Gowri Shankar, Member (T)
1. The question for consideration in these two appeals is the liability to inclusion in the assessable value of the water heaters manufactured by each of the appellants of the cost of corrugated boxes in which these heaters were packed for supply to out station customers. In the common order passed by the Commissioner (Appeals) it has been held that the cost is includible.
2. The advocate for the appellants brings to our knowledge a decision the Tribunal in Racold Appliances v. CCE in appeal E/1757/88 [1994 (69) E.L.T. 312 (T)J. In that decision the Tribunal had noted that it is not in dispute that the clearances of the heaters made at the factory gate were not in corrugated boxes or wooden cases and has held that the cost of the boxes or cases was not includible in the assessable value. The advocate for the appellant informs us that this decision has been confirmed on merits by the Supreme Court in its judgment on the appeal filed by the Collector against this order by Civil Appeal No. 2122(NB)/94 [1998 (100) E.L.T. A64].
3. The only difference between the facts as set out in the Tribunal’s order and the facts before us was that the percentage of the goods cleared by the appellant to the wholesale market at the factory gate has come down from nine (considered by the Tribunal) to four or five per cent. The Supreme Court’s judgment in Government of India v. MRF – 1995 (77) E.L.T. 433 makes it clear that the test is whether that packing, the cost of which is sought to be included is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate. By applying that ratio the cost of corrugated boxes is not includible as the goods are not packed in the corrugated boxes for sale at factory gate.
4. The departmental representative relies upon the Tribunal’s decision in CCE v. Stallion Shox Limited, 1996 (85) E.L.T. 139. In that case the Tribunal found that 65% of the sales of goods manufactured by the assessee to the wholesale market at the factory gate were in wooden case while the remaining were not so packed. It held that these goods were ordinarily sold at factory gate in wooden cases and hence held that the cost of this packing is to be included in the assessable value.
5. The position before us is that cost of the heaters sold at the factory gate is packed in the corrugated boxes. It is only the heater which are sold in market beyond the factory gate, i.e., out of town, which are so packed. The fact that this quantity amounts to around 95% of the total clearances is irrelevant. What is to be included in the cost of that packing in which the goods are sold at the factory gate market. That packing alone is what render them marketable. Accordingly we hold that the cost of cartons is not includible in the assessable value.
6. The appeals are accordingly allowed and the impugned order set aside.