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Judgment
Nainar Sundaram, J.—The petitioner manufactures a number of excisable products. Out of such products, the following products are
admittedly packed in metal containers -
Caustic soda
V.N.N. Oil (V)
Bleaching powder
Vanaspathi
Methylene Chloride
Chiereform
Carbon Terrachloride
Calcium Chloride.
The petitioner has not stated that the aforesaid eight products can be pushed into the market at the factory gate for sales without they being packed
in metal containers. The petitioner manufactures the metal containers also. Such metal containers by themselves are excisable goods and as such
the petitioner paid excise duty on such metal containers under item 46 of the First Schedule to the Central Excises and Salt Act 1 of 1944
(hereinafter referred to as the Act).
The eight finished products in the metal containers also underwent the levy of excise duty. The petitioner wanted refund of the excise duty paid
as above for the period from 1-3-1970 to 1-10-1974 on two basis; firstly, that the value of the metal containers must be equated to packing
charges, which are in the nature of post-manufacturing expenses, and therefore such value should be excluded from the assessable value of the
eight finished products referred to above under S. 4 of the Act. Secondly, that the metal containers as such having already suffered the excise duty
cannot be made to suffer once again excise duty, when the eight products are packed in the metal containers and pushed into the market. This
move of the petitioner has not found the countenance of the respondents. The petitioner challenges the orders of the respondents in this regard.
It is nowhere stated that the eight products referred to above are being marketed at the factory gate as finished products without they being
packed in metal containers. In the said circumstances, it has got to be held that the manufacture of the said eight products will take in also the
process of putting them into the metal containers, for the purpose of being pushed into the market as marketable commodities at the factory gate. It
is true that in calculating the wholesale price, post-manufacturing expenses must be excluded. But then the question is as to whether a particular
expenses is a post-manufacturing expense or part of the manufacturing expenses. The answer to that question will depend on the facts of each
case. Manufacture will include each and every process incidental or ancillary to the completion of the manufacture of the product, so as to put the
same into market as a marketable commodity at the factory gate. The wholesale price at the factory gate is the quantum on which levy should be
made. In Aurofood Pvt. Ltd. v. Govt. of India, Ministry of Finance (Dept. of Revenue and Insurance) New Delhi and others, W.P. 3151 of 1975,
judgment dated 8-2-1978, 1978 E.L.T. 673, Mohan J. dealt with the case of biscuits manufactured by the petitioner therein. In that case certain
biscuits were marketed only after being packed in containers. The learned Judge held that the packing in tin containers cannot the characterised as
post-manufacturing operation so as to exclude the cost of the tin containers and it is the value at wholesale price when the excisable article is
delivered at the factory gate, which should provide the quantum for the levy. The ratio of Mohan J. applies squarely to the facts of the present
case.
Mr. V. Narayanaswami, learned counsel for the petitioner, would refer to me a judgment of Koshal J. in E.I.D. Parry Ltd. and Shaw Wallace
and Co. Ltd. v. Union of India, represented by the Joint Secretary, Ministry of Finance (Dept. of Revenue and Insurance), Govt. of India, New
Delhi, W.P. 1746 of 1972 etc. judgment dated 11-3-1977, 1978, E.L.T. 18, and would submit that packing in the form of containers must be
held to be post-manufacturing expenses, not to be included in the excisable value. In that judgment, the question that came before the learned
Judge was as to whether chemical fertilisers manufactured early to 1st March, 1969, which were not assessable to excise duty before 1st March,
1969, would become so assessable merely because they got packed into gunny bags etc. after 1st March, 1969. On the facts of that case, the
learned Judge held that such process could not become part of manufacturing process and the mere transfer of the end product into containers
which can be handled conveniently would form part of the manufacturing process and the fertiliser in question having already been manufactured
prior to 1st March, 1969, could not be held to have undergone any further process of manufacture after 1st March, 1969, so as to become
assessable to excise duty.
The judgment of Koshal J. has been referred to by Mohan J. in the judgment mentioned above and the learned Judge has also rightly held that the
judgment of Koshal J. cannot be of any assistance to decide the question in issue.
Mr. V. Narayanaswami, learned counsel for the petitioner referred to me the judgment of Madhya Pradesh High Court (Indore Bench) in
Malwa Vanaspati and Chemical Co. Ltd., Indore vs. Union of India through Secretary, Ministry of Finance, New Delhi, 1979 E.L.T. 243. That
was a case where the vegetable product ''Vanaspati'' after manufacture was packed and sold in metal containers, which are durable in nature and
are returnable to the petitioners. On the facts of that case, the Division Bench of the Madhya Pradesh High Court held that the price of the
containers and the freight and transport charges should not be included in the price of the containers and the freight and transport charges should
not be included in the price of the product for determining the value under S. 4 of the Act. The learned counsel for the petitioner also relied on the
judgment of the Calcutta High Court in Hindustan Pilkington Glass Works Ltd. v. Superintendent, Central Excise, Asansole and others, 1978
E.L.T. 229. That was a case involving manufacture of wire and figured glass of various qualities at the factory site of the party concerned. For the
purpose of forwarding such products to the sales organisation, the products were subjected to special packing and in those circumstances it was
held the cost of packing, freight and transport charges are post-manufacturing cost and cannot be included in determining the assessable value of
the goods.
In view of the fact that the eight products manufactured by the petitioner are not supposed to be marketed at the factory gate without they being
put in the metal containers and such is also not the case put forth by the petitioner at any point of time, it has got to be held on the first contention
urged by the learned counsel for the petitioner that the cost of the metal containers cannot be excluded from the excisable value of the eight finished
products.
The next contention relates to the alleged double taxation. There is no dispute that the metal containers are manufactured by the petitioner and as
they are so manufactured, excise duty is leviable under item 46 of the First Schedule to the Act. If the said metal containers are again utilised for
the purpose of finishing another product so as to put the same into the market, necessarily it becomes part and parcel of the other product and if
the value of the metal containers is not to be held as post-manufacturing expenses, then it becomes part of the excisable value of the other product
which it contains. Hence I am not able to appreciate and accept this contention of the learned counsel for the petitioner. For all these reasons, I do
not find any warrant for interference in writ jurisdiction and the writ petition fails and the same is dismissed. There will be no order as to costs.