By TIOL News Service

MUMBAI, OCT 12, 2015: DURING the period 1.4.99 to 30.6.2000, the assessee cleared multilayered plastic collapsible tubes to M/s Sunshine Cosmetics Limited, Hyderabad , in special boxes over and above the primary packing per the agreement with the said party.

After receiving the material, M/s Sunshine Cosmetics would sell the special packing in the market and remit the sale proceeds to the appellant. The appellant had received Rs. 5,96,475/- as such sale proceeds. The appellant have paid excise duty amounting to Rs. 1,13,070/- on the said amount received from the buyer.

A demand notice was issued to the appellant seeking to include, in terms of clause (d) of subsection (4) of Section 4 of CEA, 1944, the value of the boxes in the assessable value. The total value of the boxes was ascertained as Rs.13,51,542/- and a duty of Rs. 3,06,886/- was demanded on the same.

The duty was confirmed by adjudicating as well as the appellate authority.

Before the CESTAT, the appellant argued that the special packing, in the nature of secondary packing, was for the purpose of transport of multilayered plastics collapsible tubes, which are fragile in nature, and hence had to be protected during the transport. It is further submitted that the cost of secondary packing was not includable in the assessable value in view of the apex court decision in National Leather Cloth Manufacturing Co. Ltd. - 2010-TIOL-53-SC-CX.

The AR reiterated the findings of the lower authorities.

The Bench observed that the issue of secondary packing has been dealt by the Apex Court in the case of Bombay Tyre International Ltd. - 2002-TIOL-374-SC-CX.

After extracting paragraphs 51 and 52 of the said decision, the CESTAT concluded -

"5. Since cost of secondary packing not ordinarily used and given specially at the request of customer, is not includible in the assessable value, the benefit of exclusion of the cost of special packing as a secondary packing has to be allowed to the appellant in terms of Section 4 of the Central Excise Act. The appeal filed by the appellants is consequential allowed."

(See 2015-TIOL-2173-CESTAT-MUM)