Case Law Details
Karia Can Co Limited Vs C.C.E. & S.T. (CESTAT Ahmedabad)
CESTAT held that the cost of corrugated boxes supplied free of cost by the buyers to the appellant is includible in the transaction value of the metal containers manufactured and supplied by the appellant as per the provision of Section 4 of the Central Excise Act, 1944 and rules made thereunder. We also find that the matter is no longer res-integra as this tribunal in the appellant’s own case has already decided the issue against them and has held that the cost of free supplied corrugated boxes need to be included into the assessable value of the metal containers for the purpose of payment of Central Excise duty.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the matter are that the appellant assessee are engaged in the manufacture of metal containers falling under Central Excise Tariff Heading 73 of Central Excise Tariff Act, 1985. During the course of the departmental audit, it was noticed that the assessee has not included cost of packing material received by them from their buyers free of cost. It is a matter of record that the buyers of the appellant assessee have been supplying corrugated boxes for packing and delivery of metal containers which were purchased by the buyers for further packing of various products of the M/s. Amul Dairy.
2. It has been the contention of the department that the cost of the packing material received free of cost by the appellant from their buyers should have formed part of the transaction value for the purpose of payment of central excise duty. The department is of the view that the additional consideration has flown back to the manufacturer from their buyers in the form of free supply of the corrugated boxes resulting in under invoicing of the excisable products in terms of the provision of Clause (a) of Sub-section (1) of Section 4 of the Central Excise Act, as the price does not seem to be sole consideration of the sale as the appellant has received packing material namely corrugated boxes from their buyers free of cost. The packing materials were essential part of the goods as without the packing material the goods could not have been cleared from the factory and sold. The department has taken a stand that since the price was not the sole consideration for sale, the value for charging duty was to be determined in accordance with the manner as prescribed under Rule 6 of the Central Excise Valuation (Determination of price on excisable goods) Rule, 2000 and accordingly, eight show cause notices were issued to the appellant for different periods demanding central excise duty of Rs. 31,96,147/- along with interest and penalty. The show cause notices were adjudicated by the learned Assistant Commissioner vide his order dated 29.03.2012 whereunder, the charges as invoked in the show cause notices were confirmed. The Order-In-Original was challenged by the appellant before Commissioner (Appeals) who vide his order no. V.2(73)155/VDR-I/2012 dated 21.05.2013 had upheld the findings of the Order-In-Original. The appellants are before us against the above mentioned Order-In-Appeal.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
