Case: J. G. Glass Industries Limited Vs. Union of India

( 1 ) THE petitioners are manufacturers of glass and glasswares and which manufacture is liable to excise duty under Tariff Item No. 23a. Tariff Item No. 23a deals with the subject of glass and glassware and Clause (4) provides that excise duty on "other glass and glassware including tableware" is thirty five per cent ad valorem. The petitioners had entered into an agreement to manufacture bottles for a company and the agreement provided that the petitioners, on manufacture of the bottles, shall print a logo of the customer on the bottles. The petitioners were required by Messrs. Poona Beverages Limited to supply 200 ml. Campa bottles to enable the beverage company to sell beverages in the said bottles. The petitioners filed price list No. 37 dated April 4, 1978 for supply of Campa bottles inclusive of the printing charges. The price list sets out that the manufacturing cost would be Rs. 700/and printing charges Rs. 200/and consequently the total charges Rs. 900/per 1000 bottles. The petitioners also informed the superintendent of Central Excise that the printing charges should not be included in the assessable value while determining the duty payable by the petitioners. The Assistant Collector approved the price list on October 7, 1980 and accepted the claim of the petitioners that the cost of the printing need not be included while determining the assessable2 ) PURSUANT to the approval given by the Assistant Collector to the price list, the petitioners filed refund application on May 7, 1981 seeking refund of Rs. 7,68,776/for the period commencing from April 5, 1978 and ending with November 26, 1980. The Assistant Collector, Pune Division, by order dated October 31, 1981, sanctioned refund of Rs. 3,93,671. 82 by cheque and directed that an amount of Rs. 1,02,478. 94 should be set off against the pending dues of the petitioners. The Assistant Collector also held that the remaining amount is not refundable as the petitioners had recovered the said duty from the customers.( 3 ) ON April 24, 1982, the Collector of Central Excise and Customs, Pune, served a show cause notice on the petitioners to explain why the order granting refund should not be reviewed in exercise of powers under Section 35a (2) of the Central Excise Act and the order granting refund should not be quashed. The petitioners filed a reply and thereafter the Collector passed the impugned order dated July 7, 1983 whereby the show cause notice was made absolute and the order of refund granted earlier by the Assistant Collector on October 31, 1981 was set aside. The collector of Central Excise came to the conclusion that the value for assessment of the glass bottles has to be inclusive of the cost of printing.

Court's reasoning:
( 5 ) IT is not possible to sustain the view taken by the Collector while holding that the cost of printing shall be included while determining the assessable value of the glassexcise duty being on the process of manufacture, it can hardly be debated that the taxable event occurred when the manufacture of glass bottles wasit is not possible to accede to the submission on the facts and circumstances of the case. The process of printing logo is undertakes for the purpose of identification and we are unable to appreciate how by any stretch of imagination it will increase the value of the bottle. Indeed, every manufacturer undertakes the process of either printing logo or the name of the customer when an order is booked for a large number of articles to beour judgment, as the identity of the article, that is, the glass bottle, is not altered by process of printing logo or the value of the glass bottle is not increased or the glass bottle is not an improved article by the process of printing, it is futile to suggest that the cost of printing logo should be included while determining assessable value of glassthe present case, in our judgment, the process of printing has not brought into existence a different article with a distinct identity nor the process has increased or improved the value of the article. In these circumstances, the collector was clearly in error in disturbing the order passed by the Assistant Collector and concluding that while determining the assessable value of glass bottles the cost of printing should be included. The order of the Collector is not sustainable and is required to be setare not prepared to accede to the submission of Mr. Desai that the petitioners should be driven to commence a fresh bout of litigation for more than one reason. In the first instance, the present petition is pending in this Court for the last over seven years and it would be extremely harsh and unjust to compel the petitioners to adopt remedy of filing an appeal by incurring large expenses. Secondly, the decision of the Collector is entirely unsustainable on the facts and circumstances of the case and there is no dispute whatsoever about the facts on which the decision is to be resisted. In these circumstances, we decline to accede to the preliminary objection raised by Mr. Desai.