THIRD MEMBER ON REFERENCE : SHRI J.H. JOGLEKAR, MEMBER (T) HINDUSTAN NATIONAL GLASS & INDUS. LTD. Vs. COMMR. OF C. EX., CALCUTTA-II

JUDGEMENT

(1.) THE captioned first 108 appeals filed by the same appellants arise out of the same common impugned Order of the Commissioner (Appeals) and the last captioned appeal at Serial No. 109 filed by the same appellant firm arise out of another Order -in -Appeal No. 358/Cal. II/88 dated 16 -12 -1988 passed by the same Commissioner. All the appeals filed by the same appellant firm involve a common question of fact and law. As such, all the appeals are being disposed of vide this single Order.

(2.) THE outcome of the said appeals depends upon the decision of the disputed issue, whether the packing charges realised by the appellants from their customers in different situations for different types of packing would form part of assessable value of their final product or not.

(3.) THE appellants are engaged in the manufacture of various types of glass bottles for milk, soft drinks, medicines, hair -oil, beer etc. The bottles manufactured by the appellant firm are used by the various manufacturers of the consumer product for packing of their goods. According to the appellant firm, these bottles are delivered by them in loose condition at the factory -gate in the course of wholesale trade. In a good number of cases, their buyers want the goods to be packed in some sort of packing for the safe transportation of the goods and to avoid the breakage etc. during transit. Whereas in some cases, the buyers send their own packing material like gunny bags, wooden cartons, wooden crates etc., in some cases, they buy the packing materials on behalf of their customers who reimburse the cost of the same. Wherever the packing material is supplied by the buyers viz. cardboard boxes and wooden crates etc. at their own cost, only ex -factory prices for the sale of the goods is being realised by them as the sale is in loose condition and it is the headache of the customer to provide any type of packing to ensure safe transportation of the goods. They only charge some extra sums termed as initial packing in lieu of this extra services rendered at the buyers request by way of labour charges etc. after putting the bottles in the boxes/crates supplied by their customers and also towards the costs of stores material and other related expenditure such as cost of pins, gum tape, coir string and sutti etc. No initial packing charges were being realised by them prior to April, 1977 and also in those cases where the goods were delivered in loose condition without any packing whatsoever at the factory gate. It is also the appellants contention that even where the packing material is being provided by them at the behest of the buyer, the same is invariably durable and returnable justifying its non -inclusion in the assessable value. As per the appellants, their price -lists were approved without the inclusion of packing charges though these charges were reflected in the price -list depending upon the type of packing the customer opted for. As per the facts on record, the appellants were served with a show cause notice dated 31 -12 -1970 by the Department raising demand of duty of Rs. 21,721.95 on packing undertaken by the appellants during the period from 1st January, 1970 to 31st March, 1970. Thereafter, a series of demand show cause notices were raised against the appellants for non -inclusion of the packing charges in the assessable value of their final product. The show cause notice raised upto 14 -11 -1975 and the subsequent demands made on the assessment memorandums of RT 12 returns became the subject matter of Writ Petition No. 5002(W) of 1980 before the Honourable High Court of Calcutta when the appellants challenged the attachment of their goods by the Department vide their letter dated 9 -4 -1980. The High Court vide its Interim Order dated 30 -4 -1980 appearing at page 537 of the paper -book ordered as under : -