons in which the pressure cookers are packed and of the wooden crates should be included in the assessable value of the pressure cookers. He relied on the judgment of the Supreme Court in the matter of Union of India and Ors. etc. v. Bombay Tyre International Limited etc. etc. (reported in 1983 ELT 1896 S.C). He submitted that according to this judgment of the Supreme Court the cost of secondary packing cannot be deducted from the wholesale cash price of the excisable articles at the factory gate. He pointed out that the Supreme Court held that packing of which the cost is included (in the assessable value) is the packing in which the goods are wrapped, contained or wound when the goods are delivered at the time of removal.
In this case, Shri Mahesh Kumar submitted, it is clear that the goods are normally delivered in the wooden crates and therfore the cost of the wooden crates should be included in the assessable value. In support of his arguments he cited the "additional points for consideration" filed by the appellants in the paper book wherein they gave certain statistics of removals.
4. We have carefully considered the arguments of both sides. The matter to be decided is whether or not the cost of wooden crates should be included in the assessable value. The decision depends on whether or not this is the normal packing at the time the goods are removed from the factory. We have taken notice of the findings of the Appellate Collector. We have also considered the appellants' arguments.
5. In the "additional points for consideration" filed by the appellants they say as follows- The goods are normally sold in these cartons from the factory and crating is resorted to only when the goods are to be sent by trucks or by rail to distant places. To illustrate this point, the appellants submit that they cleared 418 pcs in card board cartons during August & September 1975 and 2,230 pcs in wooden crates during the period.
Examination of this statement made by the appellants shows that overwhelming majority of pressure cookers were cleared in wooden crates during the relevant period. Besides, in term of the judgment of the Supreme Court the position is quite clear that the cost of the crates has to be included in the assessable value inasmuch as the appellants have not showed us that crates constitute special secondary packing ordered by the customers. It must, therefore, be taken as normal secondary packing and its value included in the assessable value.