Cost of boxes/containers and wooden packing are includable in value only when it is done to put goods in marketable condition and not when it is meant for safe transportation for sale at factory gate
In the instant case, Addisons Paints & Chemical Ltd. was manufacturing paints and varnishes falling under Chapter 32 of the Excise Tariff Act. The final products manufactured were packed in tins and plastic containers which were then put in carton boxes for the purpose of transportation and then sold to the wholesale dealers. The Respondent filed a refund claim, claiming that the duty paid on the cost of cartons cannot be included in the assessable value of the final products. However, the same after being initially rejected by the Department was later on allowed by the Hon’ble Tribunal.
The Hon’ble Supreme Court held that the stated issue depends upon the test as to whether packing is done in order to put the goods in marketable condition and whether the goods are capable of reaching the market without the type of packaging concerned. Packing is includible in value only if it is done in order to put goods in marketable condition and not when goods are capable of reaching market without said packing.
If goods are generally sold in wholesale market at ‘factory gate’, use of cartons for transportation ‘from factory gate’ for sale to individual customers or as stock transfers cannot be included in value. Similarly, since wooden packing is not a requirement for sale at ‘factory gate’, same cannot be included in value.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: firstname.lastname@example.org)