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PETITIONER: UNION OF INDIA & ORS.

       Vs.

RESPONDENT: GODFREY PHILIPS INDIA LTD. ETC. ETC.

DATE OF JUDGMENT30/09/1985

BENCH: BHAGWATI, P.N. (CJ) BENCH: BHAGWATI, P.N. (CJ) PATHAK, R.S. SEN, AMARENDRA NATH (J)

CITATION:  1986 AIR  806            1985 SCR  Supl. (3) 123  1985 SCC  (4) 369        1985 SCALE  (2)619  CITATOR INFO :  E&D        1987 SC 701  (19)  R          1987 SC1576  (3)  D          1987 SC1794  (29)  RF         1987 SC2414  (23)  R          1988 SC1531  (46)  R          1989 SC1933  (28)             1990 SC 374  (4,7,TO10,14,16,17)  RF         1990 SC1276  (4)  R          1990 SC1676  (24)  C&F        1991 SC  14  (11)  D          1991 SC 818  (18)  RF         1992 SC1075  (3)  RF         1992 SC2169  (20)

ACT:      Central Excise  and Salt Act 1944, Section 4(4) (d) (i) and Explanation  thereto - ’value’ - ’in a packed condition’ - Cost  of such  packing - Whether to be included for excise duty -  Primary packing  and secondary  packing - Difference between.      Cigarettes -  Manufactured  and  packed  in  paper/card board packets  and then  in  cartons  -  Cartons  packed  in corrugated fibre board containers - Cost of corrugated fibre board containers Exclusion for levy of excise duty - Whether arises.      Promissory estoppel      Doctrine of  promissory  estoppel  -  Applicability  of Explained.      Constitution of India 1950, Article 141      Supreme Court  - Enunciation  of law  by a Bench of the Court  -  Whether  Co-ordinate  Bench  entitled  to  express disagreement.      Words and Phrases      ’Value’ -  ’in a  packed  condition’  -  Meaning  of  - Central Excise and Salt Act, 1944 Section 4(4)(d)(i).

HEADNOTE:      The respondents  in the  appeals were  manufacturers of cigarettes. They  manufactured cigarettes in their factories and the  cigarettes so manufactured were packed initially in paper/card board packets of 10 and 20 and these packets were

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then packed  together in  paper/card  board  cartons/outers. These cartons/outers  were then  placed in  corrugated fibre board containers and these corrugated fibre board containers filled with  cartons/outers containing packets of cigarettes of 10  and 20  were delivered  by  the  respondents  to  the Wholesale dealers at the factory gate.      The wholesale  price charged by the respondents for the cigarettes sold  to the  wholesale dealers included not only the 124 cost of  primary packing  in packets  of 10 and 20, but also the cost of secondary packing in cartons/outers and the cost of final packing in corrugated fibre board containers.      On May  19, 1976 the Cigarette Manufactures Association made a  representation to  the Central  Board of  Excise and Customs pointing  out that corrugated fibre board containers "are not  an Integral  or essential requirement for the sale of  cigarettes   and  are  used  for  the  sole  purpose  of protecting cigarettes  from any damage that may arise during transportation ,  and that the cost of such corrugated fibre board containers  should not  therefore be  included in  the value of  goods for  the purpose  of excise  duty. The Board accepted this  plea of the Association and by a letter dated May 24, 1976 intimated to the Association that "Instructions have been  issued to  the Collectors  of Central Excise that the cost  of corrugated  fibre board  containers in question does not  form part  of the  value  of  cigarettes  for  the purposes of  excise duty".  This representation contained in the letter  dated May  24, 1976  continued to hold the field until November  2, 1982 when the Central Board of Excise and Customs addressed  a circular  to all  Collectors of Central Excise, stating that the matter had been re-examined and the earlier advice should be treated as cancelled.      In the  appeals by  the  Revenue  to  this  Court,  the question for  consideration was  whether the cost of packing is includible  in   the value  of  the  cigarettes  for  the purpose of assessment to excise duty.      On behalf  of the  appellant-Revenue it  was  contended that on a true construction of section 4 (4)(d)(1) read with the Explanation,  that whatever  be the  packing, primary or secondary,  in   which  the   cigarettes  were  packed  when delivered to  the buyer  in the course of wholesale trade at the factory  gate, the  cost of such packing would be liable to be  included in  the value of the cigarettes, and that lt was a totally unwarranted gloss on the Language of section 4 (4)(d)(1) read  with the  Explanation to  make a distinction between primary  and secondary  packing because that section did not  make any  such distinction  and  on  the  contrary, provided in  the clearest terms for inclusion of the cost of the entire  packing in which the cigarettes were packed when delivered to the whole-sale buyer at the time of removal.      On behalf  of  the  respondents  -  companies,  it  was contended that  though section  4(4) (d)(i)  read  with  the Explanation did not make any distinction between the primary packing and secondary 125 packing, the  cost of only such secondary packing was liable to be  included in  the  value  of  the  cigarettes  as  was necessary for sale of the cigarettes in the wholesale trade, and not the cost of secondary packing which was necessitated in order  to protect  the packed  cigarettes ant  to prevent them, from being damaged during the course of transportation from the  factory gate  to the  godown or  warehouse of  the wholesale dealer.  It was further contented that the cost of corrugated fibre  board containers was not includible in the

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value of  the goods  because the letter dated 24th May, 1976 constituted an  exemption order within the meaning of Rule 8 sub-rule (2)  of the  Central Excise  Rules,  1944  and  the respondents were accordingly exempted from payment of excise duty on  the cost  of corrugated fibre board containers w ed for packing  the cigarettes,  and the doctrine of promissory estoppel was  invoked against the Government on the basis of the representation  contained in  the letter dated 24th May, 1976. ^      HELD 1.[per  Bhagwati, C.J..  Pathak and  Sen,j.j]  The Central Government  and the  Central  Board  of  Excise  and Customs were  clearly bound bypromissory estoppel to exclude the cost of corrugated fibre board containers from the value of the  goods for  the purpose  of assessment of excise duty for the  period 24th  May 1976  to 2nd  November  1982.  The respondents would  be entitled  to exclusion  of the cost of corrugated fibre  board containers  from the  value  of  the cigarettes only  during the  period 24th  May  1976  to  2nd November 1982. [147 B, C]      In the  instant case,  a representation was undoubtedly made by the Central Board of Excise and Customs and approved and accepted  by the  Central Government,  that the  cost of corrugated fibre  boards containers  would not be includible in the value of the cigarettes for the purpose of assessment to  excise   duty.   The   respondents   acted   upon   this representation and  continued the  use of  corrugated  fibre containers for  packing the  cartons/outers of cigarette and did not  recover from  the wholesale  dealers the  amount of excise duty  attributable to  the cost  of  such  corrugated fibre board  containers during  the period  24th May 1976 to 2nd November 1982. It would be most inequitable to allow the Excise authorities  to assess  excise duty on the basis that the value  of the cigarettes manufactured by the respondents should  include   the  cost   of  corrugated   fibre   board containers, when  lt was  clearly represented by the Central Board of  Excise and  Customs that  the cost  of  corrugated fibre board  containers would not be includible in the value of the  cigarettes for  the purpose  of assessment of excise duty. [146 C-F] 126      2. What  has been laid down in Motilal Sugar Mills case [1979] 2  S.C.R. 641 represents the correct law in regard to the doctrine  of promissory  estoppel. The  observations  in Jeet Ram’s  case [1980] 3 S.C.R. 689 to the extent that they conflict with  the statement  of the  law in  Motilal  sugar Mills case  and introduce reservations cutting down the full width and  amplitude of the propositions of law laid down in that case  are dissented from. If the Bench of two Judges in Jeet Ram’s  case found  themselves unable  to agree with the law laid  down in  Motilal sugar  Mills case they could have referred Jeet Ram’s case to a larger Bench. It was not right on  their  part  to  express  their  disagreement  with  the enunciation of  the law  by a  co-ordinate Bench of the same Court in Motilal Sugar Mills case. [145 c-e]      3. Union of India v. Bombay International Ltd. 11984] 1 S.C.C. 467  broadly dealt  with  the  question  of  cost  of packing, and  it was  conceeded on behalf of the respondents in that  case that  the cost  of  primary  packing  must  be regarded as  falling within  the terms of s. 4(4)(d)(i) read with the  Explanation and  lt was only the cost of secondary packing which gave rise to dispute between the parties. [131 F; 134 F]      (Per Bhagwati, C.J.)      1. Whenever  a question  arises whether the cost of any

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particular  kind  of  secondary  packing  is  liable  to  be included in  the value  of the  article, the  question to be asked is  does the  packed condition in which the article is generally sold  in the  wholesale market at the factory gate include such  secondary packing?  If it  does, it  would  be liable to  be included  in the  value of the article for the purpose of excise duty. lt must therefore follow that if the packed condition in which the cigarettes manufactured by the respondents are  generally sold  in the  wholesale market at the factory  gate includes packing in corrugated fibre board containers  the   cost  of   such  corrugated   fibre  board containers would  be liable  to be  included in the value of the cigarettes for the purpose of excise duty. [135 B-D]      2. The  condition for  applicability of  the  inclusive defenition of  value in s. 4 (4)(d)(i) is that the goods are delivered at  the time  of removal  "in a  packed condition" and where  this condition  is satisfied,  the "value" of the goods would  include "the  cost of  such packings  and "such packing" must  obviously mean the packing in which the goods are when  they are  delivered at  the time  of removal.  The question therefore to be 127 asked is  - what  is the packed condition in which the goods are A when delivered at the time of removal? Whatever is the packing of  the goods at the time when they are delivered at the time  of removal,  the cost  of such  packing  would  be liable to  be include  in the  ’value’  of  the  goods.  The explanation  to   s.  4   (4)(d)(i)  provides  as  exclusive definition of  the term  "packing" and  it includes not only outer packing  but also  what may  be called  inner packing. 1135 F-G]      3. Ordinarily  bobbin, pirl,  spool, reel and warp beam on which  yarn is  wound would not be regarded as packing of such yarn, but brought within the definition of "packing" by the Explanation. The Explanation thus extends the meaning of the word "packing" to cover items which would not ordinarily be regarded  as forming  part of  "packing". The Explanation then  proceeds   to  say  that  "packing"  means    wrapper, container or  any other  thing in  which the excisable goods are wrapped or contained. [135H;136B]      4. It  is  apparent  from  the  wide  language  of  the Explanation that  every kind of container in which it can be said  that  the  excisable  goods  are  contained  would  be "packing" within  the meaning  of the  Explanation and  this would necessarily  include  a  fortiorari  corrugated  fibre board containers in which the cigarettes are contained. [136 C]      5. The  question is  not for  what purpose a particular kind of packing la done. The test is whether particular kind of 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 of they are generally sold in the wholesale market at the factory gate in a 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. [137 E-F]      In the  instant case,  there can  therefore be no doubt that  corrugated   fibre  board   containers  in  which  the cigarettes are  contained  fall  within  the  definition  of "packing" in  the Explanation  and if  they form part of the packing in  which the goods are packed when delivered at the time of  removal, it  is difficult  to resist the conclusion that under  s, 4  (4)(d)(i) read  with the  Explanation, the cost of  such corrugated  fibre board  containers  would  be liable to  be included  is the value of the cigarettes- [136

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E-F] 128      6. Rule  8 of the Central Excise Rules, 1944 deals with the power to authorise exemption from duty in special cases. Sub-rule (2) Rule 8 postulates the making of a special order by the  Central Board  of Excise  and Customs  in each  case exempting from  payment of  duty any  exciseable goods. [139 C,G]      7- The letter dated 24th May 1976 could not possibly be regarded as  a special  order by the Central Board of Excise and Customs  in the  case of  each of  the manufacturers  of cigarettes exempting  cigarettes from payment of duty to the extent of  the cost  of packing  by way  of corrugated fibre board containers.  The argument  of the respondents based on sub-rule (2)  of Rule  8 must be therefore rejected. 1139 G; 140 A]      8.  The   doctrine  of  promissory  estoppel  is  well- established  in   the  administrative   law  of   India.  It represents a  principle evolved by equity to avoid injustice and,  though  commonly  named  promissory  estoppel,  lt  is neither in  the realm  of  contract  nor  in  the  realm  of estoppel. The  basis of  this doctrine is the inter position of equity which has always, true to its form " stepped in to mitigate the rigour of strict law.      9. The  doctrine of  promissory estoppel  is applicable against the  Government in the exercise of its governmental, public or  executive functions  at the doctrine of executive necessity or  freedom of  future executive  action cannot be invoked to  defeat the  applicability  of  the  doctrine  of promissory estoppel. [144 G]      Central   London Property  Trust Limited  v. High Trees House Limited,  [1966] 1  ALL E.  R. 256, Rederiaktiebolaget Amphitrite v. The King [1921] 3 K.B. 500, Roberston Minister of Pension, [1949] 1 K.B. 227, Union of India v. Indo Afghan Agencies, [1968]  2 S.C.R.  366  and  Century  Spinning  and Manufacturing Company  Limited v. Ulhasnagar Council, [1970] 3 S.C.B. 854, referred to.      10.  The  doctrine  of  promissory  estoppel  being  an equitable doctrine, must yield the equity so requires, If it can be  shown by  the Government  or public  authority  that having regard  to the  facts as   they  have transpired,  it would be  inequitable  to  hold  the  Government  or  public authority to  the promise  or representation made by it. The Court would  not raise  an equity in favour of the person to when the  promise or  representation is made and enforce the promise or  representation against  the Government or public authority. The doctrine of promissory 129 estoppel would  be displaced  in such a case, because on the facts A  equity would  not require  that the  Government  or public authority  should be  held bound  by the  promise  or representation made by it. [145 G; 146 A]      (Per Pathak & Sen, JJ. dissenting)      The corrugated fibre board containers are not necessary for selling  the cigarettes  in the  wholesale market at the factory gate. The cost of such packing cannot be included in the ’value’  for the  purpose of  assessment of excise duty. [148 G; 151 Bl      (Per R.S. Pathak, J.)      1. Under  s. 3 of the Central Excise and Salt Act, 1944 the levy  of excise duty is made on manufactured cigarettes, the excisable  goods. Section  4 of the Act provides how the ’value’ shall be determined. The expression "value" has been extended to  include the cost of packing. The packing itself is not the subject of the levy of excise duty. [148 B]

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    2. For  the purpose  of computing  the measure  of  the levy, the  statute has  given an  extended  meaning  to  the expression ’value’  in clause (d) of sub-s. (4) of sec. 4 of the Act.  The expression must be strictly construed. What is being included  in the  value now  is something  beyond  the value of the manufactured commodity itself. [148 C]      3. The  corrugated fibre  board containers are employed only for  the purpose  of avoiding  damage or  injury during transit. 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 fibre  board containers  are  not  necessary  for selling the  cigarettes  in  the  wholesale  market  at  the factory gate. [148 F-G]      4. The  position expressed  by  the  Central  Board  of Excise and Custom in its letter dated May 24, 1976 was right when lt  declared that  the Collector  of the Central Excise has been  instructed that the cost of corrugated fibre board containers in  question does  not form  part of the value of cigarettes for the purpose of excise duty."[148 H]      Union of  India  v.  Bombay  Tyre  International  Ltd., [1984] 1 S.C.C. 467, referred to. 130      (Per A.N. Sen, J.)      1.  Excise  duty  which  is  levied  on  the  goods  is ultimately passed  on to the consumers of the goods and they have ultimately  to bear the burden. So far as the consumers are concerned  they buy  cigarettes, loose  or in packets or even in  cartons. Cartons  packed in  corrugated fibre board containers are not purchased by the consumers. So far as the retail sellers  are concerned  who may buy from wholesalers, they usually  buy loose  packets of cigarettes or packets of cigarettes packed  in cartons.  So far  as the buyers in the wholesale trade  are concerned,  they  buy  the  cartons  of cigarettes In  which the packets of cigarettes are course of their wholesale  trade for  selling the sale to retailers or to their  customers. It  is only for the sake of convenience in the  matter of  smooth delivery  of cartons  in which the packets of  cigarettes are  packed that  the cartons  may be further packed  in corrugated  fibre  board  containers  for facility of  transport and  smooth transit  of  the  cartons before delivery  of the sake to the whole ale buyer. [151 B- D]      2. On  a proper construction of s.4(4)(d)(i) of the Act read with the Explanation any secondary packing done for the purpose of  facilitating transport and smooth transit of the goods to  be delivered  to the  buyer in the wholesale trade cannot  be   included  in  the  value  for  the  purpose  of assessment of excise duty. [150 G-H]      In the instant case, the cost of corrugated fibre board containers which  the  cartons  containing  the  packets  of cigarettes is  packed, cannot  be included  in the value for the purpose of assessment of excise duty. [151 A]      Union of India v. Bombay Type International Lit. [1984] S.C.C. 467, referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1136 of 1977.      From the  Judgment and  Order dated  29.4.1976  of  the Bombay High Court in Misc. Petn. No. 548 of 1974.                              AND

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              Civil Appeal No. 1244 of 1977. 131      From the  Judgment and  Order dated  15.12.1975 of  the Bombay A High Court in Spl. Misc. Petition No. 293 of 1974.                             AND               Civil Appeal Nos. 55-61 of 1979.      From the  Judgment and  Order dated  18.8.1977  of  the Andhra Pradesh  High Court  in Writ  Appeals Nos.  252, 435, 550, 553  and 560  of 1976  and Writ  Petition Nos. 3114 and 6044 of 1975.      K. Parasaran,  Solicitor General,  N.C. Talukdar, Suraj Udai Singh, Dalveer Bhandari, C.V. Subba Rao and R.N. Poddar for the Appellants.      N.A. Palkhiwala, J.C. Bhatt, D.B. Engineer, B.H. Antia, Ravinder Narain,  O.C. Mathur,  Kamal Mehta,  Talat  Ansari, Mrs. A.K.  Verma, Ashok Sagar, Sukumaran, D.N. Mishra, Kamal Mehta and Ms. Rainu Walia for the appearing Respondents. D      S.  Roy   Chowdhury,  Jatin   Ghosh,  D.N.   Gupta,  S. Ramsubramaniam,  D.N.   Gupta  and   S.K.  Nandy   for   the Intervener.      The following Judgments were delivered      BHAGWATI, C.J.  These appeals  by special leave raise a number of  questions relating  to excise  duty  leviable  on cigarettes manufactured by the respondents. Barring one, all the other  questions are  now settled  as a  result  of  the decision of  this Court  in Union  of India  v. Bombay  Tyre International Ltd.  [1984] 1  S.C.C. 467,  and all  that  is required is  to direct  the assessing  authorities to assess the excise  duty leviable on the respondents on the basis of the law laid down in-Bombay Tyre International case (supra). The only  question which  remains to  be  considered  is  in regard to  cost of  packing includible  in the  value of the cigarettes for the purpose of assessment to excise duty.      The respondents  in these  appeals are manufacturers of cigarettes. They  manufacture cigarettes  in their factories and the  cigarettes so  manufactured are packed initially in paper/card board  packets of 10 and 20 and these packets are then packed  together in  paper/card  board  cartons/outers. These cartons/outers  are then  placed in  corrugated  fibre board containers and it is 132 these  corrugated   fibre  board   containers  filled   with cartons/outers containing packets of cigarettes of 10 and 20 which are  delivered by  the respondents  to the  whole sale dealers at  the factory  gate. It  was common ground between the  parties  that  the  whole-sale  price  charged  by  the respondents  for  the  cigarettes  sold  to  the  whole-sale dealers includes  not only  the cost  of primary  packing in packets of 10 and 20, but also the cost of secondary packing in  cartons/outers   and  the   cost  of  final  packing  in corrugated fibre  board containers.  So far as the two items of cost,  namely cost  of primary packing into packets of 10 and 20  and the cost of secondary packing in cartons/outers, are concerned, there was no dispute between the parties that these two  items of cost must be included in determining the value of  the cigarettes  for the  purpose of  assessment to excise duty, since such packing would admittedly fall within the terms  of section  4(4)(d)(i) of the Central Excises and Salt Act,  1944 (hereinafter  referred to  as the  Act) read with the  Explanation to  that provision.  But the  question whether the  cost of final packing in corrugated fibre board containers would  be liable  to be  included in the value of the cigarettes  for the purpose of assessment to excise duty raised  a  serious  controversy  between  the  parties.  The appellant contended  that on  a true construction of Section

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4(4)(d)(i)  read  with  the  Explanation,  whatever  be  the packing, primary  or secondary, in which the cigarettes were packed when  delivered to  the buyer in the course of whole- sale trade  at the  factory gate,  the cost  of such packing would  be  liable  to  be  included  in  the  value  of  the cigarettes. The  argument of the appellant was that lt was a totally  unwarranted   gloss  on  the  language  of  Section 4(4)(d)(i) read  with the  Explanation to make a distinction between primary  and secondary  packing because that section did not  make any  such distinction  and  on  the  contrary, provided in  the clearest terms for inclusion of the cost of the entire  packing in which the cigarettes were packed when delivered to  the whole-sale  buyer at  the time of removal. The respondents  on the  other hand urged that though it was true that  Section 4(4)(d)(i)  read with the Explanation did not  make   any  distinction  between  primary  packing  and secondary packing,  the cost  of only such secondary packing was liable  to be included in the value of the cigarettes as was necessary  for sale  of the cigarettes in the whole sale trade and  not the  cost  of  secondary  packing  which  was necessitated in  order to  protect the packed cigarettes and to prevent  them from  being damaged  during the  course  of transportation from  the  factory  gate  to  the  godown  or warehouse  of   the  whole-sale   dealer.  The   packing  in corrugated   fibre    board   containers,    contended   the respondents, was not 133 necessary or  essential for  the  purpose  of  sale  of  the cigarettes to  the whole-sale dealer at the factory gate but it  was   done  only   A  with   a  view   to   facilitating transportation of  the cigarettes  from the  factory gate to the  godown  or  warehouse  of  the  whole-sale  dealer  and protecting  the   cigarettes  against   damage  during  such transportation and  therefore the  cost of  such packing was not liable  to be  included in  the value of the cigarettes. These were  the rival  contentions urged  on behalf  of  the parties and we shall now proceed to examine them.      We have  broadly dealt  with the  question of  cost  of packing in  the Judgment  delivered by  us  in  Bombay  Tyre International case  (supra) and  it would  be convenient  at this stage  to reproduce  what we have said in that Judgment in regard to the cost of packing:           "The case  in respect  of the  cost of  packing is           somewhat complex.  The new  Section 4(4)(d)(i) has           made express  provision for  including the cost of           packing in  the determination  of "value"  for the           purpose of  excise duty.  Inasmuch as  the case of           the  parties   is   that   the   new   Section   4           substantially  reflects   the  position  obtaining           under the  unamended Act,  we shall proceed on the           basis that  the position  in regard to the cost of           packing is the same under the Act, both before and           after the  amendment of the Act.Section 4(4)(d)(i)           reads : x      x     x    x    x      x       x           It is  relevant to note that the packing, of which           the cost  is included, is the packing in which the           goods are  wrapped, contained  or wound  when  the           goods are  delivered at  the time  of removal.  In           other words,  it is  the packing  in which  it  is           ordinarily sold  in the  course of wholesale trade           to the  wholesale buyer.  The degree of packing in           which the excisable article is contained will vary           from one  class of  articles to  another. From the           particulars detailed  before us  by the assessees,

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         it is  apparent that  the cost of primary packing,           that is  to say,  the packing in which the article           is contained  and in  which it  is made marketable           for the  ordinary consumer,  for example a tube of           toothpaste or  a bottle of tablets in a card-board           carton, or biscuits in a paper wrapper or 134           in a  tin container,  must be  regarded as falling           within  A   section  4(4)(d)(i).  That  is  indeed           conceded by  learned counsel  for the assessee. It           is the  cost of secondary packing which has raised           serious dispute. Secondary packing is of different           grades.  There  is  the  secondary  packing  which           consists of  larger cartons  in which  a  standard           number of  primary cartons (in the sense mentioned           earlier) are  packed. The  large  cartons  may  be           packed into  even larger  cartons for facilitating           the easier transport of the goods by the wholesale           dealer. Is  all the  packing, no  matter  to  what           degree,  in   which  the  wholesale  dealer  takes           delivery  of   the  goods  to  be  considered  for           including the  cost thereof  in the  "value" ?  We           must remember  that while  packing is necessary to           make  the   excisable   article   marketable   the           statutory provision  calls for strict construction           because the  levy is  sought to be extended beyond           the manufactured  article itself.  It seems  to us           that the  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 the degree           of packing  whose cost  can  be  included  in  the           "value" of  the article  for the  purpose  of  the           excise levy. To that extent, the cost of secondary           packing cannot be deducted from the wholesale cash           price of  the excisable  article  at  the  factory           gate." It will  be noticed  that  so  far  as  primary  packing  is concerned, it  was conceded  on behalf of the respondents in that case  that the cost of primary packing must be regarded as falling  within the terms of section 4(4)(d)(i) read with the Explanation  and it  was  only  the  cost  of  secondary packing which  gave rise to dispute between the parties. But we did  not proceed  to decide  whether the  cost  of  every degree of  secondary packing  would be liable to be included in the  value of the goods or whether a distinction could be drawn between  one degree  of secondary packing and another. We posed the question: Is all the packing, no matter to what degree, in which the whole-sale dealer takes delivery of the goods to be considered for including the cost thereof in the value"?  Or  does  the  law  require  a  line  to  be  drawn somewhere?" ’We  did not  answer this question specifically, leaving it to a later date when this question would directly come up for consideration on the facts of a Particular case. We however laid 135 down the  general proposition  that "the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the whole- sale market  at the  factory gate  is the  degree of packing whose cost  can be included in the ’value of the article for the purpose  of the excise duty . Where therefore a question arises whether  the cost of any particular kind of secondary packing is liable to be included in the value of article, we would have  to ask  does the  packed condition  in which the

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article is  generally sold  in the  whole-sale market at the factory gate  include such secondary packing? If it does, it would be  liable to  be included in the value of the article for the  purpose of  excise duty.  On this reasoning it must follow that  if the packed condition in which the cigarettes manufactured by  the respondents  are generally  sold in the whole-sale market  at the  factory gate  includes packing in corrugated  fibre   board  containers,   the  cost  of  such corrugated fibre  board containers  would be  liable  to  be included in  the value  of the cigarettes for the purpose of excise duty.      We  may   leave  aside   for  the   moment  the   above observations made  by us  in the  Judgment  in  Bombay  Tyre International case  (supra) and turn to examine the language of Section  4(4)(d)(i) read  with the  Explanation.  Section 4(4) (d)  (i) enacts  an inclusive  definition of value" and provides that  E "value" in relation to and excisable goods, "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. The condition for applicability of  this inclusive  definition of  ’value’  is that the  goods are  delivered at  the time  of removal in a packed conditions and where this condition is satisfied, the value" of the goods would include "the cost of such packing" and "such  packing" must obviously mean the packing in which the goods  are when  they  are  delivered  at  the  time  of removal. The  question which has to be armed is: what is the packed condition  in which  the goods  are when delivered at the time of removal? Whatever is the packing of the goods at the time   when  they are  delivered at the time of removal, the cost  of such  packing would be liable to be included in the  ’value’  of  the  goods.  The  Explanation  to  Section 4(4)(d)(i) provides  an exclusive  definition  of  the  term "packing" and  it includes  not only  outer packing but also what may  be called  inner packing. Ordinarily bobbin, pirl, spool, reel and warp beam on 136 which yarn is wound would not be regarded as packing of such yarn,  but   they  are  brought  within  the  definition  of "packing" by  the Explanation.  The Explanation thus extends the meaning of the word ’packing" to cover items which would not ordinarily  be regarded  as forming part of packing. The Explanation  then   proceeds  to  say  that  "packing  means wrapper, container or any other thing in which the excisable goods are wrapped or contained. It is apparent from the wide language of  the Explanation that every kind of container in which it  can be said that the excisable goods are contained would be  packing" within the meaning of the Explanation and this would necessarily include a fortiorari corrugated fibre board containers in which the cigarettes are contained. When Bombay Tyre  International case was argued before us, it was at one  stage sought to be contended, though rather faintly, that it is only the immediate packing in which the excisable goods are  contained, that  is primary  packing alone, which would be  liable to  be  regarded  as  ’packing  within  the meaning of  the Explanation.  But this argument was given up when it was pointed out that even secondary packing would be within the  terms of the Explanation, because such secondary packing would  also constitute  a wrapper  or a container in which the  excisable goods are wrapped or contained. That is why we  held in  the Judgment  in Bombay  Tyre International case (supra)  that secondary packing is also included within the term "packing in the Explanation. There can therefore be no doubt that corrugated fibre board containers in which the

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cigarettes are contained fall  within the definition of packing" in the Explanation and if they form  part of the packing in which the goods are packed when delivered  at the  time of  removal, it is difficult to resist the  conclusion that  under Section  4(4)(d)(i)  read with the  Explanation, the  cost of  such  corrugated  fibre board containers  would be liable to be included in value of the cigarettes.      But then  it was contended on behalf of the respondents that it  is not  the cost of every kind of secondary packing which is  includible in  the value  of the  excisable goods. Whether the  cost of  secondary packing is includible or not must depend  upon the  necessity  or  essentiality  of  such secondary packing  for sale  of the  excisable goods  at the factory gate  in the course of wholesale trade. The argument was that  where the  secondary packing  is  necessitated  in order to  protect the  packed excisable  goods  from  damage during the course of transportation from the factory gate to the godown or warehouse of the wholesale dealer, the cost of such secondary  packing cannot  be included  in the value of the goods. The respondents thus sought to draw a 137 distinction between  secondary  packing  necessary  for  the purpose A  of selling  the goods  at the factory gate in the course o  wholesale trade and the secondary packing used in order to  protect the goods against damage during the course of transportation so that they may safely reach the consumer in proper condition. We find it difficult to appreciate this distinction  so   far  as   assessment  to  excise  duty  is concerned. Obviously  every wholesale  dealer would  like to take delivery  of the  goods from  the manufacturer  in such packing that he can safely transport the goods to his godown or warehouse  and sell  the same to the retailer or consumer in  marketable   condition.  The   wholesale  dealer   would therefore  insist   that  the  goods  purchased  by  him  in wholesale should  be properly packed so that they do not get damaged  during   transportation  or   even   storage.   The manufacturer would  accordingly have to deliver the goods at the factory gate in such packed condition as demanded by the wholesale dealer.  It is  apparent that unless the goods are in such  packed condition  the wholesale  dealer  would  not ordinarily  take  delivery  of  the  goods  and  necessarily therefore such  would be  the packed  condition in which the goods are  generally sold  in the  wholesale market  at  the factory gate. It makes no difference to the applicability of the definition  in Section  4(4)(d)(i) read with Explanation that the  packing  of  the  goods  ordinarily  sold  by  the manufacturer in  the wholesale  trade  is  packing  for  the purpose  of  protecting  the  goods  against  damage  during transportation or  in the warehouse. The question is not for what purpose  a particular kind of packing is done. The test is whether  a particular kind of 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  a 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. Of course, as pointed out by us in the judgment in Bombay  Tyre International  case if any special secondary packing is  provided by  the assessee  at the  instance of a wholesale buyer  which is not generally provided as a normal feature of  the wholesale  trade, the  cost of such‘ special packing would  not be  includible in  the value of the goods and would have to be deducted from the wholesale cash price.

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    That takes us to the next contention of the respondents based on  the letter  dated 24th  May 1976  addressed by the Under Secretary,  Central Board of Excise and Customs to the Cigarette Manufacturers’  Association. It  is necessary,  in order to 138 appreciate the  contention based  on this letter, to state a few facts.  On 19th  May 1976  the Cigarette  Manufacturer’s Association made  a representation  to the  Central Board of Excise and  customs pointing out that corrugated fibre board containers are  not an integral or essential requirement for the sale  of cigarettes and are used for the sole purpose of protecting cigarettes  from any damage that may arise during transportation and  that the  cost of  such corrugated fibre board containers  should not  therefore be  included in  the value of  the goods  for the  purpose of  excise  duty.  The Central Board  of Excise  and Customs  after examining  this question accepted  the plea  of the Cigarette Manufacturers’ Association and by a letter dated 24th May 1976 intimated to the Cigarette  Manufacturers’ Association that "instructions have been issued to the Collector of Central Excise that the cost of  corrugated fibre  board containers in question does not form part of the value of cigarettes for the purposes of excise duty  . The  respondents and  other manufacturers  of cigarettes, acting  upon this  representation  made  by  the Central Board  of Excise and Customs, proceeded on the basis that the  cost of  corrugated fibre board containers was not liable to  be included  in the  value of  cigarettes for the purpose of  assessment to  excise duty  and did  not recover from the wholesale dealers to whom they sold the cigarettes, any amount by way of excise duty attributable to the cost of such corrugated  fibre board containers. This representation contained in  the letter  dated 24th  May 1976  continued to hold the  field until  2nd November,  1982 when  the Central Board of  Excise and  Customs addressed a circular letter to all the Collectors of Central Excise stating that the matter had been  re-examined in  consultation with  the Ministry of Law and  in view of the provisions of Section 4, the cost of packing "whether initial or secondary in which the excisable goods are packed at the time of the removal may form part of the assessible  value of  such goods" and the earlier advice inconsistent  with   this  position  should  be  treated  as cancelled. The  question which  was raised  on behalf of the respondents on  this set  of facts  was as to whether during the period  between 24th  May 1976 and 2nd November 1982 the respondents were liable to pay excise duty on the basis that the cost of corrugated fibre board containers was includible in the value of the goods. It was contended on behalf of the respondents  that   the  cost   of  corrugated  fibre  board containers was  not includible is the value of the goods and there  were   two  arguments   urged  in   support  of  this contention. The  first argument  was that  the letter  dated 24th May  1976 constituted  an exemption  order  within  the meaning of  Rule 8 sub-rule (2) of the Central Excise Rules, 1944 and the respondents were accordingly 139 exempt from payment of excise duty on the cost of corrugated A fibre  board containers  used for  packing the cigarettes. The second  argument  invoked  the  doctrine  of  promissory estoppel  against   the  Government  on  the  basis  of  the representation contained  in the letter dated 24th May 1976. The first argument is in our opinion not well-founded but so far as  the second argument is concerned, we find that there is considerable force in it. Our reasons are as follows.      Rule 8 of the Central Excise Rules, 1944 deals with the

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power to  authorise exemption from duty in special cases and it reads as follows:-           "Rule 8. Power to authorise exemption from duty in           Special cases           (1) The  Central Government may from time to time,           by notification  in the  Official Gazette,  exempt           (subject to such conditions as may be specified in           the notification)  any excisable  goods  from  the           whole or any part of duty leviable on such goods.           (2) The Central Board of Excise and Customs may by           special order in each case exempt from the payment           of duty,  under circumstances  of  an  exceptional           nature, any excisable goods. The respondents obviously could not invoke the aid of Rule 8 sub-rule (1)  since the  letter dated  24th May  1976 was  a communication addressed  by the  Central Board of Excise and Customs and  could not  even  by  the  farthest  stretch  of imagination be  construed as  a notification  by the Central Government. The  respondents were  therefore constrained  to place reliance  on Rule 8 sub-rule (2) because that sub-rule confers power  on the Central Board of Excise and Customs to grant exemption  and if  at all,  the letter  dated 24th May 1976 could  be justified  only under  that sub-rule.  But we fail to  see how  Rule 8 sub-rule (2) can possibly avail the respondents.  That  sub-rule  postulates  the  making  of  a special order  by the Central Board of Excise and Customs in each case  exempting from  payment  of  duty  any  excisable goods. The  letter dated 24th May 1976 could not possibly be regarded as  a special  order by the Central Board of Excise and Customs  in the  case of  each of  the manufacturers  of cigarettes exempting  cigarettes from payment of duty to the extent of  the cost  of packing  by way  of corrugated fibre board containers. We 140 do not think the letter dated 24th May 1976 could be brought within the  terms of sub-rule (2) of Rule 8 and the argument of the respondents based on that sub-rule must be rejected.      The respondents  are however  on firmer ground in their plea of  promissory estoppel  against the  Central Board  of Excise  and   Customs  and   the  Central   Government.  The representation contained  in the letter dated 24th May, 1976 was undoubtedly  made by  the Central  Board of  Excise  and Customs but  we may  safely assume,  and for this assumption there is  clear warrant  in the proceedings in special Civil Application No.  787 of 1976 in the Gujarat High Court, that this representation  was  made  with  the  approval  of  the Central Government  and  it  was  accepted  by  the  Central Government  as  correctly  representing  the  stand  of  the Revenue. It is significant to note that when the petitioners in Special  Civil Application No. 787 of 1976 in the Gujarat High Court  contended that  the value  of  corrugated  fibre board containers  was not  includible in  the value  of  the goods manufactured  by the  petitioners, it  was conceded on behalf of the Union of India and the Excise Authorities both in the  affidavit in  reply filed in the case as also in the course of  the arguments  that the  cost of corrugated fibre board containers  used for  packing by the petitioners would not form  part of  the value  of the goods for assessment of excise duty.  The representation  contained  in  the  letter dated 24th May 1976 could therefore legitimately be regarded by the  respondents  as  a  representation  of  the  Central Government. The  respondents could  reasonably  assume  that such a  representation could  never have  been made  by  the Central Board of Excise and Customs with out the approval of the Central  Government and  if it did not have the approval

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of the  Central Government,  it would  have been immediately objected to  and the  Central Government would have promptly directed the Central Board of Excise and Customs to withdraw it. The  question is whether this representation made by the Central  Board  of  Excise  and  Customs  and  approved  and accepted by  the Central  Government could validly found the plea of promissory estoppel.      Now  the   doctrine  of   promissory  estoppelis  well- established  in   the  administrative   law  of   India.  It represents a  principle evolved by equity to avoid injustice and,  though  commonly  named  promissory  estoppel,  it  is neither in  the realm  of  contract  nor  in  the  realm  of estoppel. The  basis of  this doctrine is the inter position of equity  which has always, true to its form, stepped in to mitigate the  rigour of strict law. This doctrine, though of ancient vintage,  was rescued from obscurity by the decision of 141 Mr. Justice  Denning as  he  then  was,  in  his  celebrated judgment in  Central London  property Trust  Limited v. High Trees House  Limited, (1956)  1 All  E. R.  256-.  The  true principle of promissory estoppel is that where one party has by his  word or  conduct made  to  the  other  a  clear  and unequivocal promise  or representation  which is intended to create legal  relations or  affect a  legal relationship  to arise in  the future,  knowing or intending that it would be acted upon  by the  other  party  to  whom  the  promise  or representation is  made and  it is  in fact so acted upon by the other  party, the  promise or  representation  would  be binding on  the party making it and he would not be entitled to go  back upon it, if it would be inequitable to allow him to do  so, having  regard to  the dealings  which have taken place between the parties. It has often been said in England that the  doctrine of  promissory estoppel  cannot itself be the basis  of an  action: it  can only be a shield and not a sword: but the law in India has gone far ahead of the narrow position adopted  in England and as a result of the decision of this  Court in  Motilal Sugar  Mills v.  State  of  Uttar Pradesh, [1979]  2 S.C.R.  641, it  is now well-settled that the doctrine  of promissory  estoppel is  not limited in its application only to defence but it can also found a cause of action. The  decision of  this Court  in Motilal Sugar Mills case  (supra)  contains  an  exhaustive  discussion  of  the doctrine of promissory estoppel and we find ourselves wholly in agreement  with the  various parameters  of this doctrine outlined in that decision.      More importantly, it is necessary to point out that the decision  in  Motilal  Sugar  Mills  case  (supra)  marks  a significant development  in the law relating to the doctrine of promissory  estoppel. The  principal question  debated in that case  was as  to whether  and if so, to what extent, is the doctrine  of promissory  estoppel applicable against the Government. It was contended on behalf of the State of Uttar Pradesh  that   the  plea  of  promissory  estoppel  is  not available against the exercise of executive functions of the State, for the State cannot bind itself, so as to fetter its future executive  action. There  is contention was sought to be supported by relying on the observations of Rowlatt J. in an early  decision in  Roderiaktiebolaget Amphitrite  v. The King (1921)  3 K.B.  500. But this Court observed in Motilal Sugar mills  case (supra)  that what Rowlatt J. said in that case did  not represent  the correct  law on the subject and pointed  out   that  the  doctrine  of  executive  necessity propounded by  Rowlatt J.  was disapproved by Denning, J. as he then  was, in  Roberston v. Minister of Pensions (1949) 1

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K.B. 227. Denning, J. categorically 142 expressed the  view in  Roberston’s case  (supra)  that  the crown cannot  escape its  obligation under  the doctrine  of promissory estoppel  by  praying  in  aid  the  doctrine  of executive necessity  . This  Court also in Union of India v. Indo Afgan  Agencies  [1968]  2  S.C.R.  366,  exploded  the doctrine of executive necessity. Shah, J. speaking on behalf of the  Court negative  the argument  urged on behalf of the Government that  it is  not competent  for the Government to fetter its  future executive action which may necessarily be determined by  the needs  of the community when the question arises and  no promise  or undertaking  can be  held  to  be binding on  the Government  so as  to hamper  its freedom of executive action and observed at page 376 of the Report:           We are unable to accede to the contention that the           executive necessity  releases the  Government from           honouring its  solemn promises  relying  on  which           citizens have  acted to their detriment. Under our           constitutional set-up no person may be deprived of           his right  or liberty  except in due course of and           by authority  of law; if a member of the Executive           seeks to deprive a citizen of his right or liberty           otherwise than  in exercise  of power derived from           the law  common or  statute- the  Courts  will  be           competent to  and indeed would be bound to protect           the rights of the aggrieved citizens. The learned  judge also  after examining the decisions cited before him summed up the position in the following words:           Under our  jurisprudence  the  Government  is  not           exempt   from   liability   to   carry   out   the           representation made by it as to its future conduct           and it  cannot on  some undefined  and undisclosed           ground of  necessity or  expediency fail  to carry           out the  promise solemnly made by it, nor claim to           be the  Judge of its own obligation to the citizen           on an  ex-parte appraisement  of the circumstances           in which the obligation has arisen. The  defence   of  executive   necessity  was  thus  clearly negatived by  this Court  and it was pointed out that it did not release the Government from its obligation to honour the promise made  by it,  if the  citizen, acting in reliance on the promise,  had altered  his  position.  The  doctrine  of promissory estoppel  was in  such a  case applicable against the Government  and it could not be defeated by invoking the defence of executive necessity. This 143 Court in Motilal Sugar Mills case (supra) also negatived the argument that  if the  Government were  held bound  by every representation made  by  it  regarding  its  intention,  the result would  be that  the Government  would be  bound by  a contractual obligation even though no formal contract in the manner required  by Article  299  of  the  Constitution  was executed. It  was held  by this  Court that a party who has, acting in  reliance on  a promise  or representation mate by the Government, altered his position, is entitled to enforce the promise  or the  representation against  the Government, even though the promise or representation is not in the form of a  formal contract  as required  by Article  299 and that Article does  not militate  against the applicability of the doctrine of promissory estoppel against the Government.      The resultant  position summarised  by  this  Court  in Motilal Sugar Mills case (supra) in the following words:           The law  may therefore  now he taken to be settled           as a  result  of  this  decision  that  where  the

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         Government makes  a promise  knowing or  intending           that it  would be acted on by the promises and, in           fact, the  promisee, acting  in  reliance  on  it,           alters his  position the  Government would be held           bound by  the promise  and the  promise  would  be           enforceable against the Government at the instance           of the  promises, notwithstanding that there is no           consideration for  The promise  and the promise is           not recorded  in the  form of a formal contract as           required by Article 299 of the Constitution. It is           elementary that  in Republic  governed by the rule           of law,  on   one, howsoever high or low, is above           the law.  Everyone is  subject to the law as fully           and completely  as any other and the Government is           no  exception.   It  is   indeed  the   pride   of           constitutional democracy  and rule of law that the           government stands on the same footing as a private           individual so  far as the obligation of the law is           concerned: the  former is  equally  bound  as  the           latter. It  is indeed  difficult to  see  on  what           principle can  a government, committed to the rule           of  law,  claim  immunity  from  the  doctrine  of           promissory estoppel.  Can the  government say that           it is  under no obligation to act in a manner i.e.           fair ant  just or  that it  is not  bound  by  the           considerations of  honesty and  good faith  ?  Why           should the  government  not  be  held  to  a  high           standard of rectangular rectitude while dealing 144           with its  citizens ?  There was  a time  when  the           doctrine of  executive necessity  was regarded  as           sufficient justification  for  the  government  to           repudiate even  its contractual  obligations,  but           let it be said to the eternal glory of this court,           this doctrine  was emphatically  negatived in  the           Indo-Afgan agencies  case and the supremacy of the           rule of  law was  established. It was laid down by           this court  that the government cannot claim to be           immune from  the  applicability  of  the  rule  of           promissory estoppel  and repudiate  a promise made           by It  on the  ground that such promise may fetter           its future executive action. The doctrine  of promissory  estoppel as explained above was also held  to be  applicable against  public authorities  as pointed out  in Motilal  Sugar Mills  case.  This  court  in Motilal  Sugar   Mills  case   quoted  with   approval   the observations  of   Shah,  J.   in   Century   Spinning   and Manufacturing  Company   limited  v.   Ulhasnagar  Municipal Council [1970] 3 S.C.R. 854, where the learned Judge said:           Public  bodies   are  as  much  bound  as  private           individuals to  carry out representations of facts           and premises  made by them, relying on which other           persons  have  altered  their  position  to  their           prejudice.           If our  nascent democracy  is to  thrive different           standards of conduct for the people and the public           bodies cannot  ordinarily be  permitted. A  public           body  is,   in  our   judgment,  not  exempt  from           liability to  carry out  , its  obligation arising           out of  representations made  by it  relying  upon           which a  citizen has  altered his  position to his           prejudice." The Court  refused to  make a  distinction between a private individual and  a public  body so  far as  the  doctrine  of promissory estoppel is concerned.

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    There   can therefore  be no doubt that the doctrine of promissory estoppel  is applicable against the Government in the  exercise  of  its  governmental,  public  or  executive functions and the doctrine of executive necessity or freedom of future  executive action  cannot be invoked to defeat the applicability of  the doctrine  of promissory  estoppel.  We must concede  that the  subsequent decision of this Court in Jeet Ran  v. State  of Haryana  [1980] 3 S.C.R. 689, takes a slightly different view and holds 145 that the  doctrine of  promissory estoppel  is not available against   the exercise  of executive  functions of the State and the  State  cannot  be  prevented  from  exercising  its functions under  the law.  This decision  also expresses its disagreement with  the observation  made  in  Motilal  Sugar Mills case  that the  doctrine of promissory estoppel cannot be defeated  by invoking the defence of executive necessity, suggesting by  necessary implication  that the  doctrine  of executive necessity is available to the Government to escape its obligation under the doctrine of promissory estoppel. We find it difficult to understand how a Bench of two Judges in Jeet Ram’s  case could  possibly overturn  or disagree  with what was  said by  another Bench  of two  Judges in  Motilal Sugar Mills  Case. If  the Bench of two Judges in Jeet Ram’s case found themselves unable to agree with the law laid down in Motilal  Sugar Mills  case, they could have referred Jeet Ram’s case  to a  larger Bench,  but we  do not think it was right on  their part  to express their disagreement with the enunciation of  the law  by a  coordinate Bench  of the same Court  in  Motilal  sugar  Mills  case.  We  have  carefully considered both the decision in Motilal Sugar Mills and Jeet Ram’s case and we are clearly of the view that what has been laid down in Motilal sugar Mills case represents the correct law in  regard to the doctrine of promissory estoppel and we express our disagreement with the observations in Jeet Ram’s case to  the extent that they conflict with the statement of the  law   in  Motilal   Sugar  Mills   case  and  introduce reservations cutting  down the  full width  and amplitude of the prepositions of law laid down in that case.      Of course  we must  make it clear and that is also laid down in  Motilal Sugar Mills case (supra), that there can be no  promissory  estoppel  against  the  legislature  in  the exercise of its legislative functions nor can the Government or public  authority be debarred by promissory estoppel from enforcing a  statutory prohibition.  It is equally true that promissory estoppel  cannot be used to compel the Government or a  public authority  to carry  out  a  representation  or promise which  is contrary  to law  or which was outside the authority or  power of  the officer  of the Government or of the public authority to make. We may also point out that the doctrine of  promissory estoppel being an equitable doctrine it must  yield when  the equity  so requires,  if it  can be shown by  the Government  or public  authority  that  having regard to  the facts  as they  have transpired,  it would be inequitable to  hold the  Government or  public authority to the promise  or representation  made by  it, the Court would not raise an equity in favour of the person to whom 146 the promise  or  representation  is  made  and  enforce  the promise or  representation against  the Government or public authority. The  doctrine of  promissory  estoppel  would  be displaced in such a case, because on the facts, equity would not require  that the  Government or public authority should be held  bound by  the promise or representation made by it. This aspect has been dealt

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with fully  in Motilal  Sugar Mills case (supra) and we find ourselves wholly  in agreement  with what  has been  said in that decision on this point.      We may  now turn  to examine  the facts in the light of the  law   discussed  by   us.  Here  a  representation  was undoubtedly made  by the Central Board of Excise and Customs and approved  and accepted  by the  Central Government, that the cost  of corrugated fibre boards containers would not be includible in the value of the cigarettes for the purpose of assessment to  excise duty.  The respondents acted upon this representation and  continued the  use of  corrugated  fibre board  containers  for  packing  the  cartons  /  outers  of cigarettes and  did not  recover from  the wholesale dealers the amount  of excise  duty attributable to the cost of such corrugated fibre board containers during the period 24th May 1976 to  2nd November, 1982. It would be most inequitable to allow the  Excise Authorities  to assess  excise duty on the basis that  the value  of the cigarettes manufactured by the respondents should  include the  cost  of  corrugated  fibre board containers,  when it  was clearly  represented by  the Central Board  of Excise  and Customs  in  response  to  the submission made  by the Cigarette Manufacturers’ Association - and  this representation  was approved and accepted by the Central Government  that the  cost of corrugated fibre board containers would  not be  includible in  the  value  of  the cigarettes for  the purpose of assessment of excise duty. Of course,  this   representation  could   operate  to   create promissory estoppel  only if it was within the competence of the Central  Board of  Excise and  Customs and  the  Central Government  to   make  good   such  representation  and  the exclusion of  the cost  of corrugated fibre board containers from the value of the cigarettes was not contrary to law. We think that  the Central  Government had  power under  Rule 8 sub-rule (1)  of the Rules to issue a notification excluding fibre board  containers from the value of the cigarettes and thereby exempting  the cigarettes  from  that  part  of  the excise duty  which would  be attributable  to  the  cost  of corrugated fibre board containers. So also the Central Board of Excise and Customs had power under Rule 8 sub-rule (2) to make a  special order in the case of each of the respondents granting the game exemption, because it could 147 legitimately  be   said   that,   having   regard   to   the representation     made  by   the  Cigarette  Manufacturers’ Association, there  were  circumstances  of  an  exceptional nature which  required the  exercise of the power under sub- rule (2)  of Rule  8. The Central Government and the Central Board of  Excise and Customs were therefore clearly bound by promissory estoppel  to exclude the cost of corrugated fibre board containers  from the  value of  the B  goods  for  the purpose of assessment of excise duty for the period 24th May 1976 to 2nd November 1982.      The  respondents   would  therefore   be  entitled   to exclusion of  the cost  of corrugated fibre board containers from the value of the cigarettes only during the period 24th May 1976 to 2nd November 1982. Save and except in respect of this  period,   the  cost  of  the  corrugated  fibre  board containers would  be liable  to be  included in the value of the cigarettes for the purpose of assessment of excise duty. I would therefore pass an order in these appeals in terms of the format  order which  has  been  evolved  by  consent  of parties in the, Bombay Tyre International case (supra) and I would direct that the Assessing Authorities shall assess the excise duty  under the  format order  in the  light  of  the observations contained  in this  Judgment. There  will be no

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order as to costs.      PATHAK, J.  I have perused the judgment proposed by the learned Chief  Justice in  these appeals  and while  I  find myself in  agreement with  his  views  on  the  question  of promissory estoppel,  I am unable, with regret, to subscribe to the  view expressed  by him  on the question of secondary packing. I  propose, therefore,  to set  down my own view in the matter.      In Union  of India  v. Bombay  Tyre International  Ltd. [1984] 1  S.C.C. 467, while construing sub-cl. (i) of cl.(d) of sub-s.  (4) of  8. 4 of the Central Excises and & lt Act, 1944, which  provides for  including the  cost of packing in the determination  of value  for the purpose of excise duty, we observed  that the  cost of primary packing as well as of secondary packing  in the sense explained in that case would be included  within the meaning of the expression value . In the present  case the cigarettes are manufactured and packed in cardboard  packets, each  containing 10 to 20 cigarettes. Those packets  constitute primary packing. Those packets are thereafter packed in cartons or "outers" for delivery to the buyer. Finally,  the cartons or outers are themselves packed in corrugated  fibre board  containers, evidently  to ensure the cartons against injury or damage during transport. The 148 question is  whether the  corrugated fibre  board containers can be  regarded as secondary packing, the cost of which can permissibly be  included in the determination of value n for the purpose of excise duty.      Now it  is apparent that under 8. 3 of the Act the levy of excise  duty is  made on  manufactured cigarettes,  which after all are the excisable goods. And 8. 4 provides how the value of  manufactured cigarettes  shall be  determined. The expression values  has been  extended to include the cost of packing. The  packing itself  is not the subject of the levy of excise  duty. The manufactured cigarettes are the subject of the  levy, because  excise duty  is here  charged on  the manufactured commodity,  that is to say, cigarettes. For the purpose of  computing the  measure of the levy, however, the statute has  given an  extended meaning  to  the  expression value in  clause (d) of sub-s.4 of 8. 4 of the Act. Plainly, the extension  must be strictly construed, for what is being included in  the value  now is something beyond the value of the Manufactured  commodity itself.  In Union  of  India  v. Bombay Tyre International Ltd. (supra), we observed :-           It seems  to  us  that  the  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 the  degree of packing whose cost           can be  included in  the value  of the article for           the purpose of the excise levy." Is  the   packing  in   corrugated  fibre  board  containers necessary for  putting the  cigarettes in  the condition  in which they are generally sold in the wholesale market at the factory gate?  In my opinion, it is not. The corrugate fibre board containers  are  employed  only  for  the  purpose  of avoiding damage  or injury  during transit.  It is prefectly 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 fibre  board containers  are  not  necessary  for selling the  cigarettes  in  the  wholesale  market  at  the factory gate.      I think  the position expressed by the Central Board of

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Excise and  Custom in  its letter  dated May  24,  1976  was prefectly right  when it  declared that the Collector of the Central  Excise   has  been  instructed  that  the  cost  of corrugated fibre  board containers in question does not form part of  the value  of cigarettes  for the purpose of excise duty. 149      The assessing  authorities will  now proceed to make an assessment in  accordance with the opinion expressed in this judgment .      AMAREDRA NATH SEN, J. I have read the judgment proposed to be delivered by the Learned Chief Justice in this appeal. After giving  my anxious  and careful  consideration, I find with regret  that I cannot persuade myself to agree with the view expressed  by the Learned Chief Justice on the question of secondary  packing. On  the other  question,  namely  the question of  promissory estoppel,  I am  in entire agreement with his views.      The Learned  Chief Justice  in his judgment has set out all the  material facts  and circumstances. He has noted the respective contentions put forward on behalf of the parties. He has  also adverted  to the earlier decision of this Court in Union of India v. Bombay Tyre International Ltd; [1984] 1 S.C.C. 467.  It does not, therefore, become necessary for me to refer  to the  facts and circumstances of this case or to any of these aspect in my judgment.      The cigarettes  after manufacture are usually placed in paper/card board  packets, each  packet containing  10 or 20 cigarettes. These  packets before  delivery to the wholesale buyer         are    packed     together    in    paper/card board/cartons/outers, each  of  such  cartons  containing  a number of  packets of cigarettes with 10 or 20 cigarettes in each packet. I agree with the Learned Chief Justice that the cost of packing cigarettes in packets of 10 or 20 cigarettes each and  thereafter in  cartons/outers for  delivery to the buyer in  the course of whole-sale trade at the factory gate must necessarily be included in the value for the purpose of levy of  excise duty.  I however, find it difficult to agree with the  view expressed  by the  learned Chief Justice that when a  number of  these cartons are put in corrugated fibre board containers  for delivery,  the  cost  of  the  further packing  incurred   for  putting   cartons/outers   in   the corrugated fibre  board containers  must also be included in the value for the purpose of assessment of excise duty.      When tobacco  is  rolled  up  in  paper  following  the appropriate process  of manufacturing cigarettes, cigarettes come into  existence. The  paper  in  which  cigarettes  are rolled is  indeed a part of the manufactured product itself. The paper  in which  a cigarette  is rolled forms no part of the packing  and is  indeed a  part of the cigarette itself. When the cigarettes, after their 150 manufacture,  are   put  in  packets,  each  packet  usually containing 10  or 20  cigarettes, the  packets in  which the cigarettes are  packed indeed constitute the primary packing for the  purpose of  delivery and  there can  be no question that the  cost of  this packing must necessarily be included in the value for the purpose of assessment of excise duty. A number of  packets, containing cigarettes either 10 or 20 in number in  each  packet  are  then  put  in  larger  cartons according to the requirements of the buyer in the whole-sale trade. Packing a number of packets of cigarettes in a larger carton for  delivery to  the buyer  in the  whole-sale trade according to  his requirement  constitutes secondary packing but the  cost of  this packing  on a true construction of 8.

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4(4) (d)(i)  of the  Act read with explanation to the clause but also be included in the value for the purpose of levy of excise duty. Packets of cigarettes in the larger cartons are to be  delivered to  the buyer  in the  whole-sale trade  to enable the  buyers in  the whole-sale  trade to  sell to the retail sellers  in the  same condition  or by  removing  the packets from the cartons. Packets of cigarettes so packed in cartons can  easily be delivered to the buyers in the course of whole-sale  trade at the factory gate without any further packing. If  the buyer who is to take delivery in the course of the  whole-sale trade  at the  factory gate,  carries  on business within  a  reasonable  distance  from  the  factory premises, the  whole-sale buyer will very likely not want to have cartons  of cigarettes  further  packed  in  corrugated fibre board  containers. Cartons  of cigarettes  are usually further  packed   in   corrugated   fibre   containers   for facilitating transport  in the  course of delivery to buyers in the  whole-sale 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 buyer at the factory gate after further packing  these cartons  in  corrugated  fibre  board containers. The  further packing  of cartons  in  which  the packets of  cigarettes have  been packed  in the  corrugated fibre board  containers is  not, indeed  in  the  course  of delivery to the buyer in the whole-sale trade at the factory gate but is only for the purpose of facilitating the 8 month transport  of   the  cartons   containing  the   packets  of cigarettes to the buyer in the whole-sale trade. On a proper construction of  S. 4(4)(d)(i)  of the  Act  read  with  the explanation, I  am of the opinion that any secondary packing done for  the purpose  of facilitating transport and 8 month transit of  the goods  to be  delivered to  the buyer in the whole-sale trade  cannot be  included in  the value  for the purpose of  assessment of  excise duty.  I, therefore,  hold that the cost of corrugated fibre board containers which the cartons 151 containing the  packets of  cigarettes is  packed, cannot be included in  the value  for the  purpose  of  assessment  of excise A  duty. It  is to  be borne  in mind that the excise duty which is levied on the goods is ultimately passed on to the consumers  of the goods and they have ultimately to bear the burden.  So far  as the consumers are concerned they buy cigarettes loose  or in  packets or even in cartons. Cartons packed  in   corrugated  fibre   board  containers  are  not purchased by the consumers. So far as the retail sellers are concerned who  may buy  from whole-sellers, they usually buy loose packets  of cigarettes or packets of cigarettes packed in cartons. So far as the buyers in the whole-sale trade are concerned, they  buy the  cartons of cigarettes in which the packets of  cigarettes are  packed in  the course  of  their whole-sale trade  for selling  the same  to retailers  or to their customers.  It is  only for the sake of convenience in the matter  of smooth  delivery  of  cartons  in  which  the packets of  cigarettes are  packed that  the cartons  may be further packed  in corrugated  fibre  board  containers  for facility of  transport and  smooth transit  of  the  cartons before delivery of the same to the whole-sale buyer.      The letter  dated 4th  May, 1976 addressed by the Under Secretary, Central  Board  of  Excise  and  Customs  to  the Cigarette Manufacturers  Association which has been referred to and  considered at  length in the judgment of the Learned Chief Justice,  clearly supports,  in my opinion, the view I have taken.

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    For reasons  briefly indicated  above, I have to record my dissent  with the  view expressed  by the  Learned  Chief Justice on this question of secondary packing.      On  the   other  question,   namely,  the  question  of promissory estoppel  I am in entire agreement with the views expressed by  the learned Chief Justice for reasons recorded by him in his judgment and I have nothing to add.      I accordingly hold that the cost of the further packing of the cartons in which the packets of cigarettes are packed in the  corrugated fibre board containers cannot be included in the value for the purpose of assessment of excise duty.      I agree  with the  Learned Chief  Justice that  in  the light of  the judgment  and decision  delivered by  us,  the Assessing  Authorities   will  now   proceed  to   make  the assessment. N.V .K . 152