LexNATIONAL LEATHER CLOTH MANUFACTURING CO. versus UNION OF INDIA & ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2010] 8 S.C.R. 971
NATIONAL LEATHER CLOTH MANUFACTURING CO.
. v.
UNION OF INDIA & ANR.
(Civil Appeal No. 3403 of 2003)
JULY 23, 2010
[D.K. JAIN AND ANIL R. DAVE, JJ.]
Central Excise Act, 1944:
A
B
Section 4(4)(d)(i) -
Valuation of excisable goods for c
assessment of excise duty -
Cost of secondary packing -
Exclusion of - HELD: By including cost of packing in value
of goods, legislature has sought to extend the levy beyond
the manufactured article itself and, therefore, the provision has
to be strictly construed - Cost of additional packing in the
0
nature of secondary packing cannot be added in the value of
goods in terms of s.4(4)(d)(i) for assessment of excise duty-
Interpretation of Statutes.
The assessee, a manufacturer of coated fabrics, sold
its product to wholesalers at the factory gate in polythene
E
bags. It further packed three rolls in hessian cloth, in order
to send the same to up-country customers. The assessee
made a claim for refund of the amount representing
differential excess duty on account of cost of hessian
cloth used in further packing. The claim was rejected by
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the Revenue on merits and also as barred by time. The
High Court dismissed the assessee's writ petition.
In the instant appeal filed by th2 assessee, the only
question for consideration before the Court was:
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"whether the cost of packing of fabric in hessian cloth,
which according to the assessee, is not required for sale
of their goods at the factory gate and is necessitated to
protect the fabric from damage during the course of
971
H
972
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A transportation to up-country customers is includible in
the assessable value of the coated fabrics manufactured
by the assessee for the purpose of levy of excise duty?
Partly allowing the appeal, the Court
B
HELD: 1.1 As per s.4(4)(d)(i) of the Central Excise Act,
1944, the cost of packing is to be included in working out
the value of the goods, unless the packing is of a durable
nature and is returnable by the buyer to the assessee. By
inciuding the cost of packing in the value of goods, the
C legislature has sought to extend the levy beyond the
manufactured article itself and, therefore, the provision
has to be strictly construed. Although the provision is
clear and unambiguous, yet the concept of "primary
packing" and "secondary packing" was evolved by this·
o Court in Bombay Tyre International Ltd.* The test laid down
was that it is only the cost of packing ordinarily required
for selling the goods in the course of wholesale trade to
a wholesale buyer at the factory gate which would be
includible in the value of the goods and not the cost of
E any additional or special packing. [para 11-12) [978-E-H;
979-A-C]
*Union of India & Ors. Vs. Bombay Tyre International Ltd.
& Ors. (1984) 1 sec 467, relied on.
F
1.2 The cost of secondary packing in hessian cloth
cannot be included in the value of the goods in terms of
s. 4(4)(d)(i) of the Act, {or the purpose of assessment of
excise duty. Since, admittedly, the fabric manufactured
by the assessee was sold by the assessee to the
G wholesalers at the factory gate only in polythene bags,
the further packing of three rolls in hessian cloth for the
convenience of the
up-country customers
in
transportation of the goods was not iti the course of
normal delivery to the customers in the wholesale trade
H at the factory gate and was, therefore, not required to
NATIONAL LEATHER CLOTH MANUFACTURING CO. 973
v. UNION OF INDIA & ANR.
make the product marketable. [para 16] [980-F-H; 981-A]
A
Commissioner of Central Excise, Allahabad & Ors. Vs.
Hindustan Safety Glass Works Ltd. & Ors. 2005 (2) SCR 229
= (2005) 3 SCC 468; and Union of India & Ors. Vs. Godfrey
Philips India Ltd. 1985 (3) Suppl. SCR 123 = (1985) 4 SCC
B
369; Geep Industrial Syndicate Ltd. Vs. Union of India 1992
(61) E.L.T. 328 (S.C.) - relied on.
Commissioner of Central Excise, Calcutta Vs. Hindustan
National Glass & Industries Ltd. 2005 (2) SCR 744 = (2005)
3 sec 489 - cited.
c
Case Law Reference:
1984 (1) sec 467
2005 (2 ) SCR 229
2005 (2 ) SCR 7 44
referred to · para 7
relied on
para 7
cited
1985 ( 3 ) Suppl. SCR 123 relied on
1992 (61) E.L.T. 328 (S.C.)
relied on
para 7
para 13
para 14
'
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3403 of 2003.
D
E
From the Judgment & Order dated 10.07.2002 of the High
Court of Judicature at Bombay in writ PetitExcerpt shown. Read the full judgment & AI analysis in Lexace.