Per Ranganathan, J. (concurring)
The answer to the question whether the cost of the container should be included in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not. If the answer is yes, three kinds of situation may arise. Where the manufacturer supplies his own container or drum but does not charge the customer therefor, then the price of the goods will also include the cost of the container. There will be no question of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the container is a durable one and is returnable to the manufacturer. If the manufacturer supplies the drums and charges the customers separately therefor, then, under Section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer. If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefor then the cost (or value) of the packing cannot be “notionally” added to, or subtracted from, the price at which the goods have been sold by the manufacturer.
(Para 21)
The words of a statute have to be read in the context and setting in which they occur. There is ample internal indication in the statute to show that the cost of packing referred to in Section 4(4)(d)(i) is the cost of packing incurred by the manufacturer and recovered by him from the purchaser whether as part of the sale price or separately. While generally the normal price for which the goods are sold at the factory gate is to be taken as the assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market. It will indeed be anomalous if the cost of an item of packing charged for from the customer is to be excluded from the assessable value where the packing, though durable, is returnable to the manufacturer but the cost of an item of durable packing supplied by the customer and taken back by him is liable to be included in the assessable value.
(Para 20)
The above conclusion is sufficient to dispose of the present appeals. It is unnecessary to discuss wider question as to the circumstances in which the cost of packing (primary or secondary) can at all enter into the determination of the assessable value under Section 4(4)(d)(i) or as to the correctness or otherwise of the decision of the Court in Union of India v. Godfrey Philips.
(Para 21)
Union of India v. Godfrey Philips India Ltd., (1985) 4 SCC 369 : 1986 SCC (Tax) 11 : 1985 Supp 3 SCR 123, referred to
Per Verma, J. (concurring)
The cost of packing envisaged in Section 4(4)(d)(i) of the Act for determining the “value” in relation to any excisable goods is only the “cost of such packing” incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer. The “cost of such packing” referred to in Section 4(4)(d)(i) does not include within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer. This construction of the expression “cost of such packing” in Section 4(4)(d)(i) of the Act clearly excludes in these matters the question of its addition to the price of goods recovered by the manufacturer from the buyer for determining the “value” in relation to the excisable goods for computing the duty payable on it.
(Para 23)
The above conclusion reached on the language of Section 4(4)(d)(i) of the Act is sufficient to allow these appeals. The wider propositions canvassed by the two sides including the question of correctness of the view relating to secondary packing taken in Union of India v. Godfrey Philips India Ltd. need not be considered and decided in these matters.
(Para 24)
Union of India v. Godfrey Philips India Ltd., (1985) 4 SCC 369 : 1986 SCC (Tax) 11 : 1985 Supp 3 SCR 123, referred to
R-M/9510.CT