Holding

Packing charges (except initial packing for durable, returnable containers) are not includible in the assessable value, and the 24 show‑cause notices are barred by limitation.

Summary

The assessee, Hindustan National Glass and Industries Ltd., manufactured glass bottles that were normally delivered loose at the factory gate, with buyers optionally requesting packing using durable, returnable containers. The Revenue issued numerous show‑cause notices demanding duty on the packing charges collected by the assessee, arguing that under Section 4(4)(d)(i) of the Central Excise and Salt Act, 1944 such charges must be included in the assessable value. The assessee contended that the packing was not necessary for the goods to be marketable and that the packing was of a durable, returnable nature, thus exempt from inclusion, and that 24 of the notices were barred by the six‑month limitation under Section 11A. The Supreme Court upheld the CEGAT’s findings that packing was not required for marketable condition, so packing charges (except initial packing for durable, returnable containers) are excluded from assessable value, and held that the 24 notices were time‑barred. It also clarified the distinction between levy and collection, noting that the High Court’s interim order restrained only collection, not levy. Consequently, the Revenue’s appeals were dismissed.

Issues considered

Whether packing charges collected by the assessee are includible in the assessable value of glass bottles under Section 4(4)(d)(i) of the Central Excise and Salt Act, 1944.
Whether the show‑cause notices issued after the prescribed period are barred by the limitation provision of Section 11A.
Whether the High Court’s interim orders restrained the issuance of show‑cause notices or only the collection of duty.

Legislation cited

Central Excise and Salt Act, 1944s. 11A, s. 4(4)(d)(i)
Central Excise Rules, 1944s. Rule 9B

Subjects

central exciseassessable valuepacking chargesSection 4(4)(d)(i)limitationshow‑cause noticeprovisional assessmentdurable returnable packinglevy vs collection

Judgment

---"'!""

A COMMISSIONER OF CENTRAL EXCISE, CALCUTTA
v.
M/S. HINDUSTAN NATIONAL GLASS AND INDUSTRIES LTD.

MARCH 11, 2005

B [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.]

Central Excises and Salt Act, 1944 :
--
c
Section 4(4)(d)(i)-Assessable value ofglass bottles-Determinati~n of-
Cost ofpacking, if inclusive-Assessee manufacturing glass bottles and buyer
using the same for packing its products-Bottles delivered in loose condition
at factory gate in course of wholesale trade-At option of buyer goods packed
-
for safe transit by assess~e and cost reimbursed to them and in some cases ~
b?Lyer supplying packing materials and assessee charging initial packing
charges-Tribunal held that the packing charges collected by assessee .not
D includible in the assessable value qfglass bottles except initial packing charges
towards packing of goods in durable and returnable containers-On appeal
held : Decision of Tribunal based on factual finding that ,packing is not
11ecessary for the articles in condition in which it is generally sold in the
wholesale market at the factory gate and cannot be termed perverse-Hence,
E order of Tribunal upheld

Section 11 A -Assessee challenging in Writ Petition demand of duty
r'!ised-lnterim Order and subsequent extension thereof-Issue ofshow cause
notices during pendency of Writ Petition, demand being subject to the decisiQn
of High Court-If barred by limitation-Held : Order of High Court stayed
-
F only recovery/collection and not levy-There is difference between levy and
collection-Moreover, Department issued notices as the interim order did not
restrain issuance of notices-Thus, Tribunal rightly held that notices barred
by limitation.

Respondent-assessee is engaged in manufacturing of various types
G of glass bottles and the buyers use the same for packing consumer products
like milk, soft drinks, medicines, hair-oil, beer etc. manufactured by them. --.-
According to the assessee, these bottles are delivered by it in loose
condition without packing at the factory·gate in the course of wholesale
trade. In many cases at the option of the buyer goods are packed for safe
H 744 ~
C.C.E.CALCUTIAv.HJNDUSTANNATIONALGLASSANDINDUS.LTD. 745
transit and the cost is reimbursed by the customer. In some cases buyers A
supply packing material and manufacturer charges ex-factory prices for
goods along with extra initial packing .charges for extra services rendered.
In any event, the packing materials used by manufacturer are of durable
and returnable nature and the buyers are entitled to refund of cost on
return.
B
Assessee got price-lists approved without the inclusion of packing
charges though these charges were reflected in the price list depending
upon the type of packing used. Department issued show-cause notices
totalling in all to 111, raising demand of duty on packing charges realised
by the assessee. Assessee filed writ petition challenging the notices and C
subsequent demands raised. Interim order was passed which was further
extended. High Court disposed of the writ petition. During the pendency
of the writ petition, show cause notices were issued raising demand of
duty on packing charges which was subject to the decision of High Court
in the writ petition. Both the Adjudicating Authority and the Appellate
Authority confirmed the demand of duty on packing charges. Thereafter, D
assessee filed appeals before the CEGAT contending that the packing
expenses are not included in the assessable value; that 24 show cause
notices were barred by limitation in terms of Section l lA of the Act; that
interim orders passed by High Court had not restrained issuance of
show-cause notice; that if Revenue understood that there was restraint E
on issuing show-cause notices, it could not have issued 77 notiCes; that
the interim orders related to realization and not levy; that as regards
nature of investment covered by show cause notice, Adjudicating Authority
held that the assessment were final, but were provisional in certain aspects,
and the Appellate Authority held it to be provisional and as such the
notices were within time. Tribunal allowed the appeals filed by the F
respondent. It held that the packing charges except initial packing charges
towards packing of goods in durable and returnable containers, collected
by the assessee are not includible in the assessable value· of glass and
glassware; and that the 24 notices were barred by limitation. Hence the
present appeals.
G
Appellant-Department contended that CEGAT's. view that packing
charges collected by the assessee are not includible in th~ ass~ssable value
of glass and glassware ran counter to the clear langua~ of·Section
4(4)(d)(i); that it is not a requirement in law that the goods at the factory
gate should be on marketable stage; and that both the assessee and the H ·
746 SUPREME COURT REPORTS [2005) 2 S.C.R.

A Department knew that the assessments were not final but were provisional,
therefore, the Authorities had rightly held that only two notices were
barred by limitation. . .
Dismissing the appeals, the Court

B HELD: 1.1. CEGAT with reference to the factual background has
come to the conclusion that packing was not necessary for the glass
bottles manufactured by the assessee in the condition in which i,! is
generally sold in the wholesale market at the factory gate. The findings
are factual and cannot be termed to be perverse in any ma~ner to warrant
C interference. [755-BJ

Commissioner ofCentral Excise, Allahabad, etc. v. Mis Hindustan Safety
Glass Works Ltd. etc, (2005) Scale 246, distinguished.

Union of India v. Bombay Tyre International, (19S3) 14 ELT 1896 ·
D and Government of India v. Madras Rubber Factory, (1995) 77 ELT 433,
referred to.

K. Radha Krishnaiah v. Inspector of Central Excise and Ors., [1987) 2
SCC 457; Mahalakshmi Glass Works' (P) Ltd. v. Collector of Central Excise,
(1988) 36 ELT 7~7 SC and Triveni Glass Ltd. Allahabadv. Union of India
E and Ors., (2005) 2 Supreme 191, referred to.

2.1. There. is a conceptua I difference between "levy" and
"Collection". When the High Court had stayed only the recovery/col!ection
there was no. question of any stay on the levy. In any event, the Revenue
itself issued 77 show-cause notices and, therefore, there was no question
F of reading the interim orders passed by the High Court that they
restrained the issuance of show cause notice. [755-H; 756-B, E)

Gokak Patel Vo/kart Limited v. Collector of Central Excise, Belgaum,
(1987) 28 ELT 53 SC; Sirajul Haq Khan and Ors. v. The Sunni Central
G Board ofWaqf, U.P. and Ors., [19591SCR1287 and N.B. Sanjana, Assistant
Collector of Central Excise, Bombay and Ors. v. Elphinstone Spinning and
Weaving Mills Co. Ltd., [1971) 3 SCR 506, referred to.

2.2. The plea of the Revenue that the assessment orders were
provisional in nature cannot be accepted. In order to establish that the
H clearances were on provisional basis an order under Rule 9B of the
C.C.E. CALCUTTA 1·. HINDUSTAN NATIONAL GLASS AND INDUS.LTD. [PASA YAT,J.] 74 7
erstwhile Central Excise Rules, 1944 and clearances/payment of duty on A
provisional basis are essential. (756-F-G(
Metal Forgings v. Union of India, (2002) 146 ELT 241 SC, relied on.

Coastal Gases and Chemicals Pvt. Ltd. v. Assistant Commissioner of
Central Excise, Visakhapatnam, (1997) 92 ELT 460 SC, referred to.
B
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7313-
7421 of 1999.

From the Judgment and Order dated 4.8.99 of the Central Excise,
Customs and Gold (Control' Appellate Tribunal, Eastern Bench at Calcutta in C
F.O. Nos. A.747-855/CAL/99 in A. Nos. E(SB) 527 and 528/98, E/V-25 to
130/97 and E/185 of l 989A.

A. Subba Rao and B. Krishna Prasad, for the Appellants.

S. Ganesh, Narendra M. Sharma, Ravi Prasad, R.K. Sayali and Rajesh D
Prasad Singh, for the Respondent.

The Judgment of the Court was delivered by

ARIJIT PASA YAT, J. The Revenue is in appeal against the judgment
rendered by the Customs Excise & Gold (Control) Appellate Tribunal, Bench, E
Calcutta (in short the 'CEGAT'). Since there was a difference of opinion
between 'the Member (Judicial) and the Member (Technical), the inatter was
referred to a third member i.e. another Member (Technical). By majority I 08
appeals filed by the respondent (hereinafter referred to as the 'assessee')
were allowed~ There were essentially two issues involved. The first related to
the question as to whether packing charges realized by the assessee from its F
customers in different situations for different types of packing would form
part of assessable value of the final product or not to attract duty under the
Central Excise and Salt Act, 1944 (in short the 'Act'). Second question was
whether some of the show-cause notices were issued beyond the period
prescribed under Section 1lA of the Act. The majority view was in favour G
of the assessee in respect of both the aforesaid issues.

Dispute arose in the following background :

The assessee is engaged in the manufacture of various types of glass
bottles for milk, soft drinks, medicines, hair-oil, beer etc. The bottles
H
748 SUPREME COURT REPORTS [2005] 2 S.C.R.

A manufactured by the assessee are used by the various manufacturers of the
consumer products for packing of their goods. According to the assessee,
these bottles are delivered by it in loose condition at the factory-gate in the
course of wholesale trade. In a good number of cases its buyers want the
goods to be packed in some sort of packing for safe transportation of the
B goods and to avoid the breakage etc. during transit, whereas in some cases,
the buyers send their own packing materials like gunny bags, wooden cartons,
wooden crates etc. In some cases, it buys the packing materials on behalf of
its customers who reimburse the cost of the same. Wherever the packing
material is supplied by the buyers viz, cardboard boxes and wooden crates
etc. at their own cost, only ex-factory prices for the sale of the goods is being
C realized by it as the sale is in loose condition and it is the headache of the
customers to provide any type of packing to ensure safe transportation of the
goods. It only charges some extra sums termed as initial packing in lieu to
the extra services rendered at the buyer's request by way of labour charges
etc. after putting the bottles in the boxes/crates supplied by its customers and
also towards the costs of stores material and other related expenditure such
D as cost of pins, gum type, coir string and sutti etc. No initial packing charges
were being realized by it prior to April, 1977 and also in those cases where
the goods were delivered in loose condition without any packing whatsoever
at the factory gate. It is also the assessee's contention that even where the
packing materials are being provided by it at the behest of the buyer, the
E same is invariably durable and returnable justifying its non-inclusion in the
assessable value. Its price-lists were approved without the inclusion of packing
charges, though these charges were reflected in the price-list depending .upon
the type of packing the customer opted for.

A show-cause notice dated 31.12.1970 was issued by the Department
F raising demand of duty on packing undertaken by the· assessee during the
period from 1st January to 31st March, 1974. Thereafter further show-cause
notices (111 in total) were issued on the allegation that the assessee had not
included the packing charges in the assessable value of its final product. The
show-cause notices covered period upto 14.11.1975. The show-cause notices
and subsequent demands made on the assessment memorandum of RT-12
G Returns were the subject matter of challenge in Writ Petition no. 5002(W) of
1980 before the Calcutta High Court, wherein the assessee challenged the
attachment of its goods by the Department by letter/order dated 9 .4.1980. An
interim order was passed on 30.4.1980 to which reference shall be made
infra. Another interim order dated 14.5.1980 extending the application for
H extension of the interim order was passed along with clarifications. The writ
C.C.E. CALCUTT A,.. HINDUSTAN NATIONAL GLASS AND INDUS.LTD. [PASAYA T, J] 749

'petition was finally disposed of by the High Court on 3 .4.1986 directing the A
concerned appellate/revisional authority to dispose of the matter in the light
of the principles enunciated by this Court in several judgments. Matter was
remanded with liberty to approach the High Court further in case it was
w_arranted. The interim order was directed to be continued till disposal of the
case by the concerned authorities. During the pendency of the writ petition B
before the High Court demands on various counts including packing charges
were raised by the Revenue on the RT-12 Returns .. In show-cause notices it
was, indicated th?t the demand was subject to the decision of the Calcutta
High Court in the writ petition. The Assistant Commissioner, Central Excise
(Calcutta) (hereinafter referred to as the 'adjudicating authority') adjudicated
all the show-cause notices and by order-in-original dated 18.12.1986 confirmed C
the demand of duty amounting to Rs. 2, 13,89,696.29 (subsequently corrected
to Rs. 2, 13,78,926.16) on the ground of packing charges and dropped the
demands relatable to certain other aspects. Appeal was filed before the
Commissioner (Appeals) (referred to as the 'appellate authority') by the
assessee which was dismissed. Therefore, 108 appeals were filed before the
CEGAT. Stand of the assessee before the CEGAT was two-fold. It was D
submitted that the moot question was whether the packing expenses are
required to be added in the assessable value or not and secondly whether 24
show cause notices were barred by limitation. It was pointed out that 24
show-cause notices which were issued after the expiry of the stipulated period
and subsequently confirmed by the authority were barred by limitation of six E
months in terms of Section l lA of the Act. It was pointed out that interim
orders passed by the High Court had not restrained issuance of show-cause
notice. There was some amount of confusion in the orders passed by the
adjudicating authority and the appellate authority. While adjudicating authority
categorically held that the assessments were final assessments, but were
pmvisional in certain aspects, the appellate authority held that it was F
provisional and, therefore, concluded that the notices were within time. The
conclusion of the appellate authority that the interim orders passed by the
High Court were understood by the parties as if there was a restraint on
issuance of the show-cause notice is clearly erroneous. As the factual situation
shows, out of the total number of show-cause notices (111 notices) only 24 G
notices were barred by limitation and if revenue understood that there was
restraint on issuing show-cause notices, it could not have issued 77 notices.
The interim orders related to realization and not levy. On merits it was
submitted that the goods are not generally sold in the packed condition at the
factory gate. Packing of the bottles in straw, gunny bags, cardboards or
wooden boxes/crates depend upon choice of the respective customers who H
750 SUPREME COURT REPORTS (2005] 2 S.C.R.

A either provide the packing materials themselves or ask the assessee to do the
job on their behalf. Packing suggested by the customers was to ensure safe
transportation of goods and to avoid loss of damage during transit. Different
rates were quoted for different modes of packing on the basis of the orders
placed by the customers specifying the mode of packing. The price-list filed
B specified wholesale ex-factory prices and different charges for the different
modes. Wherever packing had been ordered by the customers, packing charges
were shown separately in the invoice. Wherever the buyers had not asked for
any packing goods were delivered in loose condition without any packing. In
any event, the packing used was of.durable and returnable in nature, and the
buyers were entitled to the refund of cost on return. In a number of cases,
C such packing had been returned by the buyers and the same had been also
re-used by the assessee and adjustment towards the cost of the same has been
made. Though the authorities accepted the factum of return of packing material,
it ignored the same on the ground that number was very small. The Revenue
on the other hand submitted that in view of the categorical language of
Section 4(4)(d)(i) there was no scope for excluding the packing charges on
D the artificial distinction of primary/specific packing charges. Even if there
were some cases of return it was insignificant when compared to the volume
of transactions. On the question of limitation, it was submitted that the assessee
had in fact understood the order of the High Court to mean that the notices
were not to be issued awaiting decision and, therefore, all the notices were
E within time. As noted above, the Member (Judicial) and second Member
(Technical) decided both the issues after referring to the factual aspects in
favour of the assessee. It was held that there was no question of any provisional
assessment as projected by the Revenue and, in fact, the adjudicating authority
himself had held that there was final assessment, but it was provisional for
some purposes. A different view was taken by the Member (Technical).
F Another Member (Technical) concurred with the Member (Judicial) and the
appeals were allowed. The conclusions of the majority members of the Tribunal
were as follows : -

(1) Packing charges collected by the assessee are not includible in
the assessable value of glass and glassware.
G
(2) 'Initial packing charges' towards packing of the goods in durable
and returnable containers is includible in the assessable value.

(3) 24 show cause notices involving duty of Rs. 66,34,680.27 are
barred by limitation.
H
C.C.E. CALCUTTA 1•. HINDUSTAN NATJONAL GLASS AND INDUS.LTD. [PASAYA T, J.] 751

In support of the appeals, Mr. A Subba Rao, learned counsel submitted A
that the CEGAT's view on the question of inclusion of packing charges runs
counter to the clear language of Section 4(4)(d)(i) and various decisions of
this Court. It is not a requirement in law that the goods at the factory gate
should be on marketable stage. It clearly provides that where under the Act
duty is chargeable on any excisable goods, the nonnal price is deemed to be
the price at which such goods are ordinarily sold by the assessee to buyers B
in the course of wholesale trade for delivery at the time of removal, where
the buyer is not a related person and price is the so!e consideration of the
sale, where the goods are delivered at the time of removal in a packed
condition includes the cost of such packing except the cost of packing which
is of a durable nature and is returnable by the buyer to the assessee. The C
minority view of CEGA T was that the goods to be marketable is not a part
of the requirement of.the relevant provision. That is the correct view. Further,
onus is on the assessee to prove that the packing is of a durable and returnable
nature and have to be returned by the buyer to the assessee. There are only
a few instances where it has been returned. Further, for adjustment in the
value and that the goods were sold in loose condition, few instances were D
shown. They have been rightly discarded by the authorities below. Reliance
was placed on a decision of this Court in Serai Keila Glass Works Pvt.Ltd
v. Collector of Central Excise, Patna, [1997] 4 SCC 641 to contend that if
a provisional assessment is followed by final assessment, there is no
requirement for issuing show-cause notice in terms of Section I IA. Where E
the self assessment scheme is in operation, limitation starts from the date of
final assessment. In any event, both the assessee and the Department knew
that the assessments were not final but were provisional. Therefore, the
authorities had rightly held that only two show-cause notices i.e. 1/78 and 2/
78 were barred by limitation.
F
The agreements referred to by the assessee only show the possibility of
return but not actual return. Reliance was also placed on a decision of this
Court "in Commissioner of Central Excise, Allahabad, etc. v. Mis Hindustan
Safety Glass Works ltd., etc., (2005) 2 SCALE 246 to contend that the fact
situation therein is identical to the one involved in these appeals and, therefore, G
the appeals deserve to be allowed.

Iti response, learned counsel for the assessee submitted that the CEGAT's
conclusions were arriv~d at after analyzing the factual position. Contradictory
stands were taken by the adjudicating authority and the appellate authority as
regards the nature of assessment covered by the show-cause notices. The H
752 SUPREME COURT REPORTS [2005] 2 S.C.R.

A interim orders passed by the High Court clearly show that the authorities
were blowing hot and cold as was observed by the CEGAT. The Member.
(Judicial) noted that 77 show-cause notices were issued and 24 were not
issued during the relevant period. If the Department's view was that there
was no final assessment and only provisional assessment had been made and/
B or that the High Court's order restrained issue of show-cause notice, there
was no reason as to why 77 show-cause notices were issued.

On merits, it was submitted that by a series of decisions this Court has
explained the scope and ambit of Section 4(4)(d)(i) and, therefore, the view
taken by CEGAT is irreversible, particularly, when findings of fact were
C recorded. The fact situation in Mis Hindustan Safety Glass Works Ltd case
(supra) was entirely different. It was noted in that case that even for movement
inside the factory of the assessee the requirement of packing the articles in
question was there. Reliance was placed on three orders passed by the
Government of India in which. the revisional authority held that articles were
marketable in the loose condition. Though they related to periods prior to
D amendment of Section 4(4) the factual position did not change. The crucial
expression used in Section 4(4 )(d)(i) is "returnable" and not "returned".
Large number of documents by way of iliustration were pressed before the
CEGA T to show that the articles were of durable nature and were returnable.
The CEGAT has rightly placed reliance on them to conclude in favour of the
E assessee.

Section 4 (4)(d)(i) which is the relevant provision reads as under :

"Section 4 : Valuation of excisable goods for purposes of charging
of duty of excise : - Where under this act, the duty of excise is
chargeable on any excisable goods with reference to value, such value,
F shall subject to the other provisions of this section, be deemed to be-

(a) the normal price thereof, that is to say, the price at which such
goods are ordinarily sold by the· assessee to a buyer in the course of
wholesale trade for delivery at the time and place of removal, where
the buyer is not a related person and the price is. the sole consideration
G
for the sale :

xx xx xx xx
xx xx xx xx
(4) For the purposes of this section-
H
C.C.E. CALCUTTAv. HINDUSTAN NA TIONALGLASSAND INDUS. LTD. [PASA YAT, J.] 753

-- xx xx xx xx A
xx xx xx xx
(d)"value" in relation to any excisable goods,-
(i) Where the goods are delivered at the time of removal in a
B
-
packed condition, includes the cost of such packing except the
cost of packing which is of a durable nature and is returnable
by the buyer to the assessee.

Explanation : In this sub-clause "packing" means the wrapper,
container, bobbin, pim, spool, reel or wrap beam or any other thi,ng
in which or on which the excisable goods are wrapped, contained.or C
wound.

Xx xx xx xx
Xx xx xx xx"
The scope and ambit of the provision has been referred to in varioµs D
cases. In Mis Hindustan Safety Glass Works' Ltd. case (supra) reference was
made to almost all the decisions on the point and it was, inter alia, held as
follows :

"6. Thus under Section 4(4)(d)(i) the cost of packing is to be included
in working out the value of goods, unless the packing is of a durable E
nature and is returnable by the buyer to the assessee. The Explanation
indicates the various types of packing whose costs have to be included.
A wrapper and/or a container is packing whose cost has to be included.
The words "wrapper" and "container" are wide enough to include
all types of wrappers and containers. The further words "any other F
thing in which or on which the excisable goods are wrapped, contained,
or wound" also show that the term "Packing" has a very wide
connotation and includes anything used for wrapping and/ or
containing the excisable goods.''

Even though the statutory provision is clear and unambiguous a concept G
of primary and secondary packing was developed by this Court in the case
of Union of India v. Bombay Tyre International Ltd., (1983) 14 ELT 1896,
In this case, it was recognized that the degree of packing would vary from
one class of excisable goods to another. It was held that packing may be
necessary to make an article marketable. It was held that by including the
H
754 SUPREME COURT REPORTS [2005] 2 S.C.R.

A cost of packing the legislature has sought to extend levy beyond the
manufactured article itself. 'It was held that thus a strict construction must be
-
put upon the said provision. It was held that only the cost of packing which
was required to make the goods marketable would be includible in the value
of goods. It was held that if any additional or special packing is provided,
B which packing is not generally required or provided as a normal feature, then
the cost of such packing need not be included in the value of goods. The test
which was laid down was that it is only the cost of packing ordinarily required
for selling the goods in the course of wholesale trade to a whole buyer which
would be includible and not the cost of any additional or special packing.

C Aforesaid position was noted in Mis Hindustan Safety Glass Works ltd
case (supra).

In Government of India v. Madras Rubber Factory, (1995) 77 ELT
433, it was, inter alia, held as follows :

"The test is : whether packing, the cost whereof is sought to be
D 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
E of the goods; and if it is not, the cost of such packing has to be
excluded. Further, even if the 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
emphasize 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
F question of fact to be decided having regard to the facts and
circumstances of a given case."

After analyzing various decisions, the position was succinctly summed up by
this Court in Hindustan Safety Glass Works' case (supra) as.follows :
G "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
H
C.C.E. CALCUTTA v. HINDUSTAN NATIONAL GLASS AND !NOUS. LTD. [PASAYAT,J.] 755

must also be remembered that Section 4(4)(d)(i) specifies that ~he A
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
costs of packing is not includible is always on the assessee."

The CEGA T with reference to the factual background has come to the
conclusion that the packing was not necessary for the concerned excisable B
...-- articles in the condition in which it is generally sold in the wholesale market
at the factory gate. The findings are factual and cannot be termed to be
perverse in any manner to warrant interference. The decision in Hindustan
Safety Glass Works' case (supra) does not help the revenue as the fact situation
is clearly distinguishable. In that case admittedly for movement inside the
factory, packing was necessary. That makes a gulf of difference. That would
c
be for dismissing the appeals filed by the Revenue but there are certain
aspects which need to be highlighted in view of the recurring nature of
controversy.

Section 4(4)(d)(i) uses the expression 'returnable'. As was observed by D
this Court in K. Radha Krishnaiah v. Inspector of Central Excise and OrS.,
(1987] 2 sec 457, it is not physical capability of the packing to be return~d
which is the determining factor because in that event, the words "by the
buyer to the assessee" need not have been used and would be superfluous.
What is required for attracting applicability of the exclusion clause in Section
4(4)(d)(i) is that the packing must be returnable by the buyer to the assessee
E
on the basis of an arrangement between the buyer and assessee under which
packing is returned by the buyer to the assessee.

In Mahalakshmi Glass Works (P) Ltd v. Collector of Central Excise,
(1988) 36 ELT 727 SC it has been held that under Section 4(4)(d)(i) the costs F
of packing which is of durable and returnable nature is to be excluded. There
must be an arrangement between the buyer and the assessee that the packi~g
be returned to the assessee. The question whether the packing is actually
returned or not has no relevance. The view in Maha/akshmi Glass Works'
case (supra) was affirmed in a recent case by this Court. (See Triveni Glass
Ltd, Allahabad v. Union of India and Ors., (2005) 2 Supreme 191) G

- Coming to the question of limitation it is to be noted that there is a
conceptual difference between "levy" and "collection". This point was
highlighted by this Court in Gokak Patel Vo/kart limited v. Collector of
Central Excise, Belgaum, (l 987) 28 EL T 53 SC. Referring to the earlier H
756 SUPREME COURT REPORTS [2005) 2 S.C.R.

A decision in Sirajul Haq Khan and Ors. v. The Sunni Central Board of Waqf,
U.P. and Ors., [1959] SCR 1287 and N.B. Sanjana, Assistant Collector of
Central Excise, Bombay and Ors. v. Elphinstone Spinning and Weaving Mills
Co. ltd., [1971] 3 SCR 506, the difference between levy and collection was
noticed with reference to Section 3 of the Act which is the charging provision.
B It was held that levy and collection are two distinct and separate. steps. When
the High Court had stayed only the recovery/collection there was no question
of any stay on the levy ..

The two orders of the High Court, so far as relevant read as follows :

"Order dated 9.4.1980- In the meanwhile the petitioners will be at
c liberty to pay the duties as claimed by the respondents in respect of
the goods which the petitioners want to deliver and if such payment
.is made, the respondents shall allow the petitioners to deliver the
goods to its customers without prejudice to the rights and contenti~~s
of the parties to this Rule.
D Order dated 14. 5.1980- The interim order will continue till the disposal
of the application for extension of the interim order with the
clarification to this effect that the petitioners shall only pay the Central
. Excise duties before removing the goods but not any amount that
may be claimed by the respondents for packing and transport charges.''
E
In any event, the Revenue .itself issued 77 show-cause notices and,
therefore, there was no question of reading the interim orders passed by the
High Court in a particular way.

There i,s one other point which needs to be noted i.e. plea of the Revenue
F that the assessment orders were provisional in nature. This plea is equally
untenable, in view of what has been stated by this Court in Metal Forgings
v. Union of India, (2002) 146 ELT 241 SC. It was held that in order io
establish that the clearances were on provisional basis an order under Rule
9B of the erstwhile Central Excise Rules, 1944 (in short the 'Rules') and
G clearances/payment of duty on provisional basis are essential. Relian"ce was
placed on an earlier decision of this Court in Coastal Gases and Chemicals
Pvt. ltd. v. Assistant Commissioner ofCentral Excise, Visakhapatnam, (1997)
92 EL T 460 SC.

CEGAT's conclusions in these aspects are also in order.
H
C.C.E. CALCUTTA"· HINDUSTAN NATIONAL GLASS AND INDUS.LTD. [PASAYAT,J.] 757

Learned counsel for the Revenue lastly submitted that since the assessee A
has collected the amounts and passed on the burden to the customers, it is not
entitled to any relief. This is an aspect which may be relevant for the purpose
of Section 11 B of the Act and not for the purpose of adjudicating the
controversy in these appeals. We express no opinion on that aspect.

- N.J.
The appeals fail but in the circumstances without any order as to costs.

Appeals dismissed.
B