ORDER
G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the impugned Order-in-Appeal No. PPM-1470/ N- 1/725/87, dated 2-2-1988 passed by the Collector of Central Excise (Appeals), Bombay.
2. Arguing for the appellants, Sh. Ravinder Narain, ld. Advocate submitted that the dispute is in respect of secondary packing i.e. corrugated fibre board. He said that cigarettes are first packed in packets, which in turn, are further packed in outers and cigarettes are delivered to wholesale dealers only in outers/cartons and the cigarettes packed in outers are, further, packed in CFCs on the specific request of wholesale dealers. He contended that the CFCs are neither necessary nor essential as a packing for the purpose of sale of cigarettes to the wholesale dealers for a secondary packing supplied at the request of the wholesale dealers. He submitted that this issue has already been considered by the Supreme Court in the case of Union of India v. Godfrey Philips India Ltd. reported in 1985 (22) E.L.T. 306 (S.C.) wherein it was clearly held that the cost of secondary packing done for protection of excisable goods during transportation not includible in the assessable value. This view was reaffirmed by the Supreme Court in the case of Madras Rubber Factory Ltd. reported in 1995 (77) E.L.T. 433 (S.C.) particularly in paras 31,32,33 and 34 of the said order. He, further, said that the Assistant Collector confirmed the demand with reference to the show cause notice which was issued under Section HA. But the Collector (Appeals), on knowing that this was only provisional assessment, still he confirmed the order passed by the Assistant Collector observing that the appeal is infructuous. He said that the view taken by the Collector (Appeals), is contrary to the facts of the case. On the other hand, he should have set aside the demand as the assessment was only provisional.
3. Shri Ali, ld. DR conceded the position that since the assessment was provisional, Collector (Appeals), was not right in observing that appeal become infructuous. He submitted that on merits the arguments advanced by the appellants are not correct since the Assistant Collector has given a finding that normal packing of cigarettes is in CFCs, even though it is secondary packing. According to him, the goods, which were normally sold and delivered in CFCs, and since the goods sold and delivered in such a condition, the cost of such packing should be included in the assessable value as it was observed by the Apex Court in the Pond’s and Ors. case. Shri Ravinder Narain, ld. Advocate submitted that the Assistant Collector has recorded the finding correctly and at no stage the goods were delivered without outers or cartons, but they were cleared only with the three stages and the CFCs, being a secondary packing for the safety of the goods for transportation, etc. that too on the request of the buyers, same cannot be included in assessable value. Further, he submitted that the Supreme Court has approved the decision of Godfrey Philips India Ltd. and Ors. (supra) in the case of Lucky Biscuits Co. v. C.C.E., Patna reported in 1996 (87) E.L.T. 335 (S.C.) wherein it was clearly held that the cost of wooden cases used to protect the goods already packed, in transit is excludible from the assessable value.
4. We have carefully considered the submissions made by both sides and perused the records. We find that the Collector (Appeals) erred in holding that appeal becomes infructuous. He should have set aside the demand if it was a provisional assessment as it was rightly argued on behalf of the appellants. Since the matter has not been examined properly by the Collector (Appeals), with reference to Godfrey Philips India Ltd. and Ors., referred to above, we are of the view that this matter will have to be examined afresh. Accordingly, he is directed to examine the factual position and if it is found that CFCs are only secondary packing and that they were used in transit for safety, he has to decide the issue in the light of the observations made by the Supreme Court in the case of Godfrey Philips India Ltd. and Ors., referred to above, Commissioner (Appeals) is directed to pass an appropriate order in accordance with law after providing an opportunity to the appellants. Accordingly, the appeal is allowed by way of remand.