Decided on August 26,1991



S.V. Maruthi, Member (J) - (1.) THIS appeal relates to the approval of price lists.
(2.) THE Respondents are manufacturers of various varieties of Welding Electrodes falling under T.I. 50 of Central Excise Tariff. The goods are sold through their depots. They filed a price list No. 3/86. The Electrodes are first packed in cartons and then put in polythene bags and thereafter, in wooden cases. In the price list, they claimed abatement of duty on the cost of wooden cases relying on the judgment of the Hon'ble Supreme Court in Godfrey Philips 1985 (22) ELT 306 (SC). The Asstt. Collector issued a show cause notice proposing to disallow the claim made by the respondents. In reply to the show cause notice, the respondents stated that the function of wooden boxes used is to protect the Electrodes contained in the cartons from damage during transit. This is nothing but protective packing. They further contended that packing in wooden cases is also done with a view to facilitate transport of Electrodes from the factory gate to the godowns of wholesale dealers. It is also mentioned that the sales of Electrodes are primarily effected through their various depots. From these depots, sales are made in cartons as well as in wooden cases according to the desire of the customer. The Electrodes are marketed in cartons if a customer so desires but it is the customer's choice to take delivery in wooden cases to facilitate transport of the Electrodes in bulk packing. Packing in wooden cases is not essential for putting the Electrodes in wholesale market at the factory gate. The wooden cases are applied only for the purpose of facilitating transport as well as to avoid damage during transit. On a consideration of the reply, the Asstt. Collector held that the invoices of goods sold from depots indicates that the goods are sold in Polythene bags in retail and from the factory gate, the goods are transported in wooden cases to the depots and selling of goods in small quantities from the depots in retail in cartons is not to be taken into account for determining the assessable value. He also observed that it is the trade practice among the Welding Electrodes manufacturer that Welding Electrodes are first packed in cartons which are put in polythene bags and packed in wooden cases for removal to wholesale trade from the factory gate. In the case of Electrodes, wooden case is a necessity and is an ordinary trade practice for removing the Welding Electrodes in polythene cartons and therefore, the cost of wooden packing should be included in the value of the goods. The wooden cases serve like primary packing before removal of the goods from the factory gate and it is an essential necessity to contain the polythene cartons for removal at the factory gate.
(3.) ON appeal, the Collector held that the electrodes are packed in 120 or 150 in numbers depending upon their brands in cartons which are well covered with cellophane sheets. It cannot be said that 120 or 150 electrodes are sold in retail. Wooden cases are used for packing 1200 electrodes or 1500 electrodes and are removed from the factory in such cases. He observed that there is nothing to indicate that the wooden case packing is essential in wholesale trade in goods except to protect the goods during transit. The sale to actual user other than in wooden cases cannot be brushed aside by saying that they are retail sales in as much as electrodes are not consumable items. He also observed that the consumable cartons covered by cellophane does not include one or two number of electrodes but contain 120 or 150 electrodes. As such, the cartons covered by cellophane packing can be considered as wholesale packing. Therefore, the wooden cases containing 1200 or 1500 electrodes can be described as packing principally for protecting the goods during transit as goods are not sold at the factory gate; against which the present appeal is filed. In Weldcraft (P) Ltd. v. C.C.E., Bangalore (Order No. 129/91 -A, dated 19 -2 -1991) following an earlier order in C.C.E. v. Apar (P) Ltd. (Order No. 1588/90 -A) this Tribunal held (to which one of us was a member) that in the case of Electrodes packed initially in polythene bags and greyboard cartons and then, finally into wooden cases/corrugated paper boxes, the value of corrugated boxes or wooden cases is not includible in the assessable value. While holding as above, this Tribunal followed the judgment of the Supreme Court in Godfrey Philips. Following the above order, we allow the appeal and direct the Asstt. Collector to redetermine the assessable value by excluding the value of cardboard boxes/wooden cases, as the Department has accepted the above orders, as the Departmental Representative did not bring it to our notice any appeal having been filed to the Supreme Court against the above said two orders.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.