M/S. JAUSS POLYMERS LTD. Vs. CCE, MEERUT

JUDGEMENT

(1.) THE issue involved in this appeal, filed by M/s Jauss Polymers Ltd., is whether the cost of cartons and labels supplied by their customers is to be included in the assessable value of the plastic pet jars manufactured by them.

(2.) Shri S.D. Gaur, learned Consultant, submitted that cost of pecking material which is supplied by the customers is not includible in the assessable value of the pet jars; that the Apex Court in the case of Hindustan Polymers Vs. CCE : 1989 (43) ELT 165 (SC) observed that where the assessee has sold the goods in bulk and delivered to the factory gate also in drums, the cost of packing materials supplied by the buyer is not includible; that the Court also held that the word 'cost' has a definite connotation and is used generally in contradiction to the expression 'value'; that the clear implication of the use of the word cost is that only packing cost which is incurred by the assessee is to be included, that if the word "cost" is interpreted to include the cost of packing supplied by the customer, it would make the Section 4 of the Central Excise Act unworkable because in making the assessment of the seller, there is no machinery for ascertaining the 'cost' of packing supplied by the buyer. He also mentioned that the normal packing for pet jars is polyethylene bags. The learned Consultant, further, submitted that affixation of labels is not a process amounting to manufacture nor it is a process incidental or ancillary to the completion of a manufactured products; that pet jars are complete and fit for delivery to the market without being affixed with the labels; that the labels contain the name of the manufacturer of the goods to be packed, the product to be packed; that this label can be affixed at the buyer end also and it is only for convenience sake the buyer sends the labels to them for getting pasted on the jars. He placed reliance on the decision in the case of Tekno Engineers and Packers Vs. CCE : 1991 (51) ELT 557 (T) wherein it was held that labelling is not a process in or in relation to the manufacture and packing of washing preparations. Reliance was also placed on the decision in Joint Secretary Vs. Food Specialities Ltd. 1985 ECR 2186 (SC) wherein it was held that value of trade marks affixed on the goods can not be included in the wholesale price for the purpose of determining the assessable value of the goods.

(3.) COUNTERING the arguments, Shri P.K. Jain, learned SDR, submitted that the normal packing for the pet jars manufactured by the appellants is cartons; that the Commissioner has given the very clear and specific findings in the impugned order that cartons are their normal packing which has been accepted by the officials of the appellants as well as their customers; that the ratio of the decision in the case of Hindustan Polymers is not applicable as the goods in the said case were sold in tankers without being packing or contained in drums. The learned SDR, further, mentioned that the cost of labels is to be included in the assessable value as the process of affixing labels on pet jars is incidental or ancilliary to the manufacture of jars. He relied upon the decision of the Apex Court in the case of Sidhartha Tubes Ltd. Vs. CCE 2000 (115) ELT 32 (SC) wherein it was held that the process which even does not amount to manufacture, adds "to the intrinsic value of the product to make up the full commercial value". The Supreme Court held that the element of the cost of galvanisation must form a part of the assessable value of the galvanised black pipe. He also referred to the decision in the case of U.O.I. Vs. J.G. Glass Industries Ltd., : 1998 (97) ELT 5 (SC) wherein it was held that the excise duty is payable on value of printed bottles including printing charges if manufacture of bottles and printing thereon is carried out within the same factory.