Civil Appeal No 1037 of 1988
589 From the order dated 14121987 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No 46987A order No 80787 A SN Kackar RK Habbu PG Gokhale Ms Sushma Manchanda and BR Agarwal for the Appellant
The Judgment or the Court was delivered by SABYASACHI MUKHARJI J This is an appeal under section 35 L of the hereinafter called the Act 
The Superintendent of Central Excise returned the price list of the appellant with a covering letter satating that the price should include all the cost of packing and packing charges in terms of section 44di of the Act
The appellant a private limited company manufactured various types of glass bottles which were assessed to duty under Item No 23A of the Central Excise Tariff
According to the appellant it sold to the customers on wholesale basis the glass bottles manufactured by it packed in gunny bags and cartons which it purchases from the market
According to the appellant further it has been paying duty on the value of the glass bottles including the cost of gunny bags or the cartons in which these are packed at the time of sale
It appears therefore according to the appellant that it has been paying duty on glass bottles on the basis of the assessable value which included the costs of packing material namely the gunny bags and the cartons
The case of the appellant further is that the glass bottles are normally sold by it in the packing consisting of gunny bags which are durable and returnable and in several cases the gunny bags are returned by the buyers and are used by the appellant again for packing the glass bottles
It is only when the customers specifically ask for delivered in cartons instead of in gunny bags that the appellant delivered the glass bottles packed in cartons which are also durable and returnable
Towards the end of 1977 and early 1978 the appellant submitted price list in regard to the glass bottles manufactured by it for approval by showing separately the price at which such goods were actually sold in the course of wholesale trade and the cost of packing
By his letter dated 10th January 1978 the Superintendent of Central Excise returned to the appellant the price list duly approved but nothing therein that the price should be inclusive of the cost of packing and packing charges in terms of section 44d of the Act
Section 44di as it stood read as follows 590 4 For the purposes of this section a assessee  means the person who is liable to pay the duty of excise under this Act and includes his agent b place of removal  means i  ii x x x c xxx d value  in relation to any excisable goods i where the goods are delivered at the time of removal in a packed condition includes the cost of such packing except the cost of the 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 pirn spool reel or wrap beam or any other thing in which or on which the excisable goods are wrapped contained or wound Since then the appellant has been paying duty on the cost of packing under protest and lodging claims of refund
The appellant however did not receive any refund nor any intimation that the claims of refund are or were being rejected
Various representations made by the appellant were in vain
The Assistant Collector of Central Excise wrote a letter dated 8th March 1980 advising the appellant to file an appeal before the Appellate Collector if the appellant felt aggrieved
Feeling aggrieved the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay
The High Court passed an interim order on 18th July 1984 remanding the case back to the Assistant Collector of Central Excise and to decide the matter after giving the appellant fair and adequate opportunity to adduce evidence
After considering the written statements filed by the appellant the Assistant Collector passed an order on 29th April 1986 rejecting the appellant s refund claim for about Rs17 lakhs for the period from 1st January 1978 to 31st December 1980 and demanding duty for the period 6th January 1981 to 31st December 1985 in terms of the bank guarantees executed by the appellant
There was an appeal before the 591 Collector of Central Excise Appeals
The Collector on 21st January 1987 rejected the appeal and upheld the order of the Assistant Collector
The appellant filed an appeal before the Customs Excise and Gold Control Appellate Tribunal hereinafter called CEGAT 
CEGAT dismissed the appeal
Aggrieved thereby the appellant filed the appeal in this Court
The Tribunal noted that the appellant manufactured glass bottles
It delivered these in two types of packing namely in open crates and in cartons and gunny bags
So far as the crates were concerned the same belonged to the appellant
The customer was billed for the cost of glass bottles only
The crates were returnable to the appellant within 30 days
The revenue has not included the cost of such crates in the assessable value
The revenue has also not included the cost of packing if any supplied by the customer himself
There was no dispute about these packings
So far as the packings hl cartons and gunny bags were concerned it was noted by the Tribunal that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles
The appellant s case was that these packings were also returnable and in many cases they were actually returned and re used by the appellant
There were no evidence about the durability of the cartons and gunny bags but nothing to show that these were returnable
The position seems to be as follows
The Tribunal has rightly applied the returnability test
In K Radha Krishnaiah vs Inspector of Central Excise and others  this Court observed that it cannot be said that the packing is returnable by the buyer to the assessee unless there Is an arrangement between them that it shall be returned
Therefore such arrangement has been established
Actual return or extent of return is not relevant
What is necessary is that if the buyer chooses to return the packing the seller should be obliged to accept it and refund the stipulated amount
In this case after examining the facts the Tribunal found that there was no clause about returnability of the cartons and gunny bags
The appellant invited the attention of the Tribunal to the following clause in their standard contractor
It reads as follows 6
All packing cases other than such as may be supplied or paid for by buyer shall be returnable in good order and condition within 30 days after receipt  The Tribunal was of the view that the above clause related to cases
It could have meant only the crates which belonged to the appellant and for which the customers had not paid anything
The 592 property in the crates having remained with the appellant all along the buyers were naturally obliged to return them to their rightful owners
But that was not the case with the cartons and gunny bags
The buyers pay for these and the property in these pass on to the buyers
They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free
No such contract or agreement was forthcoming
The Tribunal was not convinced that in the normal course of business anyone could be asked to part with its property and in addition incur return freight therefor too for nothing
In those circumstances the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term
The Tribunal further noted that since the statute insisted on the packing being returnable in addition to being durable the authorities are bound to see whether the transaction fulfilled the tests of returnability as per the Supreme Court and High Court judgments
In that view of the matter the Tribunal dismissed the appeal
As noted above this Court has considered the meaning of the expression returnable in the Section in K Kadha Krishnaiah s case supra
This Court held that so far as the question of durability is concerned there cannot be such controversy about it but a question has been raised as to what is the meaning and connotation of the word returnable
Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is return able
While interpreting this word we must bear in mind that what section 44di excludes from computation is cost of packing which is of a durable nature and is returnable by the buyer to the assessee
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee
It is not the physical capability of the packing to be returned which is the determining factor because in that event the words by the buyer to the assessee need not have found a place in the section they would be superfluous
In that view of the matter we are of the opinion that in the facts found and the expressions used in section 44di of the Act which have been set out hereinbefore there being no evidence of the agreement that the cartons and gunny bags were returnable we are of the opinion that the Tribunal came to the correct conclusion
This appeal fails and is rejected accordingly
GN Appeal dismissed


Summary:
The land in question was granted to one A by the Government of Kashmir and as per the practice prevailing there he was shown as Wasidar in respect of the said land
On his death his son inherited the leasehold rights
On the death of the son his widow inherited the same
The appellants are the heirs and legal representatives of the widow
A s son during his lifetime had granted a sub lease of the said land to the Respondent s father
The widow of A s son instituted a suit for recovery of possession of the said land on the grounds that there was unlawful sub letting by the sub lessee the land was required for occupation by her and her family and that the period of sub lease had expired
The Respondent contended that the sub lease was void ab initio
The Sub Judge held that the sub lease was valid and the grounds of bona fide requirement of the appellants  mother as well as unlawful sub letting by the sub lessee had been established
On these findings the suit was decreed
on appeal the Additional District Judge upheld the decision
In the second appeal before the High Court it was contended that the transfer made was of a mere interest in the lease hold and did not amount to a transfer of the land leased as contemplated under Rule 35 of the Wasidar Rules
Rejecting the contention but without considering as to what would be the effect of the sub lease being void the High Court came to the conclusion that in view of the sub lease being void the suit filed by the appellant must be dismissed
This appeal by special leave is against the aforesaid decision
on behalf of the appellants the contentions urged in the Courts below were reiterated before this Court
The Respondent relied on Section 12 A of the Jammu Kashmir Land Grants Act 1960 as amended in 1969 and contended that the sub lease was admittedly 557 granted without the permission of the Government and so the lease granted by the Government had come to an end the title of the appellants to the said land had extinguished and they were not entitled to sue for recovery of possession of the said land
Allowing the appeal  HELD 1
Even assuming that the sub lease granted was void the result would be that the Respondent his father would be persons without any legal interest in the said land
The appellants being the lessees of the said land were suing on their own title and not relying on the sub lease hence they were entitled to evict the Respondent who had no title or interest in the said l 
If a view is taken that the sub lease was valid in that event as held by both the Courts below as grounds for eviction set out in Section 11 of the Jammu  Kashmir Houses and Shops Rent Control Act have been made out the Respondent ceased to be entitled to the protection of the said Act and was liable to be evicted as the term of his sub lease had expired
559E G 2
It was not contended by the Respondent in any of the Courts below that the title of the Appellants and his predecessors in title to the said land under the lease granted by the Govermnent had come to an end
Had the plea been taken earlier it is possible that the Appellants might have pleaded facts to show that their lease had not come to an end or that it had been renewed after the sub lease was granted
Hence allowing such a plea at this stage might cause prejudice to the Appellants
560D E 3
As regards the sub letting by the Respondent and his father and the bona fide requirement of appellants  mother these are both essentially issues of fact and have been decided in favour of the Appellants  mother and their predecessors in title
Those findings do not appear to have been seriously challenged before the High Court at all and hence there is no reason to go into the question as to whether those findings are correct in this appeal
561B