UNION OF INDIA & ORS. versus GODFREY PHILIPS INDIA LTD. ETC, ETC.

Citation: [1985] SUPP. 3 S.C.R. 123 · Decided: 30-09-1985 · Supreme Court of India · Bench: P.N. BHAGWATI

Judgment (excerpt)

123 
UNION OF INDIA & ORS, 
Vo 
GODFREY PHILIPS INDIA LTD. ETC, ETC. 
~EPTEMBER 30, 1985 
[P.N. BHAGIATI, CJ., R.S. PAT!JAK AND AMARENDRA NATH SEN, JJ.] 
Central Excise and Salt Act 1944, Section 4(4) (d) (i) and 
~xplanation thereto - 'value' - 'in a packed condition' - CoBt of 
such packing - Whether to be included for excise duty - Primary 
packing and secondary packing - Difference between. 
Cigarettes - Manufactured and packed in paper/card board 
packets and then in cartons - Cartons packed in corrugated fibre 
board containers - Cost of corrugated fibre board containers 
Exclusion for levy of excise duty - Whether arises. 
Promissory estoppel 
Doctrine of promissory estoppel -
Applicability 
of -
Explained. 
Constitution of India 1950, Article 141 
Supreme Court - Enunciation of law by a Bench of the Court 
- Whether Co-ordinate Bench entitled to express disagreement. 
Words and Phrases 
'Value' - 'in a packed condition' - Meaning of -
Central 
Excise and Salt Act, 1944 Section 4(4)(d)(i). 
The respondents in the appeals were manufacturers of 
cigarettes• They manufactured cigarettes in their factories and 
the cigarettes 
so 
manufactured 
were 
packed 
initially in 
paper/card board packets of 10 and 20 and these packets were then 
packed together in paper/card board cartons/outers. These car 
tons/outers were then placed in corrugated fibre board containers 
and these corrugated fibre board containers filled with cartons/ 
outers containing packets of cigarettes of 10 and 20 were deli-
vered by the respondents to.the wliolesale dealers at the factory 
gate. 
The wholesale price charged by the respondents for the 
cigarettes sold to the wholesale dealers included not only the 
A 
B 
c 
D 
E 
F 
G 
H 
A 
124 
SUPREME COURT REPORTS 
[1985] SUPP.3 s.c.R. 
cost of primary packing in packets of 10 and 20, but also the 
cost of secondary packing in cartons/outers and the cost of final 
packing in corrugated fibre board containers. 
On May 19, 1976 the Cigarette Manufacturers Association 
B made a representation to the Central Board of Excise and Customs 
pointing out that corrugated fibre board containers "are not an 
integral or essential requirement for the sale of cigarettes and 
are used for the sole purpose of protecting cigarettes from any 
damage that may arise during transportation", and that the cost 
of such corrugated fibre board containers should not therefore be 
included in the value of goods for the purpose of excise duty. 
C The Board accepted this plea of the Association and by a letter 
dated 
May 
24, 
1976 
intimated 
to 
the 
Association 
that 
"instructions have been issued to the Collectors of Central 
Excise that the cost of corrugated fibre board containers in 
question does not form part of the value of cigarettes for the 
purposes of excise duty". This representation contained in the 
letter dated May 24, 1976 continued to hold the field until 
0 November 2, 1982 when the Central Board of Excise and Customs 
addressed a circular to all Collectors of Central Excise, stating 
that the matter had been re-examined and the ear lier advice 
should be treated as cancelled. 
In the appeals by the Revenue to this Court, the question 
for consideration was whether the cost of packing is includible 
E in the value of the cigarettes for the purpose of assessment to 
excise duty. 
On behalf of the appellant-Revenue it was contended that on 
a true construction of section 4 (4)(d)(i) read with the 
F Explanation, that whatever be the packing, primary or secondary, 
in which the cigarettes were packed when deli.vered to the buyer 
in the course of wholessle trade at the factory gate, the cost of 
such packing would be liable to be included in the value of the 
cigarettes, and that it was a totally unwarranted gloss on the 
language of section 4 (4)(d)(i) read with the Explanation to make 
G a distinction between primary and secondary packing because that 
section did not make any such distinction and on the contrary, 
provided in the clearest terms for inclusion of the cost of the 
entire packing in which the cigarettes were packed when delivered 
to the whole-sale buyer at the time of removal. 
H 
On behalf of the respondents - companies, it was contended 
that though section 4(4) (d)(i) read with the F.xplanstion did not 
make any distinction between the primary packing and secondary 
U.Q.I. V• GODFREY PHILIPS INDIA LTD. 
125 
packing, the cost of only such secondary packing was liable to be 
A 
incl

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