By TIOL News Service

MUMBAI, MAY 20, 2014: THIS is a Revenue appeal filed in the year 2004 against the order passed by the CCE, Pune-I dropping a demand of Rs.20.71 lakhs.

The facts are that the respondents are engaged in the manufacture of glass bottles. They sell the glass bottles by packing them in gunny bags or in plastic crates supplied by the buyers or in plastic crates purchased by them. In respect of the bottles supplied in gunny bags, assessable value declared was higher and the cost of bottle was declared as Rs.4.78 per bottle. In respect of sale in plastic crates supplied by the buyer, the assessable value was declared at Rs.4.54 per bottle. The sale of bottle in gunny bags accounted for 45.67% whereas the sale in plastic crates was slightly less.

Apparently, without understanding the nuances as to why the cost of the bottle was different when sold in different packing/packaging material, the Revenue took a view that the assessable value of the bottles sold in plastic crates should be enhanced at par with those sold in gunny bags.

A simple way to demand differential duty, one must admit.

The adjudicating authority dropped the demand by observing that since the plastic crates are durable and returnable in nature, the value of such crates should not be included in the assessable value.

The Revenue may have been confused with this order but nonetheless knew for sure that the demand raised had been set aside and so they filed an appeal before the CESTAT.

The assessee did not turn up for the hearing and the Revenue representative narrated the allegations.

The Bench observed -

“5. Section 4(4)(d) of the Central Excise Act stood at the relevant time provides that the “value”, assessable to any excisable goods, - where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.” Therefore, it is clear that cost of packing of a durable and returnable nature cannot be included in the assessable value. It is not in dispute that the plastic crates are durable in nature and these have been supplied by the buyer to the assessee. In view of the clear position in law, we do not find any merit in the appeal filed by the Revenue. Accordingly, the same is dismissed as devoid of merits.”

In passing : Hope the Revenue does not take the matter further! By the way, the allegation in the first place was…

(See 2014-TIOL-809-CESTAT-MUM)