Full Judgment Text
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CASE NO.:
Appeal (civil) 3819 of 1999
PETITIONER:
Comm.of Central Excise, Allahabad, etc.
RESPONDENT:
M/s Hindustan Safety Glass Works Ltd., etc.
DATE OF JUDGMENT: 22/02/2005
BENCH:
S. N. Variava,Dr. AR. Lakshmanan & S. H. Kapadia
JUDGMENT:
J U D G M E N T
WITH
C.A. NOS. 5795/1999, 6117/1999,
8254-8255/2003 & 1758/2004
S. N. VARIAVA, J.
These Appeals are against Judgments of the Customs, Excise &
Gold (Control) Appellate Tribunal (CEGAT). As the question of law
involved in all these Appeals is the same, they are being disposed off
by this common Judgment.
The question for consideration is whether the cost of wooden
crates/boxes in which the Respondents pack their product, i.e., Glass
Sheets, is includible in the assessable value of the glass.
For the sake of convenience, facts in Civil Appeal No. 3819 of
1999 will be referred to. In Civil Appeal No.3819 of 1999 CEGAT has
held in favour of the Respondents by following an earlier decision of
CEGAT, dated 9th January 1987, in that Respondents’ own case. In
that case, the Order was based on a finding of fact that barring stray
instances glass was delivered to local customers with just a paper
packing interleaved with straws. CEGAT had, on those facts, held that
the ratio laid down by this Court in the case of Union of India & Ors.
vs. Godfrey Philips India Ltd. [reported in 1985 (22) ELT 306] and
in the case of Geep Industrial Syndicate Ltd. vs. Union of India
[reported in 1992 (61) ELT 328] applied.
Before the arguments of the parties are considered, it is
essential that the provision of law and the authorities of this Court be
first looked at.
The relevant portion of Section 4 reads as follows:
"SECTION 4. Valuation of excisable goods for
purposes of charging of duty of excise.- (1) Where
under this Act, the duty of excise is chargeable on any
excisable goods with reference to value, such value, shall,
subject to the other provisions of this section, be deemed
to be \026
(a) the normal price thereof, that is to say, the
price at which such goods are ordinarily sold
by the assessee to a buyer in the course of
wholesale trade for delivery at the time and
place of removal, where the buyer is not a
related person and the price is the sole
consideration for the sale:
xxx xxx xxx
xxx xxx xxx
(4) For the purposes of this section, -
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xxx xxx xxx
xxx xxx xxx
(d) "Value", in relation to any excisable goods, -
(i) where the goods are delivered at the time
of removal in a packed condition, includes the
cost of such packing except the cost of the
packing which is of a durable nature and is
returnable by the buyer to the assessee.
Explanation.- In this sub-clause, "packing" means
the wrapper, container, bobbin, pirn, spool, reel or warp
beam or any other thing in which or on which the excisable
goods are wrapped, contained or wound.
xxx xxx xxx
xxx xxx xxx"
Thus under Section 4(4)(d)(i) the cost of packing is to be
included in working out the value of the goods, unless the packing is of
a durable nature and is returnable by the buyer to the assessee. The
Explanation indicates the various types of packing whose costs have to
be included. A wrapper and/or a container is packing whose cost has
to be included. The words "wrapper" and "container" are wide enough
to include all types of wrappers or containers. The further words "any
other thing in which or on which the excisable goods are wrapped,
contained or wound" also show that the term "Packing" has a very
wide connotation and includes anything used for wrapping and/or
containing the excisable goods. Even though the statutory provision is
clear and unambiguous, a concept of primary and secondary packing
was developed by this Court in the case of Union of India vs.
Bombay Tyre International Ltd. [reported in 1983 (14) ELT 1896].
In this case, it was recognized that the degree of packing would vary
from one class of excisable goods to another. It was held that packing
may be of different grades. It was held that the packing may be
necessary to make an article marketable. It was held that by including
the cost of packing the Legislature has sought to extend levy beyond
the manufactured article itself. It was held that thus a strict
construction must be put upon the said provision. It was held that only
the cost of packing which was required to make the goods marketable
would be includible in the value of goods. It was held that if any
additional or special packing is provided, which packing is not
generally required or provided as a normal feature, then the cost of
such packing need not be included in the value of the goods. The test
which was laid down was that it is only the cost of packing ordinarily
required for selling the goods in the course of wholesale trade to a
wholesale buyer which would be includable and not the cost of any
additional or special packing.
Thereafter in the case of Union of India vs. Godfrey Philips
India Ltd. the same principles were reiterated. However, divergent
conclusions were arrived at on the basis of differing perceptions as to
the factual situation in that case. In that case the respondent-
assessee was engaged in the manufacture of cigarettes. The cigarettes
were packed initially in paper/cardboard packets of ten and twenty.
These packets were packed together in paper/cardboard
cartons/outers. These cartons/outers were then placed in corrugated
fiberboard containers. It is these corrugated fiberboard containers
(CFCs) filled with cartons/outers containing the packets of cigarettes of
ten and twenty which were delivered by the assessee to the wholesale
dealers at their factory gate. So far as the cost of initial packing is
concerned, there was no dispute. Similarly, there was no dispute with
respect to the cost of paper/cardboard cartons/outers. The dispute,
however, centered round the cost of CFCs. Bhagwati, C.J., [as he then
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was] held that the fact that the CFCs are used in order to protect the
goods against damage during the course of transportation is no ground
to exclude their cost. However, the majority opinion was that CFCs
were employed only for purpose of avoiding damage or injury during
transit. It was held by the majority that CFCs were not necessary for
selling the cigarettes in the wholesale market at the factory gate. On
this factual basis the majority held that the costs of CFCs were not
includible in the value of the cigarettes. Mr. Bagaria, learned counsel
for the Respondents, has placed strong reliance on the following
observations from the Judgments of Justice Pathak and Justice A. N.
Sen. The portions relied upon read as follows:-
Pathak, J :
"The corrugated fiber board containers are employed only
for the purpose of avoiding damage or injury during
transit. It is perfectly conceivable that the wholesale dealer
who takes delivery may have his depot a very short
distance only from the factory gate or may have such
transport arrangements available that damage or injury to
the cigarettes can be avoided. The corrugated fiber board
containers are not necessary for selling the cigarettes in
the wholesale market at the factory gate."
Sen, J:-
"Cartons of cigarettes are usually further packed in
corrugated fiber board containers for facilitating transport
in the course of delivery to buyers in the wholesale trade
where there is any possibility of the cartons becoming
otherwise damaged in course of transit. Naturally in such
cases, delivery of the cigarettes in those cartons is effected
to the buyers at the factory gate after further packing
these cartons in corrugated fiber board containers. The
further packing of cartons in which the packets of
cigarettes have been packed in the corrugated fiber board
containers is not, indeed, in the course of delivery to the
buyer in the wholesale trade at the factory gate but is only
for the purpose of facilitating the smooth transport of the
cartons containing the packets of cigarettes to the buyer in
the wholesale trade."
The qualification laid down by the learned Judges that the costs
of such packing was not includible as this packing was merely to
prevent damage and injury has been misunderstood by many. As is
indicated hereinafter, the ratio is not that in all cases, where the
packing is for preventing damage or injury to the goods, the costs of
such packing is to be excluded from the value of the goods.
In the case of Geep Industrial Syndicate Ltd. vs. Union of
India (supra), the Appellant-assessee was the manufacturer of
batteries and torches. The torches and batteries manufactured by it
were first packed in polythene boxes and then these polythene boxes
were placed in cardboard cartons. There was no dispute about the
inclusion of the value of polythene boxes and cardboard cartons. The
dispute was only with respect to the cost of wooden boxes in which the
cardboard cartons were placed at the time of delivery at the factory
gate. It was held that the principles laid down by the majority in
Godrey Philips case (supra) applied. It was held that the cost of
such secondary packing in wooden boxes was not includible in the
value of batteries and torches.
In the case of CCE vs. Ponds India Ltd. [reported in 1989 (44)
ELT 185 (SC)], the Respondent-assessee was the manufacturer of
talcum powder and face powder. The Excise authorities noticed that
small packing of 15, 18, 20, 30, 40 and 100 gms. powder were first
packed in a pack of dozen and then packed in secondary packing for
easy transportation to the wholesale buyer. The authorities opined that
"the secondary packing were a must for delivery to the wholesale
dealer". The Assistant Collector accordingly held that the cost of such
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secondary packing was liable to be included. This Court after referring
to the ratio of Bombay Tyre International observed that the
principle in Bombay Tyre International does not admit of any
dispute. It was held that there has been "some divergence of
emphasis" with respect to the criteria upon which the inclusion or
exclusion of the cost of packing should be determined. It was then
held as follows: -
"In my opinion, the views expressed by the majority of the
Judges in Godfrey Philips case were in consonance with the
views of this Court in the Bombay Tyre International case.
The question is not for what purpose a particular kind of
packing is done but the test is whether a particular packing
is done in order to put the goods in the condition in which
they are generally sold in the wholesale market at the
factory gate and if they are generally sold in the wholesale
market at the factory gate in certain packed condition,
whatever may be the reason for such packing, the cost of
such packing would be includible in the value of the goods
for assessment to excise duty."
Reference was then made to the Geep Industrial Syndicate
Ltd. case and it was held as follows:-
"In my opinion, the correct position seems to be that the
cost of that much of packings, be they primary or
secondary, which are required to make the articles
marketable would be includible in the value. How much
packing is necessary to make the goods marketable is a
question of fact to be determined by application of the
correct approach. Packing, which is primarily done or
mainly done for protecting the goods, and not for making
the goods marketable should not be included.... The
question is not whether these goods could be so sold, but
the question is whether these goods are so sold usually
and as such used to become marketable in such manner."
(emphasis supplied)
In the case of Hindustan Polymers vs. Collector of C. Ex.
[reported in 1989 (43) ELT 165] the Appellant-assessee was engaged
in the manufacture and sale of fusel oil. The fusel oil manufactured by
it was mainly sold in bulk. A small portion was being supplied to the
customers in drums supplied by such customers. It was found that in
the wholesale trade these goods were delivered directly into tankers
and that delivery in drums was only to facility their transport in small
quantities. It was held that the cost of drums was not included in the
value of the oil as the material on record established that the goods
were not sold in drums generally in the course of the wholesale trade.
It was, however, held that if the manufacturer supplied the drums and
charged the customers separately therefor, the cost of such drums
would have to be included in the value.
In the case of Government of India vs. Madras Rubber
Factory Ltd. [reported in 1995 (77) ELT 433 (S.C.)], this Court
considered, amongst other things, whether costs of packing is
includible in the cost of the concerned goods. All the above mentioned
cases were analyzed and the ratio deductible therefrom was summed
up as follows:-
"41. We respectfully record our concurrence with the
above observations. In our respectful opinion, the
tests evolved by Mukharji, J. and Ranganathan, J.,
which are the same in essence, are wholly consistent
with the test evolved in Bombay Tyre International. To
repeat: "the question is not for what purpose a
particular kind of packing is done but the test is
whether a particular packing is done in order to put
the goods in the condition in which they are generally
sold in the wholesale market at the factory gate and if
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they are generally sold in the wholesale market at the
factory gate in certain packed condition, whatever
may be the reason for such packing, the cost of such
packing would be includible in the value of the goods
for assessment to excise duty."
xxx xxx xxx
43. The position emerging from the review of the
decisions aforesaid may now be summarized: each
and every decision has accepted and acted upon the
law laid down in Bombay Tyre International. The test
evolved in the said decision has been expressly
reiterated in all the judgments, though it is a fact that
there has been some divergence in what may be
called ’emphasis’. Since the said decision lays down
that the cost of "that 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 to be
included, the Court enquired in Godfrey Philips
(majority opinion) whether the CFCs were necessary
for such delivery. The Court found on the facts of that
case that they were not so necessary and accordingly
held that the cost of CFCs is not includible. In Geep
Industrial Syndicate, the Court adopted the approach
of the majority in Godfrey Philips, on the footing that
the wooden boxes were not ’necessary’ for delivery at
the gate. In Ponds, however, both the learned Judges
constituting the Bench laid down tests consistent with
the one in Bombay Tyre International. Indeed,
Ranganathan, J. understood the majority decision in
Godfrey Philips and the decision in Geep Industrial
Syndicate in the same manner as we have done - a
fact emphasised by us hereinabove, while discussing
the ratio of Ponds. As pointed out by us hereinabove,
it would not be reasonable to infer any conflict or
deduce any inconsistency between the ratio of
Bombay Tyre International and the ratio of Godfrey
Philips for the reason that not only both Benches were
of coordinate jurisdiction (Bombay Tyre International
was thus binding upon the latter Bench) but also
because both the decision were rendered by the very
same Bench. The adage in such matter is: look for
harmony, not divergence. It is equally relevant to
point out that Bombay Tyre International was equally
binding upon the Bench (of three learned Judges)
which decided Geep Industrial Syndicate and that it
would be equally unreasonable to suggest that the
Bench (deciding Geep Industrial Syndicate) would lay
down an inconsistent proposition from the one in
Bombay Tyre International without even referring to
the decision or its ratio. The conclusion in these two
later cases turned upon the finding as to factual
situation obtaining therein whereas the two opinions in
Ponds not only follow the test in Bombay Tyre
International but reiterate it in clear terms. The test
laid down in Bombay Tyre International has never
been departed from in any of the later decisions and
must be treated as good and sound. We may as well
stress the obvious: in a matter like this, certainty in
law is essential. It may be that in applying the
principle having regard to the facts of a given case,
there may be some divergence in conclusion but so far
as the principle - the relevant test to be applied - is
concerned, there should be no uncertainty. The test
is: whether packing, the cost whereof is sought to be
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included is the packing in which it is ordinarily sold in
the course of a wholesale trade to the wholesale
buyer. In other words, whether such packing is
necessary for putting the excisable article in the
condition in which it is generally sold in the wholesale
market at the factory gate. If it is, then its cost is
liable to be included in the value of the goods; and if it
is not, the cost of such packing has to be excluded.
Further, even if the packing is ’necessary’ in the above
sense, its value will not be included if the packing is of
a durable nature and is returnable by the buyer to the
assessee. We must also emphasize that whether in a
given case the packing is of such a nature as is
contemplated by the aforesaid test, or not, is always a
question of fact to be decided having regard to the
facts and circumstances of a given case."
We are in complete agreement with the above conclusions. The
question is not for what purpose the packing is done. The test is
whether the packing is done in order to put the goods in a marketable
condition. Another way of testing would be to see whether the goods
are capable of reaching the market without the type of packing
concerned. Each case would have to be decided on its own facts. It
must also be remembered that Section 4(4)(d)(i) specifies that the
cost of packing is includible when the packing is not of a durable
nature and returnable to the buyer. Thus, the burden to show that the
costs of packing is not includible is always on the assessee. Also
under Section 4(a) the value is to be the normal price at which such
goods are ordinarily sold in the course of wholesale trade for delivery
at time and place of removal. Thus, at this stage, it would be
convenient to refer to the case of A. K. Roy & Anr. vs. Voltas
Limited [reported in 1977 (1) ELT (J 177)] wherein the concept of
wholesale market has been explained in the following terms:-
"8. We do not think that for a wholesale market to exist, it
is necessary that there should be a market in the physical
sense of the term where articles of a like kind or quality
are or could be sold or that the articles should be sold to
so-called independent buyers.
9. Even if it is assumed that the latter part of s. 4(a)
proceeds on the assumption that the former part will apply
only if there is a wholesale market at the place of
manufacture for articles of a like kind and quality, the
question is what exactly is the concept of wholesale
market in the context. A wholesale market does not
always mean that there should be an actual place where
articles are sold and bought on a wholesale basis. These
words can also mean that potentiality of the articles being
sold on a wholesale basis. So, even if there was no
market in the physical sense of the term at or near the
place of manufacture where the articles of a like kind and
quality are or could be sold, that would in any way affect
the existence of market in the proper sense of the term
provided the articles themselves could be sold wholesale to
traders, even though the articles are sold to them on the
basis of agreements which confer certain commercial
advantages upon them. In other words, the sales to the
wholesale dealers did not cease to be wholesale sales
merely because the wholesale dealers had entered into
agreement with the respondent under which certain
commercial benefits were conferred upon them is
consideration of their undertaking to do service to the
articles sold, or because of the fact that no other person
could purchase the articles wholesale from the respondent.
We also think that the application of clause (a) of s. 4 of
the Act does not depend upon any hypothesis to the effect
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that at the time and place of sale, any further articles of
like kind and quality have been sold. If there is an actual
price for the goods themselves at the time and the place of
sale and if that is a "wholesale cash price", the clause is
not inapplicable for want of sale of other goods of a like
kind and quality."
Having seen the statutory provision and the law on the subject,
one must now see the facts. As stated above, all the Respondents are
manufacturers of sheet glass. Facts are more or less same. Thus for
sake of convenience facts in Civil Appeal No. 3819 of 1999 are being
referred to.
In this case, the Assistant Collector had found that the cost of
wooden crates is recovered by the Respondents from the buyers. It is
found that even when the goods are sent to their own godown, they
are sent in wooden cases and are stored/packed in wooden cases for
delivery in the wholesale trade to the customers. It is found that the
goods are generally cleared by the Respondents from their factory
gate duly packed in wooden cases and they are sold as such both from
the factory gate and through the depots. It has been found that the
Respondents had not led any evidence to show that the goods were
sold in paper packing as claimed by them.
In other cases facts may vary to some extent but the essential
fact is that sheet glass is a very delicate item which is liable to crack or
shatter. Mr. Venkatramani has submitted that the fragile nature of
glass sheets is sufficient to show that they cannot be marketed without
special packing or arrangement. He submitted that Respondents had
led no evidence to show that the glass sheets were marketable without
special packing.
On the other hand, Mr. Bagaria submitted that the Respondents
in Civil Appeal No. 3819 of 1999 had relied upon an earlier Order
passed by the Tribunal in their own case. He submitted that that
Order clearly established that the Respondents’ products, namely,
glass sheets, were marketable without their being packed in wooden
cases. He submitted that the Respondents therefore did not need to
lead any further proof to show that the glass sheets were marketable
without wooden packing.
Mr. Bagaria also relied upon other decisions of the Tribunal
wherein also it has been held, on facts, that glass sheets were
marketable without wooden packing. In support of this submission, he
relied upon the authority in the case of Window Glass Ltd. vs.
Collector of Central Excise, Calcutta, [reported in 1989 (39) ELT
641]. In this case, the Appellant Company was manufacturing
"figured" and "wired" glass in the form of glass sheets. The question
was whether the cost of wooden packing was includible in the value of
such glass sheets. The Tribunal has held that the cost of such sheets
was not includible in the value of the glass sheets in the following
terms:
"7. We shall briefly deal with both these issues. Taking
the first issue, the extra item accounting for bulk of the
supplementary invoice is the cost of special packing. The
appellants declared in the price lists that their
ordinary/frame packing cost about 20 paise per sq. mtr. of
the goods and that the cost of such packing was already
included in the price declared. They further declared that
they used special packing at the request of the buyer for
avoiding breakage of the goods in transit. The special
packing used was wooden crate or wooden box. The
Collector found that overwhelming majority of sales of the
appellants were in special packing, that in some rare
cases, the sales to Calcutta buyers were in ordinary
packing and that in remaining cases even the Calcutta
buyers received the goods in special packing. The
Collector held that the special packing was the normal
mode of delivery for the appellants’ goods, that such
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packing was necessitated by the fragile nature of the
glass-sheets and that in the circumstances the cost of
special packing could not be excluded from the assessable
value. We find that in arriving at his calculation, the
Collector has fallen in error on two counts, first he relied
on the minority judgment of the Hon’ble Supreme Court in
the case of Godfrey Phillips (India) Limited [1985 (22) ELT
306 (SC)] and ignored the majority judgment therein.
Second, he went by the simple arithmetic of majority sales
versus minority sales. This is wrong. The correct position
regarding packing charges has been enunciated by the
Hon’ble Supreme Court in their judgments in Bombay
Tyres International Limited and Godfrey Phillips (India)
Limited cases aforesaid and further in their judgment in
the case of M/s. MRF Limited - 1987 (27) ELT 553 (SC).
In regard to special packing, the criterion to judge is
whether it is essential for delivery of the goods in
wholesale at the factory gate. Secondly, it is not the
relative figures of percentages of deliveries in ordinary
packing and special packing which determine the issue but
the question of principle whether the special packing is
necessitated only by the consideration of safety of the
goods during long distance transport or it is essential for
wholesale deliveries effected even at the factory gate. We
have to remember in the present case that the factory of
the appellants was situated in a village and their nearest
wholesale market at Calcutta was also 45 Kms. away.
The local demand being limited, there could not be very
large number of local deliveries at the factory gate. Their
nearest big wholesale market was at Calcutta which itself
was 45 Kms. away from their factory. The appellants
explained to us that some of their Calcutta customers who
wanted to sell their goods locally at Calcutta preferred to
purchase the goods in ordinary packing while some others
who proposed to re-sell the goods to outstation buyers in
original packing preferred to purchase the goods in special
packing. The department admits that the appellants did
clear some consignments for delivery at Calcutta in
ordinary packing. The number of such consignments may
be small but yet they do establish the principle that the
goods could be delivered in wholesale at the factory gate
in ordinary packing. The ordinary packing consisted of
frame packing with straw cushioning and paper inter-
leaving between the glass-sheets. Such ordinary packing
is quite adequate for wholesale deliveries at the factory
gate and at the market situated very close to the factory.
In some other cases of glass-sheets also which have come
for decision before us, we have held the ordinary/frame
packing adequate for wholesale deliveries at the factory
gate. Following the principle of essentiality, as laid down
by the Hon’ble Supreme Court, we hold that the cost of
special packing was, in principle, excludible in the case of
the present appellants also."
From the facts enumerated, in the paragraph set out
hereinabove, it is clear that there was no dispute that the cost of
ordinary packing was includible. The Tribunal has mentioned that the
ordinary packing consisted of frame packing with straw cushioning and
paper inter-leaving between the glass sheets. This indicates that the
ordinary packing was of wooden frames. In respect of the wooden
frame there was no dispute that the costs were includible in the value
of the glass. This case, therefore, far from helping the Respondents is
against them. This case also indicates that to make the goods
marketable it would be necessary to pack them in wooden cases or to
frame pack them.
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Mr. Bagaria also relied upon the case of Gurind India P. Ltd.
vs. Commissioner of Central Excise, Meerut [reported in 1999
(112) ELT 1020]. In this case, the Tribunal held that the cost of
wooden packing is not includible in the value of the goods by
observing that more than 64% of the goods are delivered at the
factory gate without any packing. What the Tribunal has omitted to
notice is the facts that the goods were cleared without packing, as
there were special arrangements made in trucks for the purposes of
ensuring that the goods did not break during transit. This showed that
the goods were not marketable without some special arrangements.
In all cases it would not be possible to have special trucks. Thus,
wooden packing or frame packing would be necessary to make them
marketable. In our view, the finding of the Tribunal, on the facts, is
erroneous and unsustainable.
That brings us to Mr. Bagaria’s submission that in the case of
Respondents (in Civil Appeal No. 3819 of 1999) the Tribunal had, by
its Order dated 9th January 1987, held that the cost of the wooden
cases was not includible in the value of the glass sheets. As we have
indicated hereinabove, this Order of the Tribunal was based on a
finding of fact that barring stray instances, glass was delivered to the
local customers. In that case, the Tribunal has failed to inquire or look
into the question as to who were the local customers to whom glass
was delivered without wooden packing. From the reply to the show-
cause notice given by the Respondents in this matter, it is clear that in
Calcutta the majority of the deliveries were to original equipment
manufacturers like car companies. It is clear that these companies
would take delivery without wooden cases because they have their
own special arrangements to see that the glass sheets are transported
without breakages. The Calcutta case, therefore, is an identical case
to the case of Gurind India P. Ltd., [reported in 1999 (112) ELT
1020], where the party taking delivery without wooden crates, had
made their own special arrangements.
At this stage reference must be made to a decision of a three
Judge Bench of this Court dated 20th July 1995 in Civil Appeal
Nos.3119-20 of 1980 [Union of India vs. Shri Vallabh Glass Work Ltd.
& Anr.]. Relying on the ratio in Madras Rubber Factory Ltd.’s case
(supra) this Court has held that the costs of wooden crates is
includible in the value of glass products. For the following reasons we
see no reason to take a different view.
The products of the Respondents are large glass sheets. Very
fairly, it was not denied that the goods are fragile. Without special
protection such glass sheets could not be transported. It was
submitted that for short distances they could be transported without
wooden crates. However, it is clear that even in such cases special
care would have to be taken. The test is not whether in a few stray
instances or in a small percentage of cases or by making some other
special arrangement the glass sheets can be so transported. The test
is whether for the purposes of delivery in the wholesale trade, glass
sheets can be moved without special arrangements. The answer has
to be an obvious ‘No’. In most cases the special arrangement is
packing in wooden cases. In such cases the liability to include the
costs of the wooden crates in the value of the glass sheets cannot be
avoided by claiming that the wooden crates are for purposes of
protecting the glass. In such cases, the wooden crates are for
purposes of making the glass sheets marketable. The ratio in
Godfrey Philips case is not that whenever a packing is done with
intention to prevent damage or injury to the goods the costs is to be
excluded. It is only in those cases where the goods are capable of
being marketed without special packing and the special packing is
given only by way of abundant caution to protect the goods in
transport that their costs get excluded. In the above view the
reasoning and the conclusion of the Tribunal cannot be supported.
Mr. Bagaria next submitted that the Explanation to Section
4(4)(d)(i) shows that only packing which is of the nature of simple
wrappers, container, bobbin, pirn, spool, reel or warp beam would
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become includible. He submitted that it is only in those cases where
the packing gets identified with the goods that the costs of such
packing are includible. He submitted that the Explanation makes it
clear that packing in the nature of wooden crates is not covered and,
therefore, its cost would not be includible. We are unable to accept
this submission. As we have already indicated hereinabove, the
Explanation is very wide and includes almost all types of packing. It is
not possible to give a restricted meaning as is sought to be done by
Mr. Bagaria.
It must be mentioned that in these cases it is not disputed that
there is no agreement or arrangement making them returnable. Thus
even though they may be considered to be durable the cost of wooden
cases are includible in the value of the glass sheets sold by the
Respondents. It is so held for above reasons.
Accordingly, the Appeals are allowed. The impugned
Judgments stand set aside. There will, however, be no order as to
costs.