M.K. Srinivasa Iyengar, J.
1. The petitioner which is engaged in the manufacture and sale of Pressure Cookers is challenging the inclusion of the cost of dealwood case used for packing when four or more Cookers are supplied to wholesalers so as to protect the articles during transit, in assessing the excise duty payable by the petitioner. The Asstt. Collector of Central Excise by his order dated 24-11-1975 rejected the contention put forth on behalf of the petitioner that the value of such containers could not be included for purpose of levy of excise duty, relying upon the provision of S. 4(4)(d)(i) of the Central Excises and Salt Act, 1944 as amended with effect from 1st of Oct., 1975. He came to that conclusion on the basis that the packed dealwood cases were not actually received back by the petitioner from the buyers. This order was upheld by the Appellate Collector dismissing the appeal filed by the petitioner by his order dated 29-12-1975. It is this order that has been challenged in this writ petition.
2. For the petitioner, it is urged that the dealwood packing is not incidental to the manufacture of Pressure Cookers and is clearly an expenditure incurred long after their manufacture. Being not excisable articles, the value thereof cannot be included for the purpose of imposition of excise duty and this would be wholly opposed to the concept of excise duty which is a levy at the point of manufacture and at the point where goods leave the factory.
3. The contention is that this is a post-manufacturing cost which cannot be subject to the levy of excise duty. It is also contended that the interpretation sought to be put on the provision of S. 4(4)(d)(i) is not correct. Further reliance is placed on an order of the Government of India in a subsequent revision petition filed by the petitioners on an identical point against the orders of the Appellate Collector, Central Excise, Madras in Appeals Nos. 85 and 86 of 1978 dated 18-1-1978. The order of the Government of India is dated 24-2- 1979 and it is numbered as Orders Nos. 160-161 of 1979. Therein, the Government of India came to the conclusion that such dealwood packing is a secondary packing and observed thus :
“This Secondary dealwood packing is not essentially required for delivery of the cookers at the time or removal from the factory gate. Government also find that the cost of secondary dealwood packing is available in the price-list of the goods submitted by the petitioners.
In view of these Government agree that the value of the secondary dealwood packing cannot legally form part of the assessable value of the cookers, and in the circumstances, they allow the Revision Application.”
4. According to the petitioner, these dealwood packing cases are bought by them from the market and they do not manufacture them as part of or incidental to the manufacture of Pressure Cookers. This fact is not denied on behalf of the respondents. It is patent that this packing material has nothing to do with the manufacturing process of the excisable goods, namely, Pressure Cookers, and therefore, it is not incidental or anciallary to the manufacturing process. Excise duty is a tax on the production and manufacture of goods and at the point of manufacture and it is an accepted principle that post-manufacturing cost cannot be included in the assessable value for the purpose of excise duty (vide A. K. Roy v. Voltas Ltd., ).
Any provision which would include such post-manufacturing cost in the assessable value for the purpose of excise duty would become unconstitutional as being in excess of the power conferred under Entry 84 of the Union List.
5. The provision in S. 4(4)(d)(i) is as follows :-
” Where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of packing which is of a durable nature and is returnable by the buyer to the assessee.”
From this definition it appears to be clear that value of packing which is of a durable nature and is returnable by the buyer should not be included. The provision does not require that the packing which is of a durable nature must returned or must have been returned by the buyer to the manufacturer. The expression used is ‘returnable’ which means which can be returned or which should be in a returnable condition or capable of being returned. This is also the view taken by the Gujrat High Court in the case of Alembic Glass Industries Ltd., Baroda v. Union of India – [1979 E.L.T. (J 444)]=(1980 Tax. L.R. 2251)(Guj.). This interpretation would be in confirmity with the nature of the excise duty and the ambit of the Entry 84 of the Union List and would clearly exclude the post-manufacturing cost. That would be the proper interpretation to be placed upon the provision. A requirement that the packing which is of a durable nature should be returned in order to exclude its value is not justified from the wording of the sub-section. Therefore, the view taken by the respondents is untenable. As earlier noticed, the Government of India also has conceded the contention put forth on behalf of the petitioner under identical circumstances.
6. The rule is accordingly made absolute and a writ shall issue to the respondents to exclude from the assessable value of the excisable goods the cost of the secondary dealwood packing and approve the price-list submitted by the petitioners for the relevant period under consideration.