Full Judgment
2. Appellant, engaged in the manufacture of Magnetic Floppy Diskettes, filed price lists in Part II which were duly approved and during the period from 17-10-1989 to 9-7-1990 cleared the goods and payment of appropriate duty. It was subsequently found that Diskettes supplied by manufacturer -appellant and supplied to HCL Limited were packed in packing materials as per the specification of the buyer and the cost of such packing material was required to be included in the assessable value. Appellant had not included the cost of the packing materials in the assessable value and had not paid the duty on the element of the packing cost. Accordingly, three show cause notices dated 9-2-1990,9-3-1990 and 8-8-1990 were issued in respect of the period from August 1989 to May 1990 referring all the above facts and proposing demand of differential duty on the basis of correct assessable value determined by including the cost of packing.
3. A copy of the reply to the show cause notice is not before us.
However the original order shows that the appellant contended that the packing material was as per the specification of the buyer and the packing material was supplied by the buyer and the cost thereof was met by the buyer and therefore, the cost of such material could not be included in the assessable value. It was also contended that the Diskettes were being marketed in unpacked condition for which the appellant gave certain illustrations and therefore packing was not necessary to render the goods marketable in whole sale at the Factory gate.. On this basis it was contended that the cost of packing material could not be part of the assemble value.
4. The Assistant Collector rejected the above contentions on the ground that the packing material was got manufactured by the appellant and the charges were received by debit notes raised against the buyer, that the contents of the purchase order clearly indicate that the goods were supplied to the buyer in packed condition and the packing was not durable and returnable. The Collector (Appeals) confirmed the order pointing out that the appellant had collected the cost of packing material from the buyer by debit notes and packing in the case was of essential nature without which the goods could not have been marketed.
5. Learned Counsel for the appellant stated at the outset that cost of packing material was initially met by the appellant and the same was collected from M/s. HCL Limited, the buyer, by debit notes. In other words, packing material was not provided free of cost by the buyer.
6. Learned Counsel contended that the normal packing for Floppy Diskettes is Polythene cover and the M/s. HCL Limited indicated in the purchase order that the required special packing according to certain specifications. The purchase order also indicated that the buyer had settled with the M/s. Stupa Printers about the specifications of the packing materials and required the appellant to procure packing material from M/s. Stupa Printers. The impugned order does not indicate that the appellant had a contention that normal packing consisted of polythene cover. The reply to the show cause notice is not placed before us to verify as to what exactly was the contention of the appellant. Unfortunately even the nature of the packing material used in the case of HCL Limited is not known. Without knowing the nature of the packing material used in this case, it is not possible to decide whether use of such packing material is necessary for the purpose of sale in whole sale at the Factory gate. The original order indicated that the appellant referred to supply of 14,000 units of M/s. Softek Pvt. Ltd., Delhi and M/s. Thames Technologies Ltd. in unpacked condition. If this is true, it would mean that even Polythene material was not used which is contrary to the averment in the appeal memorandum.
7. In the above circumstances we find the impugned order is unsatisfactory. It is necessary to find out what packing material if any, was being used to pack the Diskettes for the purpose of sale in whole sale at the Factory gate. According to the appellant the purchase order placed by M/s. HCL Limited would clinch the issue by showing the packing referred therein was special packing insisted upon by the buyer. The terms of the purchase order also require careful consideration along with materials to show what packing, if at all, was being used in the case of Diskettes by other whole sale buyer at the Factory gate. We are, therefore, of the opinion that the matter requires fresh consideration in detail at the hands of the original authority.
8. For the reasons aforesaid, we set aside the impugned order and remand the case to the jurisdiction adjudicating authority for decision afresh in accordance with law and the observations in this order and after giving appellant an opportunity of producing necessary records and of personal hearing. The appeal is allowed accordingly.