Secondary packing on fabrics leaving the factory gate for upcountry customers would not attract excise duty, the Supreme Court stated last week in the judgment , National Leather Cloth Manufacturing Co vs Union of India, setting aside the ruling of the Bombay high court. The revenue authorities as well as the high court had rejected the company’s 1980 claim for excluding the cost of polythene bags and hessian cloth wrapping. They held that secondary packing must be considered to be normal packing and its value should be included in the assessable value.
On appeal, the Supreme Court maintained that the additional packing or secondary packing was done for convenience of upcountry customers while transporting the goods and the hessian cloth packing in three rolls should not be included in the value of the goods in terms of Section 4 of the Central Excise Act at the relevant time.
