Full Judgment
2. On behalf of the Revenue, the learned Jr. D.R. Shri Prabhat Kumar stated that dealwood packing had to be deemed as the normal packing for the water heaters manufactured by the respondents since the major part of goods produced by the respondents was being sold in such packing. He agreed that dealwood packing being essential for putting the water heaters in question in marketable condition at the factory gate, the cost of such packing had to be deemed as a part of the assessable value. In support of his case, he placed reliance on the following case law :-I.T.C. Ltd., Madras v. Collector of Central Excise, Madras [1986 (25) E.L.T. 437 (Trib.)]Khaitan Fans (P) Ltd. v. Collector of Central Excise, Calcutta [1986 (26) E.L.T. 250 (Trib.)] 3. On behalf of the respondents we heard the learned advocate Shri K.L.
Agarwal. He contended that water heaters in question not being very fragile or delicate were normally supplied by wrapping them in polythene. He added that dealwood packing was used as secondary packing in order to avoid damage during transportation when heaters were supplied to dealers in other cities. He contended that being secondary packing, the value of dealwood packages would not form a part of the assessable value of the water heaters in question. In support of his case he placed reliance on the Bombay High Court's decision in the case of Godrej and Boyce Manufacturing Co. (Pvt.) Ltd., Bombay and another v. U.O.I. and Ors reported in 1984 (18) E.L.T. 172 (Bom.).
4. We have examined the records of the case and considered submissions made on behalf of both sides. It is seen that water heaters supplied by the respondents to dealers within Tuticorin city and nearby places were wrapped only in polythene. However, when the goods were requested to be transported over long distances, additional dealwood secondary packing was used in order to ensure safety of the goods during long distance transportation. Even though the additional or secondary dealwood packing was used for packing the goods for long distance transportation, it is evident that the goods being made of metal were not fragile and were quite capable of being supplied to dealers in the wholesale market with only polythene covering. In this regard it is seen that replying upon various decisions of the subject, the Tribunal in the case of Collector of Central Excise, Jaipur v. Laxmi Udyog, Jodhpur reported in 1987 (31) E.L.T. 329 had held that cost of wooden packing which was necessitated by considerations of safety of the metal machine parts which were not delicate or fragile and were capable of being put in the wholesale market in polythene bags only, was not includible in their assessable value. The relevant extract of the Tribunal's decision is reproduced below :- "On hearing both sides and on perusal of the record, we find that the practice of the respondents is to deliver their machine parts to local customers in polythene bags only. For out-station deliveries, a wooden box is used over and above the polythene bag. It is obvious from these facts that the wooden box packing is necessitated by the consideration of safety of the goods during long distance transportation only. Otherwise, the goods, being made of metal and not being delicate or fragile articles are quite capable of being put in the wholesale market in polythene bag only and they are in fact so sold in the local wholesale market. In the circumstances, following the ratio of the Supreme Court judgment in the case of M/s. Godfrey Philips [1985 (22) E.L.T. 306) (S.C.)] and M.R.F. Ltd. [1987 (27) E.L.T. 553 (S.C.)], we held that the cost of wooden box is not includible in the assessable value Under Section 4 of the Act. It is by now well settled 1985 (22) E.L.T. 159 (Trib.) Oswal Agro Mill Ltd., that whatever deductions are admissible from the gross sale price Under Section 4 of the Act have also to be allowed under exemption Notification No. 120/75-C.E. while determining the assessable value of the goods. We also find that both the lower authorities have also held that the cost of wooden box was not includible in the assessable value. We agree with the conclusion of the lower authorities." 5. Since the electric water heaters in question were being supplied to the dealers in the local wholesale market in polythene packing and the additional dealwood packing was provided only for ensuring the safety of the goods during long distance transportation; on the ratio of the Tribunal's decision quoted above it has to be held that the cost of the secondary dealwood packing was not includible in the assessable value of the goods