http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

CASE NO.: Appeal (civil)  3819 of 1999

PETITIONER: Comm.of Central Excise, Allahabad, etc.        

RESPONDENT: M/s Hindustan Safety Glass Works Ltd., etc.                 

DATE OF JUDGMENT: 22/02/2005

BENCH: S. N. Variava,Dr. AR. Lakshmanan & S. H. Kapadia   

JUDGMENT: J U D G M E N T WITH C.A. NOS. 5795/1999, 6117/1999,  8254-8255/2003  & 1758/2004

S. N. VARIAVA, J.

       These Appeals are against Judgments of the Customs, Excise &  Gold (Control) Appellate Tribunal (CEGAT). As the question of law  involved in all these Appeals is the same, they are being disposed off  by this common Judgment.         The question for consideration is whether the cost of wooden  crates/boxes in which the Respondents pack their product, i.e., Glass  Sheets, is includible in the assessable value of the glass. For the sake of convenience, facts in Civil Appeal No. 3819 of  1999 will be referred to.  In Civil Appeal No.3819 of 1999 CEGAT has  held in favour of the Respondents by following an earlier decision of  CEGAT, dated 9th January 1987, in that Respondents’ own case.   In  that case, the Order was based on a finding of fact that barring stray  instances glass was delivered to local customers with just a paper  packing interleaved with straws.   CEGAT had, on those facts, held that  the ratio laid down by this Court in the case of Union of India & Ors.  vs. Godfrey Philips India Ltd. [reported in 1985 (22) ELT 306] and  in the case of Geep Industrial Syndicate Ltd. vs. Union of India  [reported in 1992 (61) ELT 328] applied.             Before the arguments of the parties are considered, it is  essential that the provision of law and the authorities of this Court be  first looked at.            The relevant portion of Section 4 reads as follows: "SECTION 4. Valuation of excisable goods for  purposes of charging of duty of excise.- (1) Where  under this Act, the duty of excise is chargeable on any  excisable goods with reference to value, such value, shall,  subject to the other provisions of this section, be deemed  to be \026

(a)     the normal price thereof, that is to say, the  price at which such goods are ordinarily sold  by the assessee to a buyer in the course of  wholesale trade for delivery at the time and  place of removal, where the buyer is not a  related person and the price is the sole  consideration for the sale:

xxx                     xxx                     xxx xxx                     xxx                     xxx

       (4) For the purposes of this section, -

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

       xxx                     xxx                     xxx                 xxx                     xxx                     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 warp  beam or any other thing in which or on which the excisable  goods are wrapped, contained or wound.

       xxx                     xxx                     xxx         xxx                     xxx                     xxx"

       Thus under Section 4(4)(d)(i) the cost of packing is to be  included in working out the value of the goods, unless the packing is of  a durable nature and is returnable by the buyer to the assessee.    The  Explanation indicates the various types of packing whose costs have to  be included.  A wrapper and/or a container is packing whose cost has  to be included.  The words "wrapper" and "container" are wide enough  to include all types of wrappers or containers.  The further words "any  other thing in which or on which the excisable goods are wrapped,  contained or wound" also show that the term "Packing" has a very  wide connotation and includes anything used for wrapping and/or  containing the excisable goods.  Even though the statutory provision is  clear and unambiguous, a concept of primary and secondary packing  was developed by this Court in the case of Union of India vs.  Bombay Tyre International Ltd. [reported in 1983 (14) ELT 1896].   In this case, it was recognized that the degree of packing would vary  from one class of excisable goods to another.  It was held that packing  may be of different grades.  It was held that the packing may be  necessary to make an article marketable.  It was held that by including  the cost of packing the Legislature has sought to extend levy beyond  the manufactured article itself. It was held that thus a strict  construction must be put upon the said provision. It was held that only  the cost of packing which was required to make the goods marketable  would be includible in the value of goods.  It was held that if any  additional or special packing is provided, which packing is not  generally required or provided as a normal feature, then the cost of  such packing need not be included in the value of the goods.  The test  which was laid down was that it is only the cost of packing ordinarily  required for selling the goods in the course of wholesale trade to a  wholesale buyer which would be includable and not the cost of any  additional or special packing.            Thereafter in the case of Union of India vs. Godfrey Philips  India Ltd. the same principles were reiterated.  However, divergent  conclusions were arrived at on the basis of differing perceptions as to  the factual situation in that case.   In that case the respondent- assessee was engaged in the manufacture of cigarettes. The cigarettes  were packed initially in paper/cardboard packets of ten and twenty.  These packets were packed together in paper/cardboard  cartons/outers. These cartons/outers were then placed in corrugated  fiberboard containers. It is these corrugated fiberboard containers  (CFCs) filled with cartons/outers containing the packets of cigarettes of  ten and twenty which were delivered by the assessee to the wholesale  dealers at their factory gate. So far as the cost of initial packing is  concerned, there was no dispute. Similarly, there was no dispute with  respect to the cost of paper/cardboard cartons/outers. The dispute,  however, centered round the cost of CFCs.  Bhagwati, C.J., [as he then

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

was] held that the fact that the CFCs are used in order to protect the  goods against damage during the course of transportation is no ground  to exclude their cost.  However, the majority opinion was that CFCs  were employed only for purpose of avoiding damage or injury during  transit.  It was held by the majority that CFCs were not necessary for  selling the cigarettes in the wholesale market at the factory gate.  On  this factual basis the majority held that the costs of CFCs were not  includible in the value of the cigarettes.  Mr. Bagaria, learned counsel  for the Respondents, has placed strong reliance on the following  observations from the Judgments of Justice Pathak and Justice A. N.  Sen.   The portions relied upon read as follows:- Pathak, J :      "The corrugated fiber board containers are employed only  for the purpose of avoiding damage or injury during  transit. It is perfectly conceivable that the wholesale dealer  who takes delivery may have his depot a very short  distance only from the factory gate or may have such  transport arrangements available that damage or injury to  the cigarettes can be avoided. The corrugated fiber board  containers are not necessary for selling the cigarettes in  the wholesale market at the factory gate."                   Sen, J:-   "Cartons of cigarettes are usually further packed in  corrugated fiber board containers for facilitating transport  in the course of delivery to buyers in the wholesale trade  where there is any possibility of the cartons becoming  otherwise damaged in course of transit. Naturally in such  cases, delivery of the cigarettes in those cartons is effected  to the buyers at the factory gate after further packing  these cartons in corrugated fiber board containers. The  further packing of cartons in which the packets of  cigarettes have been packed in the corrugated fiber board  containers is not, indeed, in the course of delivery to the  buyer in the wholesale trade at the factory gate but is only  for the purpose of facilitating the smooth transport of the  cartons containing the packets of cigarettes to the buyer in  the wholesale trade."  

       The qualification laid down by the learned Judges that the costs  of such packing was not includible as this packing was merely to  prevent damage and injury has been misunderstood by many.  As is  indicated hereinafter, the ratio is not that in all cases, where the  packing is for preventing damage or injury to the goods, the costs of  such packing is to be excluded from the value of the goods.         In the case of Geep Industrial Syndicate Ltd. vs. Union of  India (supra), the Appellant-assessee was the manufacturer of  batteries and torches. The torches and batteries manufactured by it  were first packed in polythene boxes and then these polythene boxes  were placed in cardboard cartons. There was no dispute about the  inclusion of the value of polythene boxes and cardboard cartons. The  dispute was only with respect to the cost of wooden boxes in which the  cardboard cartons were placed at the time of delivery at the factory  gate.  It was held that the principles laid down by the majority in  Godrey Philips case (supra) applied.  It was held that the cost of  such secondary packing in wooden boxes was not includible in the  value of batteries and torches.          In the case of CCE vs. Ponds India Ltd. [reported in 1989 (44)  ELT 185 (SC)], the Respondent-assessee was the manufacturer of  talcum powder and face powder. The Excise authorities noticed that  small packing of 15, 18, 20, 30, 40 and 100 gms. powder were first  packed in a pack of dozen and then packed in secondary packing for  easy transportation to the wholesale buyer. The authorities opined that  "the secondary packing were a must for delivery to the wholesale  dealer". The Assistant Collector accordingly held that the cost of such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

secondary packing was liable to be included.  This Court after referring  to the ratio of Bombay Tyre International observed that the  principle in Bombay Tyre International does not admit of any  dispute.  It was held that there has been "some divergence of  emphasis" with respect to the criteria upon which the inclusion or  exclusion of the cost of packing should be determined. It was then  held as follows: -  "In my opinion, the views expressed by the majority of the  Judges in Godfrey Philips case were in consonance with the  views of this Court in the Bombay Tyre International case.  The question is not for what purpose a particular kind of  packing is done but the test is whether a particular packing  is done in order to put the goods in the condition in which  they are generally sold in the wholesale market at the  factory gate and if they are generally sold in the wholesale  market at the factory gate in certain packed condition,  whatever may be the reason for such packing, the cost of  such packing would be includible in the value of the goods  for assessment to excise duty."  

       Reference was then made to the Geep Industrial Syndicate  Ltd. case and it was held as follows:-  "In my opinion, the correct position seems to be that the  cost of that much of packings, be they primary or  secondary, which are required to make the articles  marketable would be includible in the value. How much  packing is necessary to make the goods marketable is a  question of fact to be determined by application of the  correct approach. Packing, which is primarily done or  mainly done for protecting the goods, and not for making  the goods marketable should not be included.... The  question is not whether these goods could be so sold, but  the question is whether these goods are so sold usually  and as such used to become marketable in such manner."  (emphasis supplied)                     In the case of Hindustan Polymers vs. Collector of C. Ex.   [reported in 1989 (43) ELT 165] the Appellant-assessee was engaged  in the manufacture and sale of fusel oil.  The fusel oil manufactured by  it was mainly sold in bulk.  A small portion was being supplied to the  customers in drums supplied by such customers. It was found that in  the wholesale trade these goods were delivered directly into tankers  and that delivery in drums was only to facility their transport in small  quantities.  It was held that the cost of drums was not included in the  value of the oil as the material on record established that the goods  were not sold in drums generally in the course of the wholesale trade.   It was, however, held that if the manufacturer supplied the drums and  charged the customers separately therefor, the cost of such drums  would have to be included in the value.           In the case of Government of India vs. Madras Rubber  Factory Ltd. [reported in 1995 (77) ELT 433 (S.C.)], this Court  considered, amongst other things, whether costs of packing is  includible in the cost of the concerned goods.  All the above mentioned  cases were analyzed and the ratio deductible therefrom was summed  up as follows:- "41. We respectfully record our concurrence with the  above observations. In our respectful opinion, the  tests evolved by Mukharji, J. and Ranganathan, J.,  which are the same in essence, are wholly consistent  with the test evolved in Bombay Tyre International. To  repeat: "the question is not for what purpose a  particular kind of packing is done but the test is  whether a particular packing is done in order to put  the goods in the condition in which they are generally  sold in the wholesale market at the factory gate and if

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

they are generally sold in the wholesale market at the  factory gate in certain packed condition, whatever  may be the reason for such packing, the cost of such  packing would be includible in the value of the goods  for assessment to excise duty."            xxx                  xxx                     xxx         43. The position emerging from the review of the  decisions aforesaid may now be summarized: each  and every decision has accepted and acted upon the  law laid down in Bombay Tyre International. The test  evolved in the said decision has been expressly  reiterated in all the judgments, though it is a fact that  there has been some divergence in what may be  called ’emphasis’. Since the said decision lays down  that the cost of "that degree of secondary packing  which is necessary for putting the excisable article in  the condition in which it is generally sold in the  wholesale market at the factory gate" is to be  included, the Court enquired in Godfrey Philips  (majority opinion) whether the CFCs were necessary  for such delivery. The Court found on the facts of that  case that they were not so necessary and accordingly  held that the cost of CFCs is not includible. In Geep  Industrial Syndicate, the Court adopted the approach  of the majority in Godfrey Philips, on the footing that  the wooden boxes were not ’necessary’ for delivery at  the gate. In Ponds, however, both the learned Judges  constituting the Bench laid down tests consistent with  the one in Bombay Tyre International. Indeed,  Ranganathan, J. understood the majority decision in  Godfrey Philips and the decision in Geep Industrial  Syndicate in the same manner as we have done - a  fact emphasised by us hereinabove, while discussing  the ratio of Ponds. As pointed out by us hereinabove,  it would not be reasonable to infer any conflict or  deduce any inconsistency between the ratio of  Bombay Tyre International and the ratio of Godfrey  Philips for the reason that not only both Benches were  of coordinate jurisdiction (Bombay Tyre International  was thus binding upon the latter Bench) but also  because both the decision were rendered by the very  same Bench. The adage in such matter is: look for  harmony, not divergence. It is equally relevant to  point out that Bombay Tyre International was equally  binding upon the Bench (of three learned Judges)  which decided Geep Industrial Syndicate and that it  would be equally unreasonable to suggest that the  Bench (deciding Geep Industrial Syndicate) would lay  down an inconsistent proposition from the one in  Bombay Tyre International without even referring to  the decision or its ratio. The conclusion in these two  later cases turned upon the finding as to factual  situation obtaining therein whereas the two opinions in  Ponds not only follow the test in Bombay Tyre  International but reiterate it in clear terms. The test  laid down in Bombay Tyre International has never  been departed from in any of the later decisions and  must be treated as good and sound. We may as well  stress the obvious: in a matter like this, certainty in  law is essential. It may be that in applying the  principle having regard to the facts of a given case,  there may be some divergence in conclusion but so far  as the principle - the relevant test to be applied - is  concerned, there should be no uncertainty. The test  is: whether packing, the cost whereof is sought to be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

included is the packing in which it is ordinarily sold in  the course of a wholesale trade to the wholesale  buyer. In other words, whether such packing is  necessary for putting the excisable article in the  condition in which it is generally sold in the wholesale  market at the factory gate. If it is, then its cost is  liable to be included in the value of the goods; and if it  is not, the cost of such packing has to be excluded.  Further, even if the packing is ’necessary’ in the above  sense, its value will not be included if the packing is of  a durable nature and is returnable by the buyer to the  assessee. We must also emphasize that whether in a  given case the packing is of such a nature as is  contemplated by the aforesaid test, or not, is always a  question of fact to be decided having regard to the  facts and circumstances of a given case."

       We are in complete agreement with the above conclusions.  The  question is not for what purpose the packing is done.  The test is  whether the packing is done in order to put the goods in a marketable  condition.  Another way of testing would be to see whether the goods  are capable of reaching the market without the type of packing  concerned.  Each case would have to be decided on its own facts. It  must also be remembered that Section 4(4)(d)(i) specifies that the  cost of packing is includible when the packing is not of a durable  nature and returnable to the buyer.  Thus, the burden to show that the  costs of packing is not includible is always on the assessee.  Also  under Section 4(a) the value is to be the normal price at which such  goods are ordinarily sold in the course of wholesale trade for delivery  at time and place of removal. Thus, at this stage, it would be  convenient to refer to the case of A. K. Roy & Anr. vs. Voltas  Limited [reported in 1977 (1) ELT (J 177)] wherein the concept of  wholesale market has been explained in the following terms:- "8. We do not think that for a wholesale market to exist, it  is necessary that there should be a market in the physical  sense of the term where articles of a like kind or quality  are or could be sold or that the articles should be sold to  so-called independent buyers. 9. Even if it is assumed that the latter part of s. 4(a)  proceeds on the assumption that the former part will apply  only if there is a wholesale market at the place of  manufacture for articles of a like kind and quality, the  question is what exactly is the concept of wholesale  market in the context.  A wholesale market does not  always mean that there should be an actual place where  articles are sold and bought on a wholesale basis.  These  words can also mean that potentiality of the articles being  sold on a wholesale basis.  So, even if there was no  market in the physical sense of the term at or near the  place of manufacture where the articles of a like kind and  quality are or could be sold, that would in any way affect  the existence of market in the proper sense of the term  provided the articles themselves could be sold wholesale to  traders, even though the articles are sold to them on the  basis of agreements which confer certain commercial  advantages upon them.  In other words, the sales to the  wholesale dealers did not cease to be wholesale sales  merely because the wholesale dealers had entered into  agreement with the respondent under which certain  commercial benefits were conferred upon them is  consideration of their undertaking to do service to the  articles sold, or because of the fact that no other person  could purchase the articles wholesale from the respondent.   We also think that the application of clause (a) of s. 4 of  the Act does not depend upon any hypothesis to the effect

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

that at the time and place of sale, any further articles of  like kind and quality have been sold.  If there is an actual  price for the goods themselves at the time and the place of  sale and if that is a "wholesale cash price", the clause is  not inapplicable for want of sale of other goods of a like  kind and quality."   

       Having seen the statutory provision and the law on the subject,  one must now see the facts.  As stated above, all the Respondents are  manufacturers of sheet glass.   Facts are more or less same.  Thus for  sake of convenience facts in Civil Appeal No. 3819 of 1999 are being  referred to.   In this case, the Assistant Collector had found that the cost of  wooden crates is recovered by the Respondents from the buyers.  It is  found that even when the goods are sent to their own godown, they  are sent in wooden cases and are stored/packed in wooden cases for  delivery in the wholesale trade to the customers.  It is found that the  goods are generally cleared by the Respondents from their factory  gate duly packed in wooden cases and they are sold as such both from  the factory gate and through the depots.  It has been found that the  Respondents had not led any evidence to show that the goods were  sold in paper packing as claimed by them.           In other cases facts may vary to some extent but the essential  fact is that sheet glass is a very delicate item which is liable to crack or  shatter. Mr. Venkatramani has submitted that the fragile nature of  glass sheets is sufficient to show that they cannot be marketed without  special packing or arrangement.   He submitted that Respondents had  led no evidence to show that the glass sheets were marketable without  special packing.    On the other hand, Mr. Bagaria submitted that the Respondents  in Civil Appeal No. 3819 of 1999 had relied upon an earlier Order  passed by the Tribunal in their own case.  He submitted that that  Order clearly established that the Respondents’ products, namely,  glass sheets, were marketable without their being packed in wooden  cases.  He submitted that the Respondents therefore did not need to  lead any further proof to show that the glass sheets were marketable  without wooden packing.           Mr. Bagaria also relied upon other decisions of the Tribunal  wherein also it has been held, on facts, that glass sheets were  marketable without wooden packing.  In support of this submission, he  relied upon the authority in the case of Window Glass Ltd. vs.  Collector of Central Excise, Calcutta, [reported in 1989 (39) ELT  641].  In this case, the Appellant Company was manufacturing  "figured" and "wired" glass in the form of glass sheets.  The question  was whether the cost of wooden packing was includible in the value of  such glass sheets.  The Tribunal has held that the cost of such sheets  was not includible in the value of the glass sheets in the following  terms: "7.     We shall briefly deal with both these issues.  Taking  the first issue, the extra item accounting for bulk of the  supplementary invoice is the cost of special packing.  The  appellants declared in the price lists that their  ordinary/frame packing cost about 20 paise per sq. mtr. of  the goods and that the cost of such packing was already  included in the price declared.  They further declared that  they used special packing at the request of the buyer for  avoiding breakage of the goods in transit.  The special  packing used was wooden crate or wooden box.  The  Collector found that overwhelming majority of sales of the  appellants were in special packing, that in some rare  cases, the sales to Calcutta buyers were in ordinary  packing and that in remaining cases even the Calcutta  buyers received the goods in special packing.   The  Collector held that the special packing was the normal  mode of delivery for the appellants’ goods, that such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

packing was necessitated by the fragile nature of the  glass-sheets and that in the circumstances the cost of  special packing could not be excluded from the assessable  value.  We find that in arriving at his calculation, the  Collector has fallen in error on two counts, first he relied  on the minority judgment of the Hon’ble Supreme Court in  the case of Godfrey Phillips (India) Limited [1985 (22) ELT  306 (SC)] and ignored the majority judgment therein.   Second, he went by the simple arithmetic of majority sales  versus minority sales.  This is wrong.  The correct position  regarding packing charges has been enunciated by the  Hon’ble Supreme Court in their judgments in Bombay  Tyres International Limited and Godfrey Phillips (India)  Limited cases aforesaid and further in their judgment in  the case of M/s. MRF Limited - 1987 (27) ELT 553 (SC).    In regard to special packing, the criterion to judge is  whether it is essential for delivery of the goods in  wholesale at the factory gate.  Secondly, it is not the  relative figures of percentages of deliveries in ordinary  packing and special packing which determine the issue but  the question of principle whether the special packing is  necessitated only by the consideration of safety of the  goods during long distance transport or it is essential for  wholesale deliveries effected even at the factory gate.   We  have to remember in the present case that the factory of  the appellants was situated in a village and their nearest  wholesale market at Calcutta was also 45 Kms. away.    The local demand being limited, there could not be very  large number of local deliveries at the factory gate.  Their  nearest big wholesale market was at Calcutta which itself  was 45 Kms. away from their factory.   The appellants  explained to us that some of their Calcutta customers who  wanted to sell their goods locally at Calcutta preferred to  purchase the goods in ordinary packing while some others  who proposed to re-sell the goods to outstation buyers in  original packing preferred to purchase the goods in special  packing.  The department admits that the appellants did  clear some consignments for delivery at Calcutta in  ordinary packing.  The number of such consignments may  be small but yet they do establish the principle that the  goods could be delivered in wholesale at the factory gate  in ordinary packing.  The ordinary packing consisted of  frame packing with straw cushioning and paper inter- leaving between the glass-sheets.  Such ordinary packing  is quite adequate for wholesale deliveries at the factory  gate and at the market situated very close to the factory.    In some other cases of glass-sheets also which have come  for decision before us, we have held the ordinary/frame  packing adequate for wholesale deliveries at the factory  gate.   Following the principle of essentiality, as laid down  by the Hon’ble Supreme Court, we hold that the cost of  special packing was, in principle, excludible in the case of  the present appellants also."  

       From the facts enumerated, in the paragraph set out  hereinabove, it is clear that there was no dispute that the cost of  ordinary packing was includible.  The Tribunal has mentioned that the  ordinary packing consisted of frame packing with straw cushioning and  paper inter-leaving between the glass sheets.  This indicates that the  ordinary packing was of wooden frames.  In respect of the wooden  frame there was no dispute that the costs were includible in the value  of the glass.  This case, therefore, far from helping the Respondents is  against them.  This case also indicates that to make the goods  marketable it would be necessary to pack them in wooden cases or to  frame pack them.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

Mr. Bagaria also relied upon the case of Gurind India P. Ltd.  vs. Commissioner of Central Excise, Meerut [reported in 1999  (112) ELT 1020].  In this case, the Tribunal held that the cost of  wooden packing is not includible in the value of the goods by  observing that more than 64% of the goods are delivered at the  factory gate without any packing.  What the Tribunal has omitted to  notice is the facts that the goods were cleared without packing, as  there were special arrangements made in trucks for the purposes of  ensuring that the goods did not break during transit.  This showed that  the goods were not marketable without some special arrangements.    In all cases it would not be possible to have special trucks.   Thus,  wooden packing or frame packing would be necessary to make them  marketable.  In our view, the finding of the Tribunal, on the facts, is  erroneous and unsustainable.         That brings us to Mr. Bagaria’s submission that in the case of  Respondents (in Civil Appeal No. 3819 of 1999) the Tribunal had, by  its Order dated 9th January 1987, held that the cost of the wooden  cases was not includible in the value of the glass sheets.  As we have  indicated hereinabove, this Order of the Tribunal was based on a  finding of fact that barring stray instances, glass was delivered to the  local customers.  In that case, the Tribunal has failed to inquire or look  into the question as to who were the local customers to whom glass  was delivered without wooden packing.  From the reply to the show- cause notice given by the Respondents in this matter, it is clear that in  Calcutta the majority of the deliveries were to original equipment  manufacturers like car companies.  It is clear that these companies  would take delivery without wooden cases because they have their  own special arrangements to see that the glass sheets are transported  without breakages.  The Calcutta case, therefore, is an identical case  to the case of Gurind India P. Ltd., [reported in 1999 (112) ELT  1020], where the party taking delivery without wooden crates, had  made their own special arrangements.         At this stage reference must be made to a decision of a three  Judge Bench of this Court dated 20th July 1995 in Civil Appeal  Nos.3119-20 of 1980 [Union of India vs. Shri Vallabh Glass Work Ltd.  & Anr.].  Relying on the ratio in Madras Rubber Factory Ltd.’s case  (supra) this Court has held that the costs of wooden crates is  includible in the value of glass products.  For the following reasons we  see no reason to take a different view.          The products of the Respondents are large glass sheets.  Very  fairly, it was not denied that the goods are fragile. Without special  protection such glass sheets could not be transported.  It was  submitted that for short distances they could be transported without  wooden crates.   However, it is clear that even in such cases special  care would have to be taken.   The test is not whether in a few stray  instances or in a small percentage of cases or by making some other  special arrangement the glass sheets can be so transported.  The test  is whether for the purposes of delivery in the wholesale trade, glass  sheets can be moved without special arrangements.  The answer has  to be an obvious ‘No’. In most cases the special arrangement is  packing in wooden cases.  In such cases the liability to include the  costs of the wooden crates in the value of the glass sheets cannot be  avoided by claiming that the wooden crates are for purposes of  protecting the glass.  In such cases, the wooden crates are for  purposes of making the glass sheets marketable.  The ratio in  Godfrey Philips case is not that whenever a packing is done with  intention to prevent damage or injury to the goods the costs is to be  excluded.  It is only in those cases where the goods are capable of  being marketed without special packing and the special packing is  given only by way of abundant caution to protect the goods in  transport that their costs get excluded.   In the above view the  reasoning and the conclusion of the Tribunal cannot be supported.         Mr. Bagaria next submitted that the Explanation to Section  4(4)(d)(i) shows that only packing which is of the nature of simple  wrappers, container, bobbin, pirn, spool, reel or warp beam would

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

become includible.  He submitted that it is only in those cases where  the packing gets identified with the goods that the costs of such  packing are includible.  He submitted that the Explanation makes it  clear that packing in the nature of wooden crates is not covered and,  therefore, its cost would not be includible.  We are unable to accept  this submission. As we have already indicated hereinabove, the  Explanation is very wide and includes almost all types of packing.  It is  not possible to give a restricted meaning as is sought to be done by  Mr. Bagaria.         It must be mentioned that in these cases it is not disputed that  there is no agreement or arrangement making them returnable.  Thus  even though they may be considered to be durable the cost of wooden  cases are includible in the value of the glass sheets sold by the  Respondents.  It is so held for above reasons.                 Accordingly, the Appeals are allowed.  The impugned  Judgments stand set aside.  There will, however, be no order as to  costs.