MAHALAKSHMI GLASS WORKS (P) LTD. versus COLLECTOR OF CENTRAL EXCISE, BOMBAY

Citation: [1988] SUPP. 1 S.C.R. 587 · Decided: 26-07-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

Judgment (excerpt)

MAHALAKSHMI GLASS WORKS (P) LTD. 
v .. 
COLLECTOR OF CEN>RAL EXCISE, BOMBAY 
JULY 26, 1988 
[SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.) 
Central Excises and Salt Act, 1944: Section 4(4)(d)(i)-Assessing 
of value in relation to. excisable goods-Whether price includes cost of 
packing-Arrangement between buyer and assessee for return of such 
packing is essential to determine the includibility. 
The appellant manufactured various types of glass Mltles which 
were assessed to duty under Item No. 23A of the Central Excise Tariff. 
It sold the glass bottles to the customers on wholesale basis packed iri 
gunny bags and cartons which were durable and returnable. According 
to the appellant it has been paying duty on glass bottles on the basis of 
the" assessable value which included ·the cost of packing materfal, 
namely, the gunny bags and cartons. The returned 11\lnny bags and 
cartons were re-used by the appellant. 
The appellant submitted for approval, price list in regard to the 
glass bottles manufactured by it showing separately the price at which 
the goods were actually sold and the cost of packing. Returning the 
price list duly approved; the Superintendent of Central Excise noted 
therein that the price should be inclusive of .the cost of packing and 
packing charges in terms of Section 4(4)(d) of the Act. The appellant 
was paying duty on the cost of packing under protest and lOdged claims 
of refund. As the appellant did not receive either the refund or any 
intimation rejecting the claim for refund, it tiled a writ petition before 
the High Court which remanded the case back to the Assistant Collector 
for deciding the matter after giving the appellant fair and adequate 
opportunity to adduce evidence. 
The Assistant Collector, after considering the written statements 
filed by the appellant rejected the appellant's claim for refund and 
demanded duty for the subsequent periOd. The appellant tiled an 
• appeal before the Collector of Central Excise (Appeals) which was 
rejected. The appeal filed before the Customs Excise and Gold 
(Control) Appellate Tribunal was also dismissed. This appeal under 
Section 35L of the Act is against the Tribunal's judgment. 
587 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
588 
SUPREME COURT REPORTS 
[1988] Supp. 1 S.C.R. 
Dismissing the appeal, 
HELD: 1. In view of the facts of the case, and the expressions 
used in Section 4(4)(d)(i) of the Act, there being no evidence of the 
agreement that the cartons and gunny bags were returnable, the Tri-
bunal was right in coming to the conclusion that the cartons and gunny 
bags were not returnable in the accepted sense of the term. [S92G, B-C I 
2.1 The appellant manufactured glass bottles and delivered these 
in two types of packing, namely, in open crates and in cartons and 
gunny bags. So far as the crates were concerned, the same belonged to 
the appellant. The customer was billed for the cost of glass bottles only. 
C The crates were returnable to the appellant within 30 days. The revenue 
has not included the cost of such crates in the assessable value. The 
revenue has also not included the cost of packing, if any, supplied by the 
customer himself. There was no dispute about these packings. So far as 
the packings in cartons and gunny bags were concerned, it was noted.by 
the Tribunal, that these belonged to the appellant but their cost was 
D realised from the customer along with the cost of glass bottles. It cannot 
be said that the packing is returnable by the buyer to the assessee unless 
there is an arrangement between them that it shall be returned. Actual 
return or extent of return is not relevant. What is necessary is that if the 
buyer chooses to return the packing, the seller should be obliged to 
accept it and refund the stipulated amount. In this case there was no 
E clause about returnability of the cartons and gunny bags. ls91B-F J 
2.2. So far as the question of durability is concerned, there can-
not be such controversy about it, but a question has been raised as to 
what is the meaning and connotation of the word "returnable". What 
• 
Section 4( 4)(d)(i) excludes from computation in cost of packing which is 
F 
of a durable nature and is returnable by the buyer to the assessee. The 
packing must be one which is returnable by the buyer to the assessee 
and obviously that must be under an arrangement between the buyer 
and the assessee. It is not the physical capability of the packing to be 
returned which is the determini

Excerpt shown. Read the full judgment & AI analysis in Lexace.