Cost of Corrugated Boxes supplied Free of Cost by Buyers is Includible in Transaction Value of metal containers: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the cost of corrugated boxes supplied free of cost by buyers is includible in transaction value of metal containers.

The appellant assessee, Karia Can Co Limited, is engaged in the manufacture of metal containers falling under Central Excise Tariff Heading 73 of Central Excise Tariff Act, 1985. During the course of the departmental audit, it was noticed that the assessee has not included cost of packing material received by them from their buyers free of cost.

It is a matter of record that the buyers of the appellant assessee have been supplying corrugated boxes for packing and delivery of metal containers which were purchased by the buyers for further packing of various products of the M/s. Amul Dairy.

The department is of the view that the additional consideration has flown back to the manufacturer from their buyers in the form of free supply of the corrugated boxes resulting in under invoicing of the excisable products in terms of the provision of Clause (a) of Sub-section (1) of Section 4 of the Central Excise Act, as the price does not seem to be sole consideration of the sale as the appellant has received packing material namely corrugated boxes from their buyers free of cost.

The Tribunal of Ramesh Nair, Judicial Member and CL Mahar, Technical Member noted that “In the present case, we are of the view that the cost of corrugated boxes supplied free of cost by the buyers to the appellant is includible in the transaction value of the metal containers manufactured and supplied by the appellant as per the provision of Section 4 of the Central Excise Act, 1944 and rules made thereunder.”

The Bench further observed that “The matter is no longer res-integra as this tribunal in the appellant’s own case has already decided the issue against them and has held that the cost of free supplied corrugated boxes need to be included into the assessable value of the metal containers for the purpose of payment of Central Excise duty.”

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