ORDER
D.C. Mandal, Member (T)
1. By this appeal, the appellants have challenged the Order-in-Appeal passed by the Collector of Central Excise (Appeals) confirming the Order-in-original C. No. V/17/17/37/82 dated 13.4.1983 passed by Assistant Collector of Central Excise, Madras.
2. The facts of the case in brief, are that the appellants manufacture, inter alia, printed cartons, shells, bulls and printed cut outs for cigarette packets. They submitted 3 price lists dated 5.9.1982, 5.9.1982 and 6.9.1982 respectively declaring the value of their products under Section 4 of the Central Excises and Salt Act, 1944 and claiming deductions therefrom on account of “cost of durable and returnable corrugated fibre cardboard containers.” The Assistant Collector of Central Excise, Madras III Division disallowed the deductions claimed by the appellants. An appeal filed against that order was rejected by the Collector of Central Excise (Appeals) by the impugned order.
3. The appeal filed before the Collector (Appeals) was on the same ground as before the Assistant Collector. But during the hearing before the Collector, the appellants introduced a new ground that as per the judgment of the Supreme Court in the case of Union of India and Ors. v. Bombay Tyre International Limited, delivered on 9.5.1983, cost of special secondary packing was excludible from the wholesale price and that the packing provided by the appellants was special secondary packing at the request of the customers. It. was conceded by the appellants before the Assistant Collector and the Collector (Appeals) that the packing materials were not being returned by the buyers and no part of the sale price of the excisable goods falling under Tariff Item 17 was being refunded to the buyers, when such packing materials were returned, in case they were so returned. It was held by the Full Bench of Gujarat High Court in the case of Ahmedabad Manufacturing and Calico Printing Limited and Ors. v. Union of India reported in 1982 E.L.T. 821 (Guj.) that the expression returnable by the buyer to the seller meant returnable as per agreement between the buyer and seller, because when in such cases cost of packing is included in the price by the seller, it was obvious that it was so done in order that the durable packing was returned and the cost was a sort of security for the return of the packing. Since it was conceded by the appellants that the packings were not returnable to the appellants in the sense in which the expression was interpretaed by the Gujarat High Court, the Collector (Appeals) held that the decision of the Assistant Collector in disallowing the deductions claimed by them towards cost of packing from the assessable value was correct in law and was sustainable.
4. As regards the new ground introduced during the hearing before Collector (Appeals), he has stated in para 4 of the impugned order that he had requested the appellants to substantiate with facts and documentary evidence that the special secondary packing claimed was provided by them at the specific instance of a wholesale buyer and this was not generally provided by them as a normal feature of wholesale trade. It is also stated that the evidence produced by them under cover of their letter (not dated) did not introduce any evidence to substantiate their claim that the packing done by them was in the nature of special secondary packing as contemplated in the judgment of the Supreme Court and that the evidence only showed that some customers preferred wooden packing, some desired catron packing and some requested for corrugated fibre board packing. The Collector (Appeals), therefore, has held that this does not show that these are special secondary packing as envisaged in the judgment of the Supreme Court.
5. We have heard Shri A.N. Haksar and Shri P.K. Ram, Advocates for the appellants. We have also heard Shri P.K. Ajwani, SDR for the respondent.
6. Shri Haksar has argued that there was clearance of the cartons in bundles at the factory gate without C.F.C. and wooden box packings. These packings are provided according to the preference of the customers. In paragraph 18 of the judgment of Supreme court in the case of Union of India & Others v. Godfrey Phillips India Limited & Others, reported in 1985 (22) E.L.T. 306 (S.C.), it was held that the cost of corrugated fibre board containers should not be included in the value of cigarettes. In paragraph 24 of that judgment it was also observed that such containers used for facility of smooth transport of cigarettes to customers at a distance should not be included in the assessable value of cigarettes. Shri Haksar had also pleaded that in the said judgment it was held that the doctrine of promissory estoppel was applicable from 24.5.1976 when the Central Board of Excise and Customs issued clarification that the cost of corrugated fibre board containers would not be includible in the assessment value of cigarettes. According to the learned Advocate, the same should be applicable to this case also
7. Shri P.K. Ram has argued that according to the ratio of judgment of Bombay High Court in the case of Godrej and Boyce Manufacturing Company Private Limited, Bombay and Another v. Union of India and Ors. reported in 1984 (18) E.L.T. 172 (Bom.), the cost of special secondary packing is excludible from the assessable value.
8. Copies of the 3 price lists which were the subject matter of adjudication proceedings were not produced before us by the appellants. Shri Ajwani, learned SDR filed copies of the same in the court before us during the hearing. Shri P.K. Ram, Advocate for the appellants confirmed that those were in price list at issue.
9. At the beginning of his arguments, Shri Ajwani has drawn our attention to the fact that the learned advocate for the appellants has not produced any evidence to prove that the packings were durable and returnable according to the interpretation of this expression as given by Gujarat High Court in the judgment reported in 1982 E.L.T. 821 (Ahmedabad Manufacturing and Calico Printing Limited) although time was taken for this purpose.
10. Shri Ajwani has then raised a technical objection saying that the appeal has not been signed by the Principal Officer of the Company as required by Rule 213 of the Central Excise Rules read with CEGAT Procedure Rules. Power of attorney holder is not competent to sign the Memorandum of Appeal. The appeal is liable to be dismissed on this ground itself.
11. The gists of the other arguments of Shri Ajwani are as follows;-
The appellants have not produced any evidence to prove that the printed matters manufactured by them were cleared in loose condition without any Backing. Packing which is essential for clearance of the goods from the factory is includible in the assessable value. The ground of the appellants before the Assistant Collector and in the Memorandum of Appeal before the Collector (Appeals) was that the packings were durable and returnable. Now, their ground is that those were special secondary packings. So far as the durability and returnability are concerned, this case is squarely covered by the following judgments, viz.
(i) Ahmedabad Manufacturing & Calico Printing Limited and Others v. Union of India, 1982 E.L.T. 821 (Guj.);
(ii) Sathe Biscuits and Chocolate Co. Ltd. and Another v. Union of India and Ors., 1984 (17) E.L.T. 39 (Bom.); and (iii) Lucky Biscuit Company v. Collector of Central Excise, Patna 1984 (18) E.L.T. 96 (Tribunal).
In view of these judgments, the appellant’s contention that the cost of corrugated fibre containers and the wooden boxes are excludible from assessable value is not tenable. The plea of special secondary packing also does not help their case since the terms of paragraph 49 of the Supreme Courts’ judgment in the case of Union of India and Ors. v. Bombay Tyre International Limited, reported in 1983 E.L.T. 1986 (SC), even the secondary packing is to be included in the assessable value. The judgment of the Supreme Court reported in 1985 (22) E.L.T. 306 (SC) is not applicable to the present appeal as it is not the case of the appellants that wooden boxes and corrugated fibre containers were used for the purpose of facility of transport. Their plea is that these packings were supplied according to the preference of the buyers. Further, the above case related to cigarettes, where there were three packings before the bigger cartons were packed in corrugated fibre containers. The case of Godrej and Boyce Manufacturing Co. Ltd. 1984 (18) ELT 172 relied upon by the learned Advocate Shri P.K. Ram is distinguishable from the present case since in the other case refrigerators used to be cleared in polythene packing and the wooden crates were used for outstations. In the present case, no evidence has been produced to prove that the cartons were cleared in packing other than corrugated fibre containers and wooden boxes.
12. We have carefully considered the records of the case and the submissions of both sides. We are disinclined to dismiss the appeal on the technical ground, albeit important, since we have heard the appeal on merits as well and have come to appropriate conclusions on the merits of the case. We, accordingly, dispose of the appeal on merits.
13. The appellants have not produced any evidence either before the lower authorities or before us to prove that normally the manufactured goods used to be cleared by them in bundles or in loose condition without any packing. In paragraph 5 of the Order-in-original, the Assistant Collector has stated that they have not been able to cite even a single instance where the goods were sold by them without any packing whatsoever. Even now before us, the appellants have not been able to produce any evidence to substantiate their contention. In the absence of any evidence being produced either before the lower authorities or before us, we are unable to accept this contention of the appellants.
14. The appellants have contended that the corrugated fibre containers and wooden boxes were durable and returnable packings and hence their cost should be deducted from the assessable value of their manufactured products. We find from the Order-in-Original that there were no records maintained by the appellants for packings which were returned and re-used and as such it was not possible to know whether an appreciable portion has been returned or not. We also find from the Order-in-original that the appellants submitted only one case where 13 corrugated fibre containers were returned by one customer, a match factory of Sivakasi. This single instance of only 13 containers cannot be said to represent the pattern of their sale. They have not been able to cite any other instance. The Assistant Collector has also stated in the Order-in-original that the appellants submitted one purchase order of M/s. Hindustan Lever from which it was found by him that the packing material was clearly non-returnable. This goes quite contrary to the appellants’ claim that their packings were returnable. In the case of Ahmedabad Manufacturing & Calico Printing Ltd. and Another v. Union of India, reported in 1982 E.L.T. 821 (Guj.), Gujarat High Court interpreted the meaning of expression “returnable by the buyer to the seller” appearing in Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. The Hon’ble High Court held that “Returnable means returnable as per agreement between the buyer and the seller because when in such cases the cost of packing is included in the price by the seller, it is obvious that it is so done in order that the durable packing is returned and the cost is a sort of a security for the return of the packing. A similar interpretation of the expression “durable in nature and is returnable by the buyer to the assessee” has been made by Bombay High Court in the case of Sathe Biscuit and Chocolate Company Limited and Anr. v. Union of India and Ors., reported in 1984 (17) E.L.T. 39 (Bom.). The Hon’ble High Court, in paragraph 10 of the judgement, inter alia, held that… in the context in which the word ‘returnable is used and is preceded by the word ‘is it positively indicates that there has to be a term of the contract which makes it obligatory on the manufacturer to accept the container or the packing when the same is returned if it is of a durable nature. By excepting the cost of packing which is of a durable nature and is returnable by the buyer, the Legislature was clearly giving effect to the principle that no excise duty would be leviable on a packing which was capable of being re-used because this would mean that the value Of the same packing would be subject to excise duty more than once. We are, therefore, of the view that the cost of only such packing which is of a durable nature and is returnable under the terms of the contract between the manufacturer and the wholesaler is excludible from the value for the purposes of excise duty. The above judgments were followed by this Tribunal earlier in the cases of (i) Lucky Biscuit Co. v. Collector of Central Excise, Patna (1984-18-ELT-96) and (ii) M/s. Indian Vegetable Products Limited, Bombay v. Collector of Central Excise, Bombay (Appeal No. ED/SB/T/A. No. 17/78-A), in holding that in the absence of any evidence that by an agreement between the assessee and their buyers the containers were returnable or were actually returned to the assessee, the cost of such packing was includible in the assessable value under Section 4(4)(d)(i) of the Central Excise Act. In the present case, the appellants have not been able to produce any evidence to show that the corrugated fibre containers and the wooden boxes were returnable by the buyers to the appellants as per terms of agreements and, in fact, were so returned by the buyers to them. They did not also produce any records of the returned packings, if any. In the absence of any evidence produced either before the lower authorities or before us, we cannot accept the contention that these packings were durable in nature and were returnable within the meaning of Section 4(4)(d)(i) of the Central Excises and Salt Act, as interpreted by Gujarat and Bombay High Courts (supra).
15. The learned advocate has relied upon paragraphs 18 & 24 of the judgment of the Supreme Court in the case of Union of India and Ors. v. Godfrey Phillips India Limited and Ors., reported in 1985 (22) E.L.T. 306 (S.C.), in support of his argument that the cost of corrugated fibre board containers should not be included in the assessable value of the paper cartons manufactured by them. In the case of Godfrey Phillips Ltd., the manufactured goods were cigarettes. Cigarettes were first packed in small packets of 10 or 20 cigarettes. Those small packets were then packed in bigger cartons. Cigarettes were normally cleared in those cartons to the wholesale dealers at the factory gate. It was held by the Hon’ble Supreme Court that the cost of these bigger cartons were includible in the assessable value. But when a number of these cartons are put in corrugated fibre board container for delivery or for the facility of smooth transport, the cost of further packing incurred in putting the cartons in the, C.F.C. cannot be included in the value of cigarettes for the purpose of Central Excise duty. The general proposition laid down by the Hon’ble Supreme Court in the judgment delivered in Bombay Tyres Internationals’ case (1983 ELT 1896) is that “the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate is the degree of packing whose cost can be included in the ‘value’ of the article for the purpose of excise duty.” In the case of. Sathe Biscuits and Chocolate Company Ltd. 1984 (17) E.L.T. 39 (Born.) Bombay High Court held that cost of secondary packing consisting of the tin containers and corrugated fibre containers was includible in the assessable value of biscuits. Therefore, the excludibility of secondary packing depends on the nature of packing which is normally used for delivery of the manufactured goods to the wholesale dealers in the factory gate. In the present case, the appellants have not produced any evidence to show what packing they normally used in delivering the goods to the wholesale dealers at the factory gate in the course of wholesale trade nor have they produced any evidence to prove that wooden boxes and corrugated fibre board containers were not normally used as packing for putting the paper cartons for sale “in the wholesale market at the factory gate. In the absence of any such evidence, we are unable to accept their plea that the cost, of these packings is not includible in the assessable value of the paper cartons manufactured by them.
16. The doctrine of promissory estoppel consequent on the issue of the clarificatory letter of the Central Board of Excise & Customs dated 24.5.1976 is not applicable in this case of the appellants because the said letter was issued in the context of use of corrugated fibre board containers as secondary packing of cigarettes. Cigarettes were first put into small packets of 10 or 20. Those small packets were packed in bigger cartons. This is the packing in which cigarettes were generally sold to the wholesale dealers in the factory gate. When such cartons were placed in corrugated fibre containers, the cost of the C.F.C. was not to be included in the assessable value. The appellants before us have not produced any evidence to show that such is the condition in their case also.
17. Shri P.K. Ram, Advocate for the appellants have relied upon one decision of Bombay High Court reported in 1984 (18) ELT 172. Shri Ajwani has distinguished that case from the present one. We agree with the reasoning given by him. In view of the distinction between the two cases, we cannot accept Shri Ram’s argument.
18. In ground No. (ix) of the Appeal Memorandum, the appellants have raised the plea of double taxation if excise duty was again levied on the C.F.Cs. and wooden boxes which were purchased by them from the market. This plea is misconceived and contrary to the provision of Section 4 of the Central Excises and Salt Act. This Section provides that the cost of packing should be included in the assessable value of excisable goods.
19. In view of the foregoing discussions, we find that the orders of the lower authorities are sustainable in law and do not merit interference by this Tribunal. We, therefore, see no justification to interfere with the impugned order. In the result, we dismiss this appeal.