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REPORTABLE   

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 7251-7302 OF 2000

M/s. Tata Chemicals Ltd. ... Appellant

Versus

Collector of Central Excise, Ahmedabad ... Respondent

J U D G M E N T

Dipak Misra, J.

In this batch of appeals, the appellant calls in question

the  assailability  of  judgment  and  order  dated  6.9.2000

passed by the Customs, Excise and Gold Control (Appellate)

Tribunal, New Delhi (for short ‘the tribunal’) in Appeal Nos.

E/1073-1090/90-A, E/4285-4289/90-A, E/4293-4294/91-

A,  E/4296-4322/91-A,  whereby  the  tribunal  has  not

accepted  the  letters  dated  15.12.1970,  01.02.1971  and

02.04.1971 to bring out the arrangement for the return of

durable packing, namely, gunny bags, for reuse as packing

material for selling the soda ash in bulk.  The tribunal has

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further opined that assessee’s effort to establish that there

was an arrangement between the manufacturer and their

customers to  return the  durable  packing,  namely,  gunny

bags, and accordingly the claim put forth by them that the

value  of  gunny  bags  used  for  packing  soda  ash

manufactured by them should be excluded in finding out

the  assessable  value  was  unsustainable  and  hence,

unacceptable.   

2. The controversy, to be appreciated, requires narration

of certain background facts.  Dispute with regard to these

gunny bags between the assessee and revenue have arisen

for  the  period  from  1970  to  1985.   As  is  evident,

proceedings  for  the  entire  period  were  taken  in  three

compartments,  namely,  1970-75,  1976-1980  and

1981-1985.  Initially the dispute related to payment of duty

of excise on the value of goods manufactured i.e. soda ash,

after  exclusion  of  post-manufacturing  expenses.

Subsequently,  it  was  settled  as  a  proposition  that

post-manufacturing expenses as such were not deductible

and that the deduction/exclusions could only be in terms of

specific  provisions  contained  in  Section  4  of  the  Central

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Excise Act, 1944 (for brevity, ‘the Act’).  On the basis of the

aforesaid law laid down, the matters were remanded by this

Court for reconsideration.   

3. Be it noted, it was for the first period, that is, 1970-75,

the matter was remanded to the Assistant Commissioner to

decide the issue relating to exclusion/inclusion of cost of

packing in determining the value of goods for payment of

excise duty under Section 4 of the Act.  The claim of the

assessee  was  eventually  rejected  by  order  no.

194/2006-Ex-PB dated 14.2.2006 in appeal No. E-480/04.

That  compelled  the  assessee  to  prefer  Civil  Appeal  No.

2988/2006.  The said appeal has been disposed of by this

Court  vide  judgment  and  order  dated  21.8.2014.   This

Court  had  referred  to  certain  paragraphs  of  the  order

passed by the tribunal and thereafter passed the following

order:-

“The  aforesaid  paragraphs  clearly  demonstrate that the Tribunal has followed the reasoning that it had followed for the period 1981 to 1985.  Mr. B.L.  Narasimhan,  learned  counsel  for  the appellant  would  contend  that  the  claim  of  the assessee  before  the  authorities  we  absolutely different  inasmuch  as  two  contentions  were raised before the authorities, namely, that excise duty was not  leviable on the packing materials

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supplied by the buyer, and the second, the same was  durable  and  returnable,  but,  the  Tribunal has adverted to the second aspect by expressing its view on the basis of the decision rendered by it  pertaining  to  the  assessment  years  1981  to 1985 and not adverted to the issue that no levy could have been imposed on packing material, if it is supplied by the purchaser and the said fact proven to the satisfaction of the authorities that it has been used for packing.  

Learned  counsel  for  the  appellant  fairly submitted that he does not intend to press the issue with regard to durability and returnability. He has confined his submission with regard to levy  of  excise  duty  on  the  packing  material supplied by the buyer.   

Mr. Rohtagi, learned Attorney General, we must appreciably state  submitted with all  fairness at his  command that  as far  as the first  aspect  is concerned, if the packing materials are supplied by  the  buyer,  the  levy  could  not  have  been impsed.  The said contention is absolutely correct is view of the law laid down in  M/s. Hindustan Polymers Vs. Collector of Central Excise1.   

As  the  Tribunal  has  not  adverted  to  the  said facet,  we  allow  this  appeal  and  remand  the matter to the Tribunal exclusively for delineation on the said issue.   Accordingly, the order of the Tribunal is set aside to the said limited extent. We may hasten to clarify, our setting aside of the order would not have no effect whatsoever for the assessment years 1981 to 1985.

1

(1989) 4 SCC 323

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4. It is necessary to mention here that for the subsequent

period, i.e. 1976-1980, the matter is still subjudice before

the adjudicating authorities and I am not concerned with

the  same.   The  present  batch  of  appeals  relates  to  the

period 1981-1985.   It  is  apt  to  note  here  that  when the

batch of appeals was listed before a three-Judge Bench, it

referred to Section 4(4)(d) of the Act and letters issued by

the appellant; took note of the decisions in  Mahalakshmi

Glass  Works  (P)  Ltd.  v.  Collector  of  Central  Excise2,

Triveni  Glass  Ltd.  v.   Union  of  India  &  Ors.3 and

Commissioner of Central Excise v. Hindustan National

Glass  & Industries  Ltd.4;  adverted  to  the  order  of  the

tribunal that has not accepted the documents holding that

it did not show that there was any arrangement regarding

returnability  of  gunny  bags  which  would  justify  the

exclusion of cost of gunny bags from the cost of soda ash;

analysed  the  proposition  of  law  stated  in  K.  Radha

Krishnaiah v. Inspector of Central Excise and others5

and opined thus:-

2  1988 (Supp) SCC 601 3  (2005) 3 SCC 484 4  (2005) 3 SCC 489 5  (1987) 2 SCC 457

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“As we read the decisions in K. Radha Krishnaiah (supra)  and  Mahalakshmi  Glass  Works  (P)  Ltd. (supra),  the  Court  was  of  the  view  that  there must  be  an arrangement  to  the  effect  that  the packing material must be returnable to the seller by the buyer.  In such a case actual return would not have to be established.  The reason for this is obvious.  From the section it appears that if the packing material is obliged to be returned to the seller, the seller does not in fact transfer the title in the packing material to the buyer.  The seller retains the property in the packing material.  In such  circumstances  irrespective  of  the  actual return of the packing material by the buyer to the seller,  the  seller,  not  having  effect  the  sale  of packing material, was not required to include the cost of packing material in the cost of excisable goods.   In  the  present  case,  there  was  no obligation on the part of the buyers to return the gunny  bags  and  the  assessee-seller  clearly indicate that only if the gunny bags are actually returned  would  the  buyers  be  entitled  to  a deduction  of  the  value  of  the  gunny  bags. Therefore value of the gunny bags formed part of the prices and were otherwise includible in the value of the goods.  There would be a deduction of  the  sale  price  only  if  the  gunny  bags  were returned by the customers to the assessee.  The Tribunal  rightly  came  to  the  conclusion  that there was in fact no such arrangement between the appellant and its customers that the packing material  shall  be  returned.   The  letters  show request,  recommendation  and  urging  of  the customers  by  the  assessee,  all  of  which  were open to the customers concerned to either accept or  reject.   If  we  were  to  hold  that  such  an arrangement  would  allow  the  appellant  to exclude the cost of the packing material from the value  of  the  goods  as  a  matter  of  course  and irrespective of the customers returning the gunny bags, it would run contrary to the language of the section and the decisions in K. Radha Krishnaiah

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(supra)  and  Mahalakshmi  Glass  Works  (P)  Ltd. (supra).  The basis for making an exception in the statute  in  respect  of  durable  and  returnable packing material would also cease to justify such an exception.  “We  may,  also  note  at  this  stage  that  the appellant has also contended and in fact it had only claimed a reduction in the value of the soda ash on the basis of gunny bags actually returned. Nevertheless  on  the  basis  of  the  decision  in Triveni  Glass  Ltd. (supra),  it  contends  that irrespective  of  the  actual  return  of  the  gunny bags, the Tribunal was bound to exclude the cost of the gunny bags from the value of the soda ash in all cases where there was an arrangement to return the packing materials as a matter of law.”  

After so stating, the three-Judge Bench proceeded to

observe as follows:-

“The decision in  Triveni  Glass Ltd. (supra) does appear  to  suggest  that  even  if  there  is  no obligation on the part of the buyer to return the packing material,  but  there is  an obligation on the  part  of  the  seller  to  accept  the  packing material if the buyer chooses to return it, then in all cases the cost of the packing material must be excluded  from the  cost  of  the  excisable  goods. This view is, in our opinion, contrary to the ratios laid down in the cases of  K. Radha Krishnaiah (supra)  and  Mahalakshmi  Glass  Works  (P)  Ltd. (supra).

5. In view of  the aforesaid it  referred the matter  to be

placed before the larger Bench by order dated March 23,

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2006.  The Constitution Bench vide order dated 4.8.2010

passed the following order:-

“In view of paragraphs 12 and 17 of the judgment of Three-Judge Bench of this Court in the case of Triveni Glass Limited vs. Union of India and Ors., reported in 2005(3) SCC 484, we are of the view that the assumption made in the referral  order dated  23rd March,  2006  to  the  effect  that  the decision  of  this  Court  in  Mahalakshmi  Glass Works (P) Limited vs. Collector of Central Excise, Bombay,  reported  in  1988  (Supp)  SCC 601,  is erroneous.  On the contrary, the judgment of this Court  in  Triveni  Glass  Limited  (supra)  in  turn follows  the  judgment  in  Mahalakshmi  Glass Works (P) Limited (supra).

For  the  above  reasons,  the  order  of  reference dated  23rd March,  2006,  is  set  aside  and consequently, the civil  appeals will be heard by the  appropriate  Bench in  accordance with  law. All arguments on merits on both sides are kept open.”

6. In  view  of  the  aforesaid  chronology  of  events,  I  am

required  to  adjudge  whether  the  finding  recorded  by  the

tribunal is justified in the backdrop of the letters issued by

the assessee.  The tribunal, as is noticeable, has held that

there has been no arrangement between the manufacturer

and  their  customers  to  return  the  durable  packing  and,

therefore, the claim put forth by the assessee that the value

of gunny bags used for packing soda ash manufactured by

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them should be excluded in finding out the assessable value

is untenable.   

7. It  is  submitted  by  Mr.  Ravinder  Narain,  learned

counsel  for  the  appellant  that  the  controversy  has  to  be

appreciated regard being had to the applicability of the word

“value”  as  employed  in  Section  4(4)(d)(i)  of  the  Act  in

relation to excisable goods and the interpretation placed by

this  Court  on various  authorities  in  the  backdrop of  the

letters  that  have  been brought  on record.   It  is  also  his

submission that the concept of durability and returnability

has to be understood on the bedrock of  the propositions

laid down by the decisions of this Court.  Additionally, it is

canvassed by him that once it is established that there has

been  an  arrangement,  the  authorities  can  be  asked  to

appreciate  the  other  documents,  regard being had to the

period in question to find out whether the arrangement was

in vogue during that period.  

8. The  aforesaid  submissions  have  been  seriously

controverted  by  Mr.  Mukul  Rohtagi,  learned  Attorney

General, on the foundation that the letters cannot form the

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basis  of  an  arrangement  and  they  are  fundamentally

self-serving documents.    

9. Section 4(d) which defines “value” reads as follows:-

“(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.”

10. Section 4(d)(i)  uses the word “returnable”.   The said

word fell for consideration before a two-Judge Bench in K.

Radha Krishnaiah (supra).   While  interpreting  the  said

term, the Court held thus:-

“Does  it  mean  physically  capable  of  being returned  or  does  it  postulate  an  arrangement under  which  the  packing  is  returnable.  While interpreting this word, we must bear in mind that what Section 4(4)(d)(i) excludes from computation is cost of packing which is of  a durable nature and is “returnable by the buyer to the assessee”. The packing must be one which is returnable by the  buyer  to  the  assessee  and  obviously  that must  be  under  an  arrangement  between  the buyer  and  the  assessee.  It  is  not  the  physical capability of the packing to be returned which is the determining factor because, in that event, the words “by the buyer  to  the assessee”  need not have found a place in the section; they would be superfluous. What is required for the purpose of attracting the applicability of the exclusionclause in Section 4(4)(d)(i) is that the packaging must be

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returnable  by  the  buyer  to  the  assessee.  The question which has to be asked in each case is: Is the packing in this case returnable by the buyer to the assessee and obviously it cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned.”

11. In  Mahalakshmi  Glass  Works (supra),  the

assessee-appellant have been paying duty on the value of

the glass bottles including the cost of  gunny bags or the

cartons in which these are packed at the time of sale.  It

had been paying duty on the glass bottles on the basis of

assessable  value  which  included  the  costs  of  packing

material, namely, the gunny bags and the cartons.  It was

contended before the adjudicating authority by the assessee

that the glass bottles are normally sold by it in the packing

consisting of gunny bags which are durable and returnable

and in several cases the gunny bags are returned by the

buyers and reused by the appellant again for packing the

glass bottles.  It was also brought to the notice of the said

authority that only when the customers ask for delivery in

cartons  instead  of  gunny  bags,  the  appellant  deliver  the

glass  bottles  packed  in  cartons  which  are  durable  and

returnable.   When the assessee submitted a  price  list  in

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regard to the glass bottles manufactured by it for approval

by showing separately the price at which such goods were

actually sold in the course of “whole-sale trade” and “the

cost of packing”, Superintendent of Central Excise returned

to  the  assessee  the  price  list  duly  approved  but  noting

therein that price should be inclusive of the cost of packing

and the packing charges in terms of Section 4(4)(d)(i) of the

Act.  On the basis of the said communication, the assessee

paid the duty under protest and, thereafter, lodged claims

for refund.  When it  did not receive any payment or any

intimation,  the  litigation commenced.    When the  matter

arrived  before  the  tribunal,  the  tribunal  relied  on  the

authority in K. Radha Krishnaiah (supra) and opined that

there was no clause about the returnability of the cartons

and gunny bags.  This Court, in appeal, while relying upon

the principle in K. Radha Krishnaiah case ruled that:-

“As noted above, this Court has considered the meaning  of  the  expression  “returnable”  in  the section in K. Radha Krishnaiah case. This Court held that so far as the question of durability is concerned,  there  cannot  be  such  controversy about  it,  but a question has been raised as to what is the meaning and connotation of the word “returnable”. Does it mean physically capable of being  returned  or  does  it  postulate  an arrangement  under  which  the  packing  is

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returnable?  While  interpreting  this  word,  we must  bear  in  mind  that  what  Section  4(4)(d)(i) excludes  from  computation  is  cost  of  packing which is of a durable nature and is “returnable by the buyer to the assessee”. The packing must be one which is returnable by the buyer to the assessee and obviously  that  must be under an arrangement  between  the  buyer  and  the assessee. It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words “by the buyer  to  the  assessee”  need  not  have  found  a place in the section, they would be superfluous.”

After  so  stating,  the  Court  dismissed  the  appeal  as

there  have  been  no  evidence  of  the  agreement  that  the

cartons and gunny bags were returnable.  

12. In Hindustan Polymers (supra), a three-Judge Bench

was dealing  with the concept  of  value of  excisable  goods

under Section 4(4)(d)(i).   Sabyasachi Mukharji,  J.  (as His

Lordship then was) opined that:-

“The  contention  that  the  value  of  packing materials including those supplied by the buyer, has to be included in the value of the goods, is repugnant  to  the  very  scheme  of  Section  4.  It overlooks  the  use  of  the  expression  “cost”  in relation to packing in the clause (i) of Section 4(4) (d)  of  the  Act.  The  word  “cost”  has  a  definite connotation,  and  is  used  generally  in contradistinction to the expression “value”. Thus, the clear implication of the use of the word “cost” is that only packing cost of which is incurred by the assessee i.e. the seller, is to be included. The use of the expression “cost” could not obviously

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be by way of reference to packing for which the cost is incurred by the buyer. It has to be borne in mind that  such a provision would make the provision really unworkable, since in making the assessment of  the seller, there is no machinery for ascertaining the “cost” of the packing which might  be  supplied  by  the  buyer.  Such  a contention further overlooks the scheme of clause (i) whereunder durable packing returnable by the buyer  has  to  be  excluded.  It  would  create  an absurd situation if durable packing supplied by the  assessee  and returnable  to  the  assessee  is not to be included in the assessable value but a durable  packing  supplied  by  the  buyer  to  the assessee and returnable to the buyer is made a part of the assessable value.”

Ranganathan, J., in his concurring opinion, expressed

the view thus:-

“In construing Section 4(4)(d)(i), all that has to be seen is whether the goods are delivered in packed condition.  If  this  question  is  answered  in  the affirmative, then, in respect of the goods so sold, the  cost  of  packing,  whether  incurred  by  the manufacturer  or  by  the  supplier,  has  to  be automatically included in the assessable value if necessary,  by addition to the sale price,  except only where the packing is of durable nature and returnable to the manufacturer.  He reminded us of the oft-quoted truism that, in tax matters, one has to look at what is said and that there is no question of  any intendment,  implication,  equity or liberality in construing the taxing provision. I agree  with  Mukharji,  J.  that  this  contention cannot be accepted. The principle referred to by the learned Attorney General is unexceptionable but the words of a statute have to be read in the context  and  setting  in  which  they  occur.  The proper interpretation to be placed on the words of

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Section  4(4)(d)(i)  has  been  explained  in  the judgment of my learned Brother and I am in full agreement with him on this point.”

And again:-

“Where  the  manufacturer  supplies  his  own container  or  drum  but  does  not  charge  the customer therefor, then the price of the goods will also include the cost of the container. There will be no question of separate addition to the sale price nor can the assessee claim a deduction of the  cost  of  packing  from the  sale  price  except where  the  container  is  a  durable  one  and  is returnable  to  the  manufacturer.  If  the manufacturer  supplies  the  drums  and  charges the  customers  separately  therefor,  then,  under Section  4(4)(d)(i),  the  cost  of  the  drums to  the buyer has to be added to the price except where the  packing  is  of  durable  nature  and  is  to  be returned  to  the  manufacturer.  If  on  the  other hand,  the  manufacturer  asks  the  customer  to bring  his  own  container  and  does  not  charge anything therefor then the cost (or value) of the packing  cannot  be  “notionally”  added  to,  or subtracted  from,  the  price  at  which  the  goods have been sold by the manufacturer.”

Verma, J., in his concurring opinion, ruled that:-

“The “cost  of  such packing”  referred in  Section 4(4)(d)(i)  does  not  include  within  its  ambit  the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not  the  manufacturer.  This  construction  of  the expression “cost of such packing” in Section 4(4) (d)(i) of the Act clearly excludes in these matters the question of its addition to the price of goods recovered by the manufacturer from the buyer for determining  the  “value”  in  relation  to  the

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excisable goods for computing the duty payable on it.”

13. Learned counsel for the appellant has commended me

to the authority in  Triveni Glass Limited (supra).  In the

said case, a three-Judge Bench has held thus:-

“We  have  considered  the  submission  of  the parties.  In our view, the law laid down by this Court in Mahalakshmi Glass Works (P) Ltd. is the correct law. There is no necessity that the crates must be actually returned. So long as there is an obligation on the seller to take back the crates, if the buyer chooses to return them, it is sufficient. The term in the contract, set out above, imposes an obligation on the appellants to take back the wooden crates and to pay the stipulated amount to the buyer if the buyer chooses to return them. Wooden crates merely consist of planks of wood which are nailed together. Therefore, even if they are dismantled by the buyer and the planks are returned to the appellants, the appellants would be in a position to use them again. In our view, the  High Court  was  wrong  in  holding  that  the wooden crates are not durable or returnable. The answer to the second question therefore has to be in favour of the appellants. It is held that, in view of  the  specific  term  in  the  bills/invoices,  the wooden  crates  are  durable  and  returnable packing whose cost is not to be included in the value of glass sheets.”

The  principle  stated  therein  has  been  followed  in

Triveni Glass Ltd. v. Commissioner of Central Excise,

Guntur6.

6  Civil Appeal Nos. 4852-4853 of 2005  

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14. From the aforesaid proposition of law, it is graphically

clear that there has to be an arrangement for the return of

the packing material.  In the case at hand, the tribunal has

ruled, after referring to the letters, that there has been no

arrangement.   The  said  finding  has  been  seriously

challenged by Mr. Ravinder Narain, learned counsel for the

appellant on the foundation that the letters clearly spell out

the  arrangement;  that  there  has  been  responses  by  the

dealers and that the benefits were availed accordingly.  To

appreciate  the  factual  controversy,  it  is  appropriate  to

reproduce  the  relevant  paragraphs  from  the  letter  dated

15.12.1970:-

4. At  this  stage,  it  will  be  relevant  to  recall several attempts that we have made in the past to encourage  and  promote  the  cyclic  use  of  jute bags  and  to  introduce  cheaper  and  alternative packing  materials  like  cloth,  plastics,  etc. Unfortunately,  these  attempts  have  so  far  met with  only  limited  and  interrupted  success.   In order to eliminate or to reduce the cost of packing materials,  we  were  strongly  motivated  by  the consumer interest because the packing materials can  count  for  nearly  10% of  the  bulk  price  of Soda  Ash and were  guided by  the  fact  that  in several developed countries as much as 90% of the Soda Ash is sold in bulk.  In terms of the national interest, another powerful incentive lay in the need for conserving the jute supplies both for  the  domestic  demand  from the  agricultural sector and for export.  

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xxxxx xxxxx xxxxx 6. Until  the  bulk  movement  of  Soda  Ash becomes more sidle possible and acceptable, we would strongly urge our customers to reclaim the used bags and return the sound ones back to our Works at Mithapur for reuse.  Such cyclic uses of bags, in the interim, would once again result in substantial benefit to the consumer as there will be  no  cost  of  packing  material  involved.   Our distributors  throughout  the  country  will  offer assistance, at nominal charge, for organizing this operation as a customer service.  

7. On  such  occasions  when  either  the  bulk movement of the material or the reuse of the bags is not possible, the customers will be offered free choice of any of the two following courses:-

(a) They can send their own packing materials –  jute  cloth,  plastic  etc.  –  to  our  Works  at Mithapur for use in packing the bulk Soda Ash.

(b) They can authorise Tata Chemicals to use, on  their  behalf,  packing  materials  from  their stocks  at  actual  cost  accruing  at  the  point  of packing Soda Ash.  

xxxxx xxxxx xxxxx

9. If  and  when  and  at  the  customer’s  own option, the use of packing material is involved in connecting  the  bulk-priced  Soda  Ash  to  the customer,  we  will  separately  bill  the  following charges  in  addition  to  ex-Works  bulk  prices arrived at under (8) above:

Rs./Tonne A. Cost of packing material P (note 1) B. Charges for branding / ) 3 (note 2)

Packing and stitching if ) and when necessary )

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C. “Refundable” excise contingency R (note 3)

NOTE 1: When the customer accepts deliveries in  bulk  and/or  furnishes  his  own  packing material  (used  or  new)  the  value  of  P  will obviously  be  zero.   If  Tata  Chemicals  are requested to furnish new packing material on the customer’s account, then P will equal the actual cost  of  packing  material  that  Tata  Chemicals incur at the point of  packing – on the basis of current  stocks  of  packing  materials  with  Tata Chemicals, the value of P for Light Soda Ash is estimated  at  Rs.46.00  and  Dense  and  Medium Dense Soda Ash ant Rs.52.00.” Note 3 We have been legally advised on good authority that the ad valorem excise duty at 10% should be applicable only  on our basic ex-Works price of Soda Ash in bulk and not on the packing material if and when the use of packing material is involved at the customer’s option and account. This position has, however, to be yet established clearly and fully with the excise authorities.  Only in the event of  excise  authorities  not  accepting this position readily and Tata Chemicals having to contest this in the court, we shall  recover R which will  equal  additional  excise  duty,  if  any, which  the  excise  authorities  might  impose  on account  of  the  use  of  packing  material  (used and/or  new)  furnished  either  directly  by  the customer or,  at his request,  by Tata Chemicals on  his  account.   Such  recoveries  as  Tata Chemicals might be compelled to make on this account  shall  be  refunded  to  the  clearly identifiable  end-users  after  Tata  Chemicals succeed  in  securing  a  favourable  verdict  either from  the  excise  authorities  directly  or  in  the court.  

10. At  the  time  of  placement  of  orders,  the customers are requested to specify whether:-

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(a) They  want  Soda  Ash  to  be  dispatched  in bulk.

(b) They want the material to be packed in their own bags – new or used, or  

(c) They want to  authorise  Tata Chemicals to use bags from their own stock, on their account, at actual cost at the point of packing.

15. In this context,  reference to letter  dated 1.2.1971 is

pertinent.  The relevant part of the same is as follows:-

“We  invite  your  attention  to  our  Circular  No. CON/G-50/70  dated  15th December  1970, wherein  we  had  agreed  that  customers  could send their  own packing materials  –  jute,  cloth, plastic etc. to our Works at Mithapur for use in packing the bulk Soda Ash.  While we would be pleased to  receive  such packing  materials  from our customers, to avoid problems with the Excise and the Railway authorities and to facilitate the filling of the product at our Works at Mithapur, we shall be glad if the customers send unbranded bags only of the following specifications:-

Gunny bags

Soda Ash Light 39” x 26.1/2” L Twills, WIP 2.1/2 lbs./44”hd., 8 x 8  Plain Unbranded

Soda Ash Dense 39” x 26.1/2” L Twills, WIP 2.1/2 lbs./44”x26.1/2”hd., 8 x 8  Plain Unbranded

Soda Ash Dense Medium 39” x 26.1/2” L Twills, WIP 2.1/2 lbs./44”hd., 8 x 8  Plain Unbranded”

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16. Learned  counsel  appearing  for  the  appellant  has

drawn my attention  to  letter  dated  2.4.1971.   I  think  it

appropriate to reproduce the communication in entirety:-

“Dear Sirs, Soda Ash – Packing

You will have noted from the newspaper reports that  due  to  the  political  upheaval  in  East Pakistan,  the  prices  of  jute  bags  are  rising sharply and are expected to up still further.  

We have  been recommending  over  the  last  few years to our customers to return our Soda Ash bags to our Works at Mithapur for refilling of the product  on  their  account.   We  have  further pointed  out  that  such  cyclic  use  of  jute  bags would, now that we have a price for bulk Soda Ash,  result  in  considerable  saving  to  our customers.  

In  the  interest  of  our  consumers  and conservation of jute supplies we once again very strongly  urge  the  return  of  our  used  bags  to Mithapur for re-use.  May we, therefore, request that  you  give  this  matter  your  urgent consideration and arrange for the return of the used bags to Mithapur for packing your further supplies?

While returning the bags please remember that -  

(1) you should return to us only our Soda Ash bags and not the bags of other manufacturers.

(2) the bags should be in good condition so that we are able to bring them into re-use.  

(3) The bags should be returned to Mithapur, freight paid.”

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17. The  contents  of  the  aforesaid  letters  are  to  be

appreciated in  the  proper  context  and on the  bedrock of

authorities, I have referred to hereinabove.  The decision in

Triveni  Glass  Limited,  2005  (supra)  which  has  been

approved by the Constitution Bench clearly lays down that

it is not the physical capability of packing to be returned

which is the determining factor but the condition that if the

buyer chooses to return the packing, the seller is obliged to

accept it and refund the stipulated amount.  The question

whether  the  packing  is  actually  returned  or  not  has  no

relevance.   It must be manifest that it is the obligation of

the  assessee  to  take  back  the  packing  items  from  the

purchaser.  The tribunal has interpreted the letters treating

them that they do not meet the nature and character of an

“arrangement”.   It  is  urged  before  me  by  the

assessee-appellant that it is circulated to all the dealers and

that there has been responses from the buyers to the letters

circulated  by  the  assessee.   It  is  put  forth  by  him that

communications from the buyers were brought on record

before the tribunal by way of an affidavit and invoices were

also  brought  on  record.   The  letters  clearly  show  the

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obligation  of  the  assessee-appellant  to  take  back  the

packing  materials.   Learned  counsel  has  also  taken  me

through the billing from which it is clear that in addition to

the bulk prices of soda ash, the packing material was also

required and in such cases as per the formula set out in the

letter,  the  cost  of  packing  material  has  been shown and

charged and in that event, the value of the packing material

is zero.  That apart, submits Mr. Ravinder Narain, learned

counsel  for  the  appellant  that  when  the  appellant  has

demonstrably  stated  that  it  is  obliged  to  accept  such

packing  material  for  reuse,  the  test  laid  down  in  the

decision Triveni Glass Limited, 2005 (supra) is met with.

Certain responses issued by buyers namely, All India Glass

Works  Pvt.  Ltd.,  The  Cawnpore  Chemical  Wokrs  Private

Ltd.,  The  Alembic  Glass  Industries  Ltd.,  ATIC  Industries

Limited, Ashok Silicate Industries, Ultramarine & Pigments

Limited and The Gwalior  Rayon Silk Mfg.  (Wvg.)  Co.  Ltd.

have  been  brought  on  record.   He  has  also  drawn  my

attention  to  number  of  endorsements  which  shows  that

empty bags have been returned by the buyers and in fact

the  reference  is  to  the  “empty  bags”  supplied  by  the

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appellant  which  have  been  returned  to  the  appellant  for

refilling and reuse, is in consonance with the letter dated

29.12.1970.  

18. Be  it  clarified,  an  arrangement  need  not  be  in  a

particular form, it can be oral or in writing by way of an

agreement  or  can be  ascertained from communication or

letters  exchanged.   When  oral  it  has  to  be  proved  and

established and when in writing it should be genuine and

not a camouflage, but an arrangement cannot be ignored

and treated as  non est because it  is by means of written

communications.  

19. In  Hindustan Polymers  (supra),  it  has been clearly

held that when an arrangement  per se  exists for return of

durable packaging by the buyer to the manufacturer, then

whether or not the packaging was in fact returned would be

inconsequential.  More importantly, it was held therein that

if the durable packaging was supplied by the buyer to the

assessee  and  was  returnable  to  the  buyer,  the  cost  of

durable packaging would not form a part of the assessable

value.  To treat value of the durable supplied by the buyer

as a part of the assessable value, it was observed, would

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result in an absurd situation.  In this context, it was held

that  proper  contextual  interpretation  was  required  to  be

placed  on  the  words  of  Section  4(4)(d)(i),  as  literal

interpretation would lead to difficulties.  The letter dated 2nd

April, 1971 in this context is relevant.  

20. In  view  of  the  aforesaid  analysis,  I  arrive  at  the

irresistible  conclusion  that  the  letters  spell  out  an

arrangement  between the  assessee  and the  buyers.   The

tribunal has not accepted the stand of the appellant on the

ground that it is not an arrangement and on that basis has

remanded  the  matter  to  the  adjudicating  authority  for

computation of the actual amount of duty payable by the

appellant.   Once  I  accept  that  it  has  the  nature  and

character of an arrangement, then the authority is required

to ascertain from the record whether the buyers continued

to have a choice to return the packing material for reuse.  I

need not indicate the method of verification of the existence

of the arrangement for the period in question.   Once the

existence  arrangement  and  choice  to  return  the  packing

material for reuse are established for the period in question

in view of the second decision in  Triveni Glass Limited

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(supra),  the  packing  cost  would  not  be  included.   If  the

assessee succeeds in establishing the choice mentioned in

the  documents  which  I  have  accepted  to  be  an

arrangement,  and is  prevalent  during the relevant  period

i.e. 1981 to 1985, the appellant shall be given the benefit.  If

he fails  to establish the same, the adjudicating authority

shall look into the consideration the actual return as has

been  directed  in  Civil  Appeal  No.  2988  of  2006  on

21.8.2014.   

21. Resultantly,  the  appeals  are  allowed and the  orders

passed by the forums below are set aside and the matter is

remanded to the adjudicating authority for adjudication in

accordance with the principles stated hereinabove.  There

shall be no order as to costs.  

.............................J. [Dipak Misra]

New Delhi August 06, 2015

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 Reportable

IN THE SUPREME COURT OF INDIA            CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 7251-7302 OF 2000

M/S. TATA CHEMICALS LTD.             ………APPELLANT        Vs.

THE COLLECTOR OF CENTRAL EXCISE,  AHMEDABAD                              ………RESPONDENT

J U D G M E N T

    I have gone through the judgment of my learned

brother Judge, Justice Dipak Misra, wherein certain

relevant facts have been adverted to by my learned

brother on the contentious legal issues urged on

behalf of the parties. My learned brother has also

adverted to the relevant provisions under Section

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4(4)(d)(i) of the Central Excise and Salt Act, 1944

(hereinafter referred to as “the Act”).

2.    My learned brother Judge has also referred to

the  decisions  of  this  Court  in  the  cases  of

Mahalakshmi Glass Works (P) Ltd.  v. Collector of

Central  Excise7, Triveni  Glass  Ltd.  v. Union  of India8 and  CCE  v. Hindustan  National  Glass  &

Industries  Ltd.9 and  K.  Radha  Krishnaiah  v.

Inspector  of  Central  Excise10 in  support  of  his decision  that  the  letters  dated  15.12.1970,

01.02.1971  and  02.04.1971  and  the  credit  notes

dated  12.3.1988  and  31.3.1988,  spell  out  an

arrangement between the assessee and the buyers. He

has further opined that once the existence of an

arrangement is established and there is a choice on

the buyer to return the packing material for reuse,

then the cost of packing shall not be included. He

7

(1988) Supp SCC 601 8 (2005) 3 SCC 484 9 (2005) 3 SCC 489 10 (1987) 2 SCC 457

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                                     -30-

has further held that if the assessee succeeds in

establishing the choice mentioned in the documents

which this Court has accepted to be an arrangement

and  the  same  is  prevalent  during  the  relevant

period  of  time,  i.e.1981  to  1985,  the  appellant

shall  be  given  the  benefit.  My  learned  brother

after arriving at the abovementioned conclusion has

remanded the matter to the adjudicating authority

for adjudication in accordance with the principles

laid down by this Court.

      I respectfully dissent with the said view

taken by my learned brother Judge by giving the

following reasons:

    The main issue of dispute in the present batch

of appeals is that whether the price of the gunny

bags should be included in the assessable value of

the soda ash for the purpose of levy of excise

under the Act?

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3.   In  order  to  arrive  at  an  irrefutable

conclusion that the appellant is not liable to get

the exemption from payment of excise duty on the

packing  material  of  soda  ash,  it  has  to  be

determined whether the gunny bags which are used

for packing soda ash by the appellant were durable

and returnable in nature and whether the same were

returned to the appellant for re-use/repacking of

soda ash by the appellant. Secondly, it has to be

further  determined  whether  there  was  any

arrangement, express or implied by the appellant

with its buyers of soda ash with regard to the

returnability of the used gunny bags to it in the

light of the provisions provided under the Act and

the legal principles laid down by this Court in a

catena of cases.

 4.    To  determine  the  same,  letters  dated

15.12.1970, 01.02.1971 and 02.04.1971 have to be

scrutinized  in  proper  perspective.  The  relevant

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portions of the above dated letters are extracted

hereunder:

Letter dated 15.12.1970, reads thus:

“6.  Until the bulk movement of Soda Ash becomes  more  sidle  possible  and acceptable,  we  would  strongly  urge  our customers  to  reclaim  the  used  bags and return the sound ones back to our Works at Mithapur for reuse. Such cyclic uses of bags,  in  the  interim,  would  once  again result  in  substantial   benefit  to  the consumer  as  there  will  be  no  cost  of packing  material  involved.  Our distributors throughout the country will offer assistance, at nominal charge, for organising  this  operation  as  a  customer service.

7. On such occasions when either the bulk movement of the material or the reuse of the bags is not possible, the customers will be offered free choice of any of the two following courses:-  

(a) They  can  send  their  own  packing materials-jute  cloth,  plastic etc.-to our Works at Mithapur for use in packing the bulk Soda Ash.

(b) They can authorize Tata Chemicals to use, on their behalf, packing materials  from  their  stocks  at actual cost accruing at the point of packing Soda Ash.

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8.   Against  the background  of what  has been  explained  in  the  preceding paragraphs, our prices of Soda Ash, Light and  Dense,  are  hereby  revised  and re-fixed, effective from 21 December, 1970 as follows :-

SODA ASH                     (RUPEES PER TONNE)

       LIGHT          DENSE    MEDIUM DENSE

BASIS CURRENT BAGGED EX-WORK S

REVISED * BULK EX-WORK S

CURREN T BAGGED EX-WOR KS

REVISE D BULK EX-WOR KS

CURREN T BAGGED EX-WOR KS

REVISED BULK EX-WORK S

BASE PRICE

476.00 467.0 0

496.00 505.00 486.00 495.00

LOADING 2.00 2.00 2.00 2.00 2.00 2.00 EXCISE DUTY

47.80 46.90 49.80 50.70 48.80 49.70

525.80 515.9 0

547.80 557.70 536.80 546.70

(* Effective 21 December 1970)

These prices are exclusive of sales tax and other levies, if any.

It will be noticed that to the extent that the customers avail of the option, being afforded to  them  under  our  pricing  policy  of eliminating  or  reducing  the  cost  of  the packing material, the average price of Tata Soda  Ash,  F.O.R.,  Mithapur  basis,  can  be marginally lower than hitherto.”

Letter dated 1.2.1971, reads thus:

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“We  invite  your  attention  to  our  Circular No.CON/G-50/70  dated  15th December  1970, wherein  we  had  agreed  that  customers  could send their own packing materials-jute, cloth, plastic etc. to our Works at Mithapur for use in packing the bulk Soda Ash. While we would be pleased to receive such packing materials from our customers to avoid problems with the Excise  and  the  Railway  authorities  and  to facilitate the filing of the produce at our Works at Mithapur, we shall be glad if the customers  send  unbranded  bags  only  of  the following specifications :-

                       GUNNY BAGS SODA  ASH

LIGHT

39”x26.1/2”, L Twills, WIP 2.1/2 lbs./44”hd., 8x8 Plain Unbranded.

SODA  ASH

DENSE

36”x26.1/2”, L Twills, WIP  2.1/2 lbs./44”x26.1/2”hd. 8x8 Plain Unbranded

SODA  ASH DENSE MEDIUM

39”x26.1/2”, L Twills, WIP 2.1/2 lbs./44”hd., 8x8 Plain Unbranded

We shall be grateful if you will ensure that the bags sent by you to our works at Mithapur for  filing  Soda  Ash,  conforms  to  the  above specifications.”

Letter dated 2.4.1971, reads thus:

“We have been recommending over the last few years to our customers to return our used Soda Ash  bags  to  our  Works  at  Mithapur  for refilling of the product  on their account. We

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have further pointed out that such cyclic use of jute bags would, now that we have a price for  bulk  Soda  Ash,  result  in  considerable saving to our customers.”

5.   The same have to be referred to in the light

of the decision of this Court in the case of  K.

Radha  Krishnaiah  v. Inspector  of  Central  Excise

(supra), wherein this Court has held thus:

“The only question which arises in this special leave petition is as to what is true  meaning  and  scope  of  the  word “returnable”  in  Section  4(4)(d)(i)  of the Central Excises and Salt Act, 1944. If  the  packing  is  durable  and returnable then its cost is liable to be  excluded  in  computation  of  the assessable value of the goods for the purpose of excise duty. So far as the question  of  durability  is  concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word “returnable”. Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is returnable. While interpreting this word, we must bear in mind  that  what  Section  4(4)(d)(i) excludes  from  computation  is  cost  of packing  which  is  of  a  durable  nature and is “returnable by the buyer to the

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assessee”.  The  packing  must  be  one which is returnable by the buyer to the assessee  and  obviously  that  must  be under an arrangement between the buyer and  the  assessee.  It  is  not  the physical capability of the packing to be  returned  which  is  the  determining factor  because,  in  that  event,  the words  “by  the  buyer  to  the  assessee” need  not  have  found  a  place  in  the section;  they  would  be  superfluous. What  is  required  for  the  purpose  of attracting  the  applicability  of  the exclusion clause in Section 4(4)(d)(i) is  that  the  packaging  must  be returnable  by  the  buyer  to  the assessee. The question which has to be asked in each case is: Is the packing in this case returnable by the buyer to the assessee and obviously it cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned. Here in the present case it is not the contention of the petitioner  that  there  was  any  such arrangement for return of the packing by  the  wholesale  buyers  to  the petitioner nor is there any evidence to that  effect.  The  excise  authorities were, therefore, right in not excluding the cost of packing in determination of the assessable value of the goods………”

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6.   With reference to the above decision, it is

amply clear that  the gunny bags used for packing

soda ash by the appellant have to be returnable in

nature  and  the  same  has  to  be  done  under  an

arrangement between the buyer and the appellant.

However, in the present case, with reference to the

above stated letters, it is apparent that no such

express  arrangement  has  been  made  between  the

parties. This is so because the value of the gunny

bags have been included in the final sale price of

the soda ash and a careful perusal of the above

stated letters would clearly go to show that no

express arrangement has been made by the appellant

with the buyers for the return of the gunny bags

for the reason that there would be a deduction in

the  sale  price,  only  when  the  gunny  bags  were

returned to the appellants. If we allow such an

arrangement to exist in the guise of conditional

returnability of the gunny bags which may or may

not be returned, then the same would run contrary

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to the principles laid down by this Court in the

cases of  Mahalakshmi Glass Works (P) Ltd.(supra)

and K. Radha Krishnaiah  (supra). The exclusion of

the cost of the packing material from the value of

the goods, irrespective of the customers returning

the same to the appellants is illegal and invalid

and the same cannot be justified by the appellant

by taking the plea that the above mentioned letters

indicate that there is an arrangement between the

parties  to  return  the  used  gunny  bags  to  the

appellant.

 7.   Further, the appellant has already charged for

the value of the gunny bags from the customers by

adding the same to the cost of soda ash. The fact

that some of the customers of the appellant have

returned the gunny bags out of several ones already

sold between the period of 1971 to 1988, does not

entitle it to get the benefit of exclusion of the

cost of all the gunny bags which were not even

returned to the appellant.

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     8.   The test for the determination of inclusion or

exclusion of the value of the gunny bags from the

overall value of the soda ash can be ascertained on

the basis of 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 as held by this Court in the

case  of  CCE  v. Hindustan  National  Glass  &

Industries Ltd.,(supra),  which reads thus:

“12. In  Govt. of India v.  Madras Rubber Factory Ltd. it was, inter alia, held as follows:  

“The test is: whether packing, the cost whereof is sought to be 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

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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 emphasise 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.”

After  analysing  various  decisions,  the position was succinctly summed up by this Court in Hindustan Safety Glass Works case as follows:  

“14.  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 cost of packing is not

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includible  is  always  on  the assessee.””

(emphasis laid by this Court)

9.   Thus, in the light of the aforesaid decision,

the burden to prove that the value of the gunny

bags is not inclusive and not excisable with the

value of the soda ash, lies on the appellant and it

has miserably failed to do so as is clear from the

facts and circumstances of the case that the soda

ash  are  sold  in  bulk  in  the  gunny  bags  at  the

factory  gate  to  the  wholesale  market  and  such

packing  is  indispensible  for  the  transport  and

preservation of soda ash.

 10. The appellant has also failed to establish an

arrangement as per Section 4(4)(d)(i) of the Act.

Mere  suggestion  of  the  same  in  the  above  dated

letters, regarding the return of used gunny bags to

the appellants by the buyers does not establish the

terms  and  conditions  that  are  prerequisites  for

establishing an arrangement of return of the gunny

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bags  to  the  appellant.  Further,  the  above  dated

letters also suggest that the buyers send their own

packing materials for the soda ash for which no

extra charges are incurred on them.

11. Hence, in these circumstances the appellant is

bound to include the cost of the gunny bags that

are provided by it in the overall value of the soda

ash as per the provisions of the Act. Reliance has

been placed in the case of Mahalakshmi Glass Works

(P) Ltd.  v. Collector of Central Excise  (supra),

wherein this Court has held thus:  

“5. The Tribunal noted that the appellant manufactured glass bottles. It delivered these in two types of packing, namely, in open crates and in cartons and gunny bags. So far as the crates were concerned, the same  belonged  to  the  appellant.  The customer was billed for the cost of glass bottles only. The crates were returnable to  the  appellant  within  30  days.  The revenue has not included the cost of such crates  in  the  assessable  value.  The revenue has also not included the cost of packing, if any, supplied by the customer himself. There was no dispute about these packings.  So  far  as  the  packings  in cartons and gunny bags were concerned, it was  noted  by  the  Tribunal,  that  these

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belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles. The appellant’s case  was  that  these  packings  were  also returnable  and  in  many  cases  they  were actually  returned  and  reused  by  the appellant. There was no evidence about the durability of the cartons and gunny bags but  nothing  to  show  that  these  were returnable. The position seems to be as follows: The Tribunal has rightly applied the  returnability  test.  In  K.  Radha Krishnaiah v. Inspector of Central Excise this Court observed that it cannot be said that  the  packing  is  returnable  by  the buyer to the assessee unless there is an arrangement between them that it shall be returned. Therefore, such arrangement has been established. Actual return or extent of  return  is  not  relevant.  What  is necessary is that if the buyer chooses to return the packing, the seller should be obliged  to  accept  it  and  refund  the stipulated  amount.  In  this  case  after examining  the  facts,  the  Tribunal  found that  there  was  no  clause  about returnability  of  the  cartons  and  gunny bags. The appellant invited the attention of the Tribunal to the following clause in their  standard  contract.  It  read  as follows:

“6.  All  packing  cases,  other  than such as may be supplied or paid for by  buyer,  shall  be  returnable  in good order and condition within 30 days after receipt.”

6. The Tribunal was of the view that the above clause related to “cases”. It could have meant only the crates which belonged

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to  the  appellant  and  for  which  the customers  had  not  paid  anything.  The property  in  the  crates  having  remained with the appellant all along, the buyers were naturally obliged to return them to their rightful owners. But that was not the case with the cartons and gunny bags. The buyers pay for these and the property in these pass on to the buyers. They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free. No  such  contract  or  agreement  was forthcoming.  The  Tribunal  was  not convinced  that  in  the  normal  course  of business  anyone  could  be  asked  to  part with his property, and in addition incur return freight therefore too for nothing. In those circumstances, the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term.  The  Tribunal  further  noted  that since the statute insisted on the packing being  returnable,  in  addition  to  being durable, the authorities are bound to see whether  the  transaction  fulfilled  the tests of returnability as per the Supreme Court and High Court judgments.”

12. Thus, with reference to the judgments referred

to supra, it is safe to say that in the present

case,  the  appellant  has  failed  to  establish  any

arrangement between itself and the buyers regarding

the  returnability  of  the  used  gunny  bags.

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Therefore, the appellant is hereby directed to pay

the  total  amount  of  the  gunny  bags  which  are

excisable  under  the  Act.  The  credit  notes  dated

12.3.1988 and 31.3.1988 cannot be relied upon in

the facts and circumstances of the present case,

since the credit notes relate to the year 1988,

whereas  the  present  case  is  concerned  with  the

period  1981  to  1985.  There  is  no  independent

evidence which can help establish the case of the

appellant  during  that  relevant  period  of  time.

Moreover, in most of the letters sent by the buyers

to the appellant, the buyers send their own packing

material  and  in  case  they  cannot  provide  the

appellant with a packing material, the appellant

was  required  to  send  the  soda  ash  in  its  own

packing material on which packing charges have been

incurred  by  the  buyers.  The  counsel  for  the

appellant had put forward a request for filing an

application  for  additional  documents  before  the

CEGAT in Appeal No.E/1088/90-EB(WR) of 1990, under

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Rule  23  of  Customs,  Excise  and  Gold  (Control)

Appellate  Tribunal  (Procedure)  Rules,  1982,  with

regard to its claim that there has been a deduction

on account of packing in the durable and returnable

gunny bags, the same have been produced before us

for  our  perusal.  The  CEGAT  has  rightly  not

considered  the  same  as  they  do  not  support  the

claim of the appellant that the gunny bags were

reclaimed  by  the  appellant  under  an  arrangement

between the appellant and the buyers for the return

of the used gunny bags. Therefore, they have no

bearing in justification of their claim that the

gunny bags were actually returned. The concurrent

finding of facts recorded by CEGAT at paras 5 and 6

of its judgment, on the basis of the facts pleaded

and the evidence placed on record with regard to

the returnability of the gunny bags are just and

proper and the same cannot be refuted as they are

backed by cogent and reasonable evidence.

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13. Therefore, the claim of the appellant cannot

be sustained in the light of the provisions of the

Act  and  the  laws  laid  down  by  this  Court  in  a

catena of cases, as the same is marred by lack of

proper and independent evidence.

14. Therefore, the tribunal has rightly rejected

the claim of the appellant so far as the exclusion

of the cost of packing material with the value of

soda ash is concerned and hence, it is liable to

pay the tax liability for the same in the light of

the  findings  and  observations  made  in  this

judgment. The appeals are dismissed.

                          …………………………………………………………J.                             [V.GOPALA GOWDA]

                                                  New Delhi, August 6, 2015