Input:
Civil Appeal No. 262 of 1955.
Appeal by special leave from the, judgment and decree dated February 4, 1953, of the Calcutta High Court, in Appeal from original decree No. 68 of 1952 arising out of the judgment and decree dated ' January 14, 1952, of the said High Court, in Special Suit No. 2 of 1951.
571 N. C. Chatterjee, C. B. Agarwala and Sukumar Ghose, for the appellants.
B. Sen, section N. Mukherjee, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents.
August 21.
The Judgment of the Court was delivered by WANCHOO J.
This is an appeal by special leave against the judgment of the Calcutta High Court.
The appellant is a company, incorporated in India, with its registered office in Calcutta dealing in jute.
It entered into a contract on June 18, 1945, with the respondent company, which is incorporated in England and has its registered office in London.
The contract was for the supply of five hundred bales of jute of crop 1945 46 to be shipped from Calcutta or Chittagong to Rio de Janeiro, when freight became available.
The contract provides that in the event of default of tender or delivery, the seller shall pay to the buyer as and for liquidated damages 10s.
per ton plus the excess (if any) of the market value over the contract price, the market value being that of jute contracted for on the day following the date, of default.
This date was to be the date in London on declaration of default by telegram or without such declaration if default was eventually made by lapse of time on the 21st day after expiry of the extended period.
There is also a provision for arbitration, which lays down that any claim or dispute whatever arising out of, or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London Jute Association, and it was open to either party to claim arbitration whenever and as often as disputes arose.
The contract also provides for an appeal by any party dissenting from an arbitration award to the London Jute Association in accordance with the regulations in force for the time being.
Lastly, it is provided that the contract would be construed according to the laws ,of England whatever the residence and nationality of the parties might be or become and would be deemed to be performed there.
The courts of England or 572 arbitrators, as the case might be, would have exclusive jurisdiction over all disputes which might arise under the contract, except for the purpose of enforcing in the Colonies or abroad any arbitration award made under this contract, On.
June 23, 1947, thirty nine bales of jute were consigned by the appellant to Rio de Janeiro in part performance of the contract and information of this was given to the respondent by letter on July 17, 1947.
It was said in this letter that difficulty had arisen because of the non availability of quota and it was hoped that the balance remaining under the contract would be shipped as soon as quota was available.
The respondent sent a reply to this letter on July 25, 1947, and the appellant wrote a further letter on August 1, 1947, in which it was said that the remaining amount of jute under the contract would be shipped as soon as the quota was available.
We do not know what happened thereafter till we come to August 1948.
It seems that the respondent received a cable on August 12, 1948, from the appellant stating that the contract stood cancelled long ago.
The respondent by its letter dated August 12, 1948, refused to %accept this position.
Thereafter there were disputes and differences between the parties and eventually the respondent claimed default on or about June 1949 in terms of the contract.
On or about July 14, 1949, the respondent referred the matter to the arbitration of the London Jute Association, which appointed two of its member as arbitrators.
The respondent filed its claim before the arbitrators on July 23, 1949.
On July 27, 1949, the arbitrators gave notice to the appellant to file its answer by August 19, 1949.
The appellant, however, filed no answer before the arbitrators.
What the appellant did in reply was to file an application under section 33 of the Indian (hereinafter called the ), on the original side of the Calcutta High Court, in which it made three prayers, namely (a) declaration that the arbitration agreement, if any, between the parties was void ab initio on the 573 ground of uncertainty and was not binding on the appellant; (b) declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties; and (c) that the court might be pleased to adjudicate on the existence and/or validity of the alleged arbitration agreement and the effect of the same.
This application was moved on August 12, 1949.
It appears that on August 13, 1949, the appellant sent a cable to the respondent and the London Jute Association informing them that an application had been made in the Calcutta High Court challenging the submissions contained in the contract and that the arbitrators had become functus officio pending disposal of the application, which was fixed for August 29.
The appellant received a reply to its cable in which it was asserted that no such application as the appellant bad made to the Calcutta High Court could be made there and that the arbitrators would proceed with the adjudication on August 27 as already fixed.
On August 17, 1949, the appellant sent a letter to the London Jute Association in which it referred to its cable and the reply of the Association to that and reiterated its stand that any further steps taken in the arbitration proceedings pending disposal of the application under section 33 would be invalid under the .
The arbitrators, however, proceeded with the arbitration and gave their award on October 17, 1949.
No proceedings thereafter were taken by the appellant in London, nor does it appear that any steps were taken by it to have its application under section 33 decided, till we come to November 26, 1951.
On that date, an application was filed by the respondent in the Calcutta High Court under section 5 of the , (hereinafter called the Protocol Act).
Along with this application it filed the award dated October 17, 1949, and prayed that judgment be pronounced in accordance with the award and decree be passed accordingly.
Notice of this was issued to the appellant, which filed its reply on January 14, 73 574 1952, We do not think it necessary to set ' out the petition of the respondent under section 5 of the Protocol Act and the appellant 's reply thereto in detail, because when the matter came to be heard in court only two points were urged on behalf of the appellant, namely (1) that the award was made after the notice of filing of the petition dated August 10, 1949, under section 33 of the had been given to the respondent and the arbitrators, and consequently the award made after the receipt of the said notice and during the pendency of the said application was bad under section 35 of the ; and (2) that the award was bad on the face of it and could not therefore be enforced in view of the provisions of section 7(e) of the Protocol Act, which lays down that an award cannot be enforced in India if it is contrary to the law of India.
It was contended that the award was contrary to the law of India and this appeared on the face of it inasmuch as the arbitrators had purported to award such damages as could not be done under the provisions of the .
Both these contentions were negatived by the learned Single Judge and he ordered the award to be filed, in court and passed a decree in terms thereof.
The appellant then went up in appeal, which was heard by a Division Bench of the Calcutta High Court.
The grounds of appeal show that the same two points, which were urged before the learned Single Judge ' were reiterated therein.
When the matter came to be heard before the Division Bench, the same two points were raised on behalf of the appellant there also.
The Division Bench negatived the two contentions raised before it on behalf of the appellant and confirmed the judgment of the learned Single Judge.
It is curious, however ' to notice that though all these proceedings were being taken on the application under section 5 of the Protocol Act the appellant apparently took no steps to have its application under section 33 of the , which seems to have been adjourned sine die, decided along with the respondent 's application under section 5 of the Protocol Act, 575 This was followed by an application for a certificate to appeal to this Court, which was refused.
Then the appellant applied to this Court for special leave to appeal, which was granted.
In the special leave petition also the appellant raised the same to points, namely, (i) the construction of sections 33 and 35 of the and the application of these provisions to the facts of this case, and (ii) the construction of section 7 of the Protocol Act and the with respect to the damages awarded by the award.
In the statement of case also after narrating the facts and circumstances, the same two points were mentioned as the principal questions which arose for determination in the appeal, namely, (i) the effect of sections 33 and 35 of the on the facts and circumstances of this case, and (ii) the interpretation of section 7 of the Protocol Act in the light of sections 73 and 74 of the and their bearing on the damages awarded by the arbitrators and its effect on the validity of the award.
Learned counsel for appellant, however, wanted to raise before us other points arising out of section 7 of the Protocol Act.
We do not think that the appellant should be permitted to raise at this late stage any new point in addition to the two points which were urged before the learned Single Judge and which only have all along been raised in the appeal to the High Court and in the appeal before this Court.
We shall therefore confine the appellant to these two points only and proceed on the assumption in the same manner as has been done by the High Court, namely, that an application under section 33 of the would lie in the circumstances of this case and therefore the provisions of section 35 of the would be attracted.
The part of section 33 of the , relevant for our purpose, lays down that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have its effect determined shall apply to the court and the court shall decide the question.
It will thus be clear that 576 s.33 contemplates an application for three purposes, namely, (i) when it is desired to challenge the existence of an arbitration agreement, (ii) when it is desired to challenge its validity, and (iii) when it is desired to have its effect determined.
An arbitration agreement may come into existence in one of two ways; it may either arise out of an agreement which contains nothing else besides the arbitration agreement, or it may arise out of a term contained in a contract which deals with various other matters relating to the contract, which is the present case.
Where one is dealing with an arbitration agreement of the second kind, section 33 is concerned only with the term relating to arbitration in the contract and not with the other terms of the contract which do not arise for consideration on an application under that section.
Then we come to section 35.
It provides that no reference or award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject matter of the reference, but when legal proceedings upon the whole of the subject matter of the reference has been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid.
It will be seen, therefore, 'that section 35 makes proceedings before the arbitrators invalid in the absence of an order under section 34 staying the legal proceedings, where whole of the subject matter of the reference is covered by any legal proceedings taken with respect to it.
In other words, an arbitrator can continue the proceedings and proceed to make the award on the reference, unless the whole of the subject matter of the reference is covered by the legal proceedings which have been instituted.
Assuming that the proceedings taken under section 33 are " legal proceedings ", mentioned in section 35, the question which immediately arises on the facts of the present case is whether the whole of the subject matter of the reference in this case was covered by the legal pro ceedings taken by the appellant by its application under section 33 of the .
577 In dealing with this aspect of the case, learned counsel for the appellant raised the question of frustration of the contract and the powers of the court and the arbitrator in that behalf.
It is true that the words " frustration of contract " have been used in paragraph 8 of the application.
But the prayers do not show that any relief was claimed on that ground, relief (c) being merely a repetition of the words of section 33 of the .
Learned counsel relied on Heymen vs Darwins Ltd. (1) in this connection.
We do not think we should permit the appellant to raise this contention at this late stage and would content ourselves by pointing out incidentally that even if the dictum in Heymen 's case (1) is accepted, it will not help the appellant, for on that dictum the question of frustration would be for the arbitrators to decide on the basis of the terms used in this contract which are of the widest amplitude and would not be a matter for consideration of the court.
On this basis there would be no identity of subject matter between what can be raised in an application under section 33 on the facts of this case and what can be decided by the arbitrators.
However, we do not propose to pursue this matter any further and to decide it.
Then we turn to prayers (a) and (b) of paragraph 9 of the application based on paragraphs 6 and 7 thereof.
These prayers undoubtedly cannot be the subject matter of arbitration, for they go to the very root of the contract and imply that there was no contract between the parties at all and therefore no arbitration agreement.
These prayers can certainly form the basis of an application under section 33, for they relate to the existence and validity of the arbitration agreement contained in the contract; but not being matters within the competence of the arbitrators, there can be no identity of the subject matter under reference to the arbitrators and the subject matter of prayers (a) and (b).
The conclusion, therefore, is that prayers (a) and (b) can be the subject matter of an application under section 33 but they cannot be the subject matter of the reference to the arbitrators.
Therefore, (1) [19421 2 A.C. 356.
578 the subject matter of the legal proceedings under section 33 in this case cannot and does not cover any part of the subject matter of the reference.
Section 35 in consequence can have no application and the award cannot be assailed as invalid on the ground that it violates section 35 of the .
The first contention, therefore, must fail.
The argument under this head is that the liquidated damages provided under cl.
(1 2) of the contract include not only the difference between the contract price and the market price on the date of default but also a further sum of 10s.
per ton.
Reference in this connection is made to sections 73 and 74 of the , and it is said that the extra amount of 10s.
per ton included in the sum of liquidated damages is against the provision of these, sections and therefore the award being against the law of India is bad on the face of it and should not be enforced in India.
Section 73 provides for compensation for loss or damage caused by breach of contract.
It lays down that when a contract has been broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Section 74, provides for breach of contract where penalty is stipulated for or a sum is named and lays down that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
What cl.
(12) of the contract provides in this case is the measure of liquidated damages and that consists of 579 two things, namely, (i) the difference between the contract price and the market price on the date of default, and (ii) an addition of 10s.
per ton above that.
There is nothing in section 73 or section 74 of the Contract Act, which makes the award of such liquidated damages illegal.
Assuming that the case is covered by section 74, it is provided therein that reasonable compensation may be awarded for breach of contract subject to the maximum amount named in the contract.
What the arbitrators have done is to award the maximum amount named in the contract.
If the appellant wanted to challenge the reasonableness of that provision in cl.
(12) it should have appeared before the arbitrators and represented its case.
It cannot now be heard to say that simply because cl.
(12) provided for a further sum of 10s.
per ton over and above the difference between the contract price and the market price on the date of the default, this was per se unreasonable and was therefore bad according to the law of India as laid down in sections 73 and 74, of the Contract Act.
Both these sections provide for reasonable compensation and section 74 contemplates that the maximum reasonable compensation may be the amount which may be named in the contract.
In this case the arbitrators have awarded the maximum amount so named and nothing more.
Their award in the circumstances cannot be said to be bad on the face of it, nor can it be said to be against the law of India as contained in these sections of the Contract Act.
The second contention must also fail.
We, therefore, dismiss the appeal with costs to the respondent.
Appeal dismissed.

Output:
The appellant company, incorporated in India, entered into a contract on June 18, 1945, for the supply of five hundred bales of jute, with the respondent company which was incorporated in England and which had its registered office in London.
The contract, inter alia, provided that in the event of default of tender or delivery, the seller shall pay to the buyer as and for liquidated damages 10s.
per ton plus the excess (if any) of the market value over the contract price, the market value being that of jute contracted for on the day following the date of default.
There was a provision for arbitration, under which any claim or dispute whatever arising out of, or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye laws of the London jute Association.
Disputes having arisen regarding the performance of the contract the respondent referred the matter to the arbitration of the London jute Association, who appointed two of its members as the arbitrators.
The appellant did not reply to the notice given by the arbitrators but filed an application on 570 August 10, 1949, under section 33 Of the , in the Calcutta High Court, praying, inter alia, (a) for a declaration that the arbitration agreement was void on the ground of uncertainty, and (b) for a declaration that there was in fact and in law no contract between the parties on account of mutual mistake of the parties.
Notice was given by the appellant to the respondent and the London jute Association that further steps in the arbitration proceedings should not be taken pending disposal of the application under section 33 Of the .
The arbitrators, however, proceeded with the arbitration and gave their award on October 17, 1949.
On November 26, 195i, an application was filed by the respondent in the Calcutta High Court under section 5 of the , praying that judgment be pronounced in accordance with the award.
The appellant contended that the award was invalid on the grounds, inter alia, (i) that the award was bad under section 35 of the , as it was made after the receipt of the notice of filing of the petition dated August 10, 1940, under section 33 of the , by the respondent and the arbitrators and during the pendency of the said application, and (2) that the liquidated damages provided under the award included not only the difference between the contract price and the market price on the date of default but also a further sum of 10s.
per ton, that the extra amount was against the provisions Of sections 73 and 74 of the , and that, therefore, the award was bad on the face of it and could not be enforced in view of the provisions Of section 7(e) of the , which lays down that an award cannot be enforced in India if it is contrary to the Law of India.
Held: (i) that the subject matter of the legal proceedings under section 33 Of the , which relates to the existence and validity of the arbitration agreement, are not matters within the competence of the arbitrators, and do not therefore cover any part of the subject matter of the reference.
Consequently, section 35 of the is inapplicable.
(2) The award does not violate the provisions of sections 73 and 74 Of the , as the arbitrators have only awarded the maximum amount named in the contract.


Input:
minal Appeal No. 264 of 1972.
Appeal by special leave from the judgment and order dated March 6, 1972 of the Bombay High Court at Bombay in Cr. A. No. 164 of 1972.
M. N. Sharma, for the appellant.
section B. Wad and Rine Sachthey, for the respondent.
The Judgment of the Court was delivered by DUA, J.
The appellant in this appeal by special leave was tried in the court of Session for Greater Bombay at Bombay for offences under section 467, under section 471 read with section 467 and under section 420, I.P.C.
According to the prosecution the appellant was running an octroi clearing agency under the name and style of "National Octroi Clearing Agency" at the Mulund check post.
He used to attend to certain transactions relating to the transport companies, one of those companies being the Montgomery Transport Company.
On December 16, 1962 a truck belonging to the said transport company bearing No. MPR 2147 arrived at the check post carrying a Depleix Machine to be delivered to Messrs Imperial Tobacco Company.
There were two drivers and one cleaner in the truck.
On being approached by them the appellant telephoned to manager Bakshi of the Transport Company to arrange for the payment of octroi which amounted to more than Rs. 8,000/ .
The Manager, Bakshi and Director, Inderjit Singh went to the Imperial Tobacco Company the following day and after getting Rs. 8,196/ /for the octroi reached the Mulund Check post.
The amount was handed over to the appellant in the presence of the driver.
Actually only Rs. 81 80/ were required for the octroi with the result that Rs. 16/ were paid back to Messrs Imperial Tobacco Company by means of a cheque.
During the investigation of another case arising out of an alleged forged receipt relating to octroi in respect of some imports by Messrs Pure Drinks Private.Ltd., it came to light that proper octroi had not been paid on December 17, 1968 in respect of the transaction in question in the present case.
The Assistant Assessor and Collector, Shri Karkhanis, after sending his superintendent Govind Charan to, the office of Messrs Imperial Tobacco Company he himself also visited the Company 's office and they both felt that the receipt for the payment of octroi held by the said Company was not genuine.
Having failed to trace the necessary relevant documents in the office files Shri Karkhanis lodged the complaint in February, 1969 and a case 3 L761Sup.
CI/73 550 was registered After preliminary enquiry under Ch.
XVIII Cr.
P.C. the appellant was committed for trial to the court of Session.
According to,the trial court the following points arose for determination : 1.
Whether it is proved that the receipt, Article A is a forged document ? 2.
Whether it is proved that it is the accused who forged that receipt with intent to commit fraud ? 3.
Whether it is proved that the accused used this receipt as genuine knowing it to be forged ? 4.
Whether it is proved that he cheated the Bombay Municipal Corporation, as alleged ? 5.
Whether it is proved that the accused cheated the Imperial Tobacco Co. of India Ltd., as alleged ?" The conclusions of the trial court on these points were "1.
In the affirmative.
Not proved.
In the affirmative, 4.
In the affirmative.
Not proved.
" The evidence in this case is mainly, if not wholly, circumstantial and about 20 witnesses were examined including a handwriting expert.
The trial court felt that the case required evaluation of the evidence of Bakshi (P.W. 4), Inderjit Singh (P.W. 18) and Handwriting Expert (P.W. 17).
Driver Balwant Singh was not examined in the case.
The trial court in a lengthy judgment exhaustively discussed the evidence of these witnesses.
It did not place implicit reliance either on Bakshi (P.W. 4) or on Inderjit Singh (P.W. 18) as, indeed in the testimony of 'both of them the trial court found partly reliable and partly unreliable statements.
The court did not feel inclined to hold that their evidence was wholly unreliable.
On evaluation of the evidence of the Handwriting Expert the trial court felt that the receipt in question could not necessarily be held to have been forged by the appellant.
After this ' observation follows the following passage in the judgment "I do not, however, feel that this earns an acquittal for him The direct charge regarding the forgery could be taken as not proved we will have however to weigh the other evidence for finding out whether he could have used the document which is necessarily a fogged docu ment, as a genuine document.
For this purpose we will have to appreciate the evidence of the two witnesses 551 about whom I have spoken quite a long time and we have also to appreciate the interval of time.
What exactly the accused did within that half an hour when he took the money and returned, will have to be surmised, particularly in the absence of categorical evidence showing that the disputed receipt is executed by him.
The evidence shows, it is a forged receipt.
It is not prepared at the counter.
We may not be sure in finding out as to who wrote it.
The accused may have had his associates it he himself has not written it.
Considering the way in which counters are stated to be working, considering the amount involved and the short time 'limit when the accused reappeared legitimate payment across the counter will have to be ruled out.
That is not even suggested on behalf of the accused.
He may have his own collaborators.
If we accept the version, which I do, then it was this receipt which was in the hands of the accused that was given over to the driver and from there onwards it reached the firm Messrs Imperial Tobacco Co. of India Ltd. I feel, the accused ought to be supposed to be aware that the real payment was made and what he carried could not be the real receipt.
It is for this reason that I am feeling that the charge of using a forged receipt knowing it to be forged could be brought home to him." The trial court thereafter dealt with the, charges of cheating and ultimately convicted the appellant for offence under sections 471 read with 467, I.P.C. and for an offence under section 420, I.P.C. Under the former he was sentenced to five, years ' rigorous imprisonment and a fine of Rs. 500/ with six months ' further rigorous imprisonment in case of default.
Under section 420 he was sentenced to rigorous imprisonment for two years.
The substantive sentences were directed to be concurrent.
The appeal to the High Court was dismissed in limine with one word "Dismissed".
Before us on appeal by special leave the short point but one of vital importance to the appellant requiring our decision is whether the High Court was justified on the facts and circumstances of this case in unceremoniously dismissing the appeal in limine with one word "Dismissed" without making a speaking order indicating the reasons for the dismissal.
The facts briefly stated by us and a close study of the lengthy judgment of the trial court quite clearly show that the appeal in the High Court did raise points which were not only arguable, but were also substantial requiring critical scrutiny and serious appraisal and evaluation of the prosecution evidence and the circumstances of the case.
The impor 552 tance of the opinion of the High Court on arguable points requiring consideration on appeal in that court when questions of fact or law are open to challenge by the appellant was emphasised more than 20 years ago by this Court in Mushtak Hussein vs The State of Bombay(1) when Mahajan J., (as he then was) observed at p. 820 : "With great respect we are however constrained to observe that it was not right for the High Court to have dismissed the appeal preferred by the appellant to that court summarily, as it certainly raised some arguable points which required consideration though we have not thought it fit to deal with all of them.
In cases which prima facie raise no arguable issue that course is, of course, justified, but this court would appreciate it if in arguable cases the summary rejection order gives some indication of the views of the High Court on the points raised.
Without the opinion of the High Court on such points in special leave petitions under article 136 of the Constitution this Court sometimes feels embarrassed if it has to deal with those matters, without the benefit of that opinion.
" Since then in a series of decisions (quite a number of them reported and several unreported) this Court has consistently drawn the attention of the High Courts to the eminent desirability of giving an indication of their views on the points raised in arguable cases in accordance with the legal position enunciated by this Court.
Such a course is normal in cases which raise fairly arguable questions of fact or law.
In one of the latest decisions of this Court in K. K. Jain vs State of Maharashtra(2) some of the earlier decisions were again noticed and it was considered necessary to repeat the emphasis laid on the necessity of recording reasons by the High Court for dismissing appeals raising questions which cannot be considered to be unsubstantial or not arguable.
In that decision it was reiterated, inter alia, that reasons prevailing with the High Court for dismissing the appeal, if recorded, would have been of valuable assistance to this Court in finally disposing of the appeal on merits.
Another advantage of recording such reasons.
is that the accused appellant who may not always be present in court would have the satisfaction of knowing from the judgment that the points appropriately arising for consideration in his case were actually argued and only considered by the High Court while dismissing his appeal.
This would, inter alia, tend to promote confidence of the parties concerned in our judicial process.
in the present case had the High Court recorded its reasons for dismissing the appeal it would have better enabled the appellant 's lawyer to consider the advisibility of appealing (1) ; (2) A.I.R. 1973 S.C. 243.
553 under article 136 of the Constitution and after filing the appeal would have afforded valuable assistance both to the counsel appearing in this Court and to us in the final disposal of the appeal without feeling the necessity of remanding the case to the High Court for re hearing.
The remand no doubt must result in further delay in the final disposal of the appellant 's appeal in the High Court, and this indeed is regrettable.
But in the absence of the opinion of the High Court which that Court was under the law expected to record we are left guessing about the line of reasoning the High Court would have adopted after appropriate scrutiny of the evidence on the record.
The appellant is entitled to have a proper decision on the points arising in his appeal by the High Court on due appraisal of the evidence in accordance with law.
The legal position on the point in question has been authoritatively settled and declared by this Court and the same has been frequently reiterated in its decisions.
The law reports are so full of them that it appears to us to be somewhat surprising that the counsel appearing in the appeal in the High Court Should have been unaware of it.
It, however, does seem that the attention of the High Court was not drawn to these decisions, for had that Court been apprised of the law as authoritatively declared by this Court, it is inconceivable ,that the present appeal would still have been dismissed without indicating the reasons in support of it.
Had the High Court recorded reasons the delay necessitated by this remand could have been avoided.
But in the circumstances we have no option but, to allow the appeal and remand ' the case to the High Court for rehearing and deciding the appeal after considering the points raised and recording its reasons in accordance with law.
We have taken care not to express any opinion on the merits of the case either way.
It is hoped that this appeal would now be disposed of by ,the High Court expeditiously and without avoidable delay.
section C. Appeal allowed.

Output:
The appellant was running a Octroi Clearing Agency at 'Mulund Check Post ' in the State of Maharashtra.
He used to attend to certain transactions of Montgomery Transport Co. also.
On December 16, 1968, a truck of the said transport company arrived at the Check Post with a machine to be delivered to M/s. Imperial Tobacco Co. The appellant informed the Manager of the Transport Company to arrange for the payment of Octroi which amounted to more than Rs. 8,000/ .
Accordingly, a sum of Rs. 8,196/ was handed over to the appellant in the presence of the Driver of the truck.
It was found out after investigation that the receipt for the payment of Octroi held by the Imperial Tobacco Co. was not genuine and on a complaint lodged by the Company, the appellant was arrested and committed for trial to the Court of Sessions, under section 467, 471 read with section 467 and section 420 of I.P.C.
The Trial Court convicted the appellant for an offence under section 471 read with section 467 1.
P. C. and for an offence under section 420 1.
The appeal to the High Court was dismissed in limine with the word "dismissed".
The point raised before this Court was whether the High Court was justified in dismissing the appeal in limine with one word "dismissed", without making a speaking order indicating the reasons for dismissal.
Remanding the case to the High Court for rehearing.
HELD : (i) The importance of the opinion of the High Court on arguable points requiring consideration in appeal in that Court when questions of fact or law are open to challenge by the appellant was emphasised more than 20 years ago by this Court in Mustaq Hussain vs The State of Bombay, ; Since then, in a series of decisions, this Court has consistently drawn the attention of the High Courts to the desirability of giving an indication of their views on the points raised in arguable cases in accordance with the legal position enunciated by this Court.
[552 AB.] (ii) In K. K. Jain vs State of Maharashtra, A.I.R. 1973 S.C. 243 it was reiterated that reasons before the High Court for dismissing the appeal, if recorded, would be a valuable assistance to this Court in finally dismissing of the appeal on merits.
Another advantage of recording such reasons is, that the accused appellant, who may not always be present in the court, would have the satisfaction of knowing from the judgment that the points appropriately arising for consideration in his case, were actually argued and duly considered by this High Court while dismissing his appeal.
In the prevent case, since the High Court did not record its reasons for dismissing the appeal, this court has no option but to remand the case to the High Court for rehearing and deciding the appeal after considering the points raised and recording its reasons in accordance with law.
[552 FG & 553A] 549 Mustaq Hussain vs State of Bombay, ; , and K. K. Jain vs State of Maharashtra, A.I.R. 1973 S.C. 243, referred to.


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ION: Criminal Appeal No. 11 of 1959.
Appeal by special leave from the judgment and order dated April 30,1958, of the Bombay High Court in Criminal Application No. 508 of 1958.
K. M. Desai and 1.
N. Shroff, for the appellant.
Ganpat Rai, for respondents Nos. 1 to 4 and 6.
K.L. Hathi and B. H. Dhebar, for respondent No. 5, 76 598 1959.
August 27.
The Judgment of the Court was delivered by SARKAR J.
The appellant is an unmarried Sunni Moslem woman.
She has an infant female illegitimate child called Anjum.
The appellant made an application to the High Court at Bombay under section 491 of the Code of Criminal Procedure for the recovery of the custody of the child from the respondents.
That the application was refused.
Hence this appeal.
The appellant 's case is as follows: She is the daughter of one Panna Bai.
The respondent Kaniz Begum is Panna Bai 's sister.
Kaniz Begum, whom it will be convenient to refer as the respondent, took the appellant over from Panna Bai and brought her up.
Prior to 1951 the respondent had put her in the keeping of two persons and had thereby made pecuniary gain for herself.
In 1951 the appellant met one Trivedi and since then she was been living continuously in his exclusive keeping.
The appellant stayed with Trivedi at Jabalpur up to 1954.
On September 4, 1952, the child Anjum was born to her by the said Trivedi.
In November 1953 she bore another child to him of the name of Yusuf alias Babul.
In 1954 the appellant with her said two children, her mother who had been living with her, and Trivedi left Jabalpur and came to live in Bombay.
After coming to Bombay, Trivedi for sometime lived with his relatives as he could not find independent accommodation.
During this time, the appellant with her children and mother stayed with the respondent who was then living in Bombay, but Trivedi used to visit the appellant daily at the, residence of the respondent.
In January 1956 the appellant bore a third child to Trivedi called Unus alias Chandu.
After the birth of Unus, Trivedi took the appellant, her mother and the two younger children to a hill station near Bombay called Khandala and the party stayed there for three or four months.
At the time the appellant had gone to Kandala, the respondent went to Pakistan on a temporary visa and she took the child Anjum with her presumably with the consent of the appellant, 599 After returning from Khandala, Trivedi was able to secure a flat for himself in Marine Drive, Bombay and the appellant with her mother and two sons began to stay with him there.
In April 1937 Trivedi moved into another flat in Warden Road, Bombay, with the appellant, her two younger children and mother and has since then been living there with them.
After the respondent returned from Pakistan with Anjum, the appellant who had then moved into the flat in Marine Drive, asked the respondent to send Anjum to her but the respondent refused to do so.
Since then the respondent has been refusing to restore the custody of the child Anjum to the appellant.
In these circumstances, the appellant made her application under section 491 of the Code of Criminal Procedure on April 18, 1958.
She stated that she apprehended that the respondent would remove Anjum to Pakistan any day and there was already a visa for Anjum available for that purpose.
She also stated that in view of the relationship between the parties she had not earlier taken the matter to court.
On the date of the application the respondent was away in Pakistan.
She had not however taken the child Anjum with her but had left her in her flat at Bombay in charge of her cousin Suggi and an Aya, Rozi Bhangera.
The appellant stated that the respondent had asked her sister Bibi Banoo and the latter 's husband Mahomed Yakub Munshi to look after the child.
The appellant had therefore made these four persons only the respondents to her application.
Later, on the respondent 's arrival back in Bombay, she also was made a party to the application.
The other respondents contended in the High Court that they had nothing to do with the child and had been made parties to the application unnecessarily.
They have not appeared in this appeal It is clear however that they did not make over the custody of the child Anjum to the appellant when the application was made and the affidavits filed by them leave no doubt that their sympathies are with the respondent Kaniz Begum.
The state of Bombay was also 'Made a respondent to the application, but that was a mere matter of form.
The State has no interest 600 in the case and has not taken any part in the proceedings.
The respondent opposed the application denying the correctness of some of the allegations made in the petition of the appellant.
She denied that Trivedi was the father of the child Anjum and said that the father was a Shia Moslem called Samin Naqui.
She said that the appellant 's mother had given the appellant to her to: bring up when very young as she had not the means to do so herself and since then the appellant had been living with her all along and left her flat in company with Trivedi only during her temporary absence in Pakistan in 1956.
She denied that she had made the appellant live in the keeping of any person as alleged by the latter.
She contended that she had intended that the appellant would marry and live a clean and respectable life but other influences operated upon her and she went to live with Trivedi as his mistress.
She denied that she had prevented the appellant access to the child Anjum as the latter stated.
She contended that she was looking after the child Anjum with great care and solicitude, and had put her in a good school and kept a special Aya for her.
She also said that she was well off and had enough means to look after the child well.
She contended that it was not in the interest of the child to live with the appellant because she was living in the keeping of a man who might turn her out and she would then have to seek the protection of another man.
She said that she had no child of her own and was fond of Anjum whom she had been treating as her own child.
The learned Judges of the High Court observed that the case raised various controversial questions specially as to the paternity of the child, as to whether the respondent had made the appellant live in the keeping of different persons and also as to whether she had prevented the appellant from having access to the to the child.
The learned Judges observed that it was not the function of a court in an application under section 491 to record findings on such controversial facts and that, in these circumstances, the proper forum for the appellant was to move a civil court under the 601 Guardian and Wards Act for the custody of the child.
The learned Judges further observed that they were prima facie satisfied that the child was not illegally and improperly detained by the respondents.
They therefore dismissed the appellant 's application.
We are unable to appreciate the view the learned Judges of the High Court.
It seems to us that the controversial facts referred to by them were wholly irrelevant to the decision of the application.
We have not been able to find one single fact relevant to the issue in this case which is in controversy.
The facts, which are abundantly clear and beyond dispute are these.
The child Anjum is the illegitimate daughter of the appellant who is a moslem woman.
The child was at the date of the application less than six years ' old and now she is just over seven years old.
The appellant is a singing girl by profession and so is the respondent.
The appellant stated in her affidavit that the respondent was in the keeping of a man and this the respondent has not denied.
It is not the respondent 's case that she is a married woman leading a respectable life.
In fact she admits that she allowed Trivedi to live in her flat with the appellant as his mistress and took money from him for " Lodging and Boarding Charges ".
Trivedi has sworn an affidavit acknowledging the paternity of the child and undertaking to bring her up properly as his own child.
He is a man of sufficient means and the appellant has been for a considerable time living with him as his mistress.
On these undisputed facts the position in law is perfectly clear.
Under the Mohammedan law which applies to this case, the appellant is entitled to the custody of Anjum who is her illegitimate daughter, no matter who the father of Anjum is.
The respondent has no legal right whatsoever to the custody of the child.
Her refusal to make over the child to the appellant therefore resulted in an illegal detention of the child within the meaning of section 491.
This position is clearly recognised in the English cases concerning writs of habeas corpus for the production of infants.
602 In The Queen vs Clarke (1) Lord Campbell,, C. J., said at p. 193: " But with respect to a child under guardianship for nurture, the child is supposed to be unlawfully imprisoned when unlawfully detained from the custody of the guardian; and when delivered to him, the child is supposed to be set at liberty.
" The courts in our country have consistently taken the same view.
For this purpose the Indian cases hereinafter cited may be referred to.
The terms of section 491 would clearly be applicable to the case and the appellant entitled to the order she asked.
We therefore think that the learned Judges of the High Court were clearly wrong in their view that the child Anjum was not being illegally or improperly detained.
The learned Judges have 'not given any reason in support of their view and we are clear in our mind that view is unsustainable in law.
Before making the order the court is certainly called upon to consider the welfare of the infant concerned.
Now there is no reason to think that it is in the interest of the child Anjum to keep her with the respondent.
In this connection it is relevant to state that at some stage of the proceedings in the High Court the parties appeared to have arrived at a settlement whereby it had been agreed that the child Anjum would be in the custody of the appellant and the respondent would have access to the child.
The learned Judges of the High Court however were not prepared to make an order in terms of this settlement because, as they said, " It did not appear to be in the interest and welfare of the minor ".
Here again they give no reason for their view.
Both parties belong to the community of singing girls.
The atmosphere in the home of either is the same.
The appellant as the mother can be expected to take better care of the child than the respondent.
Trivedi has acknowledged the paternity of the child.
So in law the child can claim to be maintained by him.
She has no such right against the respondent.
We have not been able to find a single reason how the interests of the child (1) ; 603 would be better served if she was left in the custody of the respondent and not with the appellant.
We further see no reason why the appellant should have been asked to proceed under the Guardian and Wards Act for recovering the custody of the child.
She had of course the right to do so.
But she had also a clear right to an order for the custody of the child under section 491 of the Code.
The fact that she had a right under the Guardians and Wards Act is no justification for denying her the right under section 491.
That is well established as will appear from the cases hereinafter cited.
The learned Advocate for the respondent said, we ,should not interfere with the order of the High Court as it was a discretionary order.
The learned Judges however have not given any reason which led them to exercise their discretion in the way they did.
We are not satisfied that the discretion was judicially exercised.
We are clear in our view that the judgment of the High Court was wrong and should be set aside.
It is further well established in England that in issuing a writ of habeas corpus a court has power in the case of an infant to direct its custody to be placed with a certain person.
In The King vs Greenhill (1) Lord Denman, C. J., said: " When an infant is brought before the Court by habeas corpus, if he be of an age to exercise a choice, the Court leaves him to elect where he will 'go.
If he be not of that age, and a want of direction would only expose him to dangers or seductions, the Court must make an order for his being placed in the proper custody.
" See also The Queen vs Clarke (2).
In Halsbury 's Laws of England, Vol.
IX, article 1201 at p. 702 it is said; " Where, as frequently occurs in the case of infants, conflicting claims for the custody of the same individual are raised, such claims may be enquired into on the return to a writ of habeas (1) ; , 640; III E.R. 922, 927.
(2) ; ; 604 corpus, and the custody awarded to the proper person." Section 491 is expressly concerned with the directions of the nature of a habeas corpus.
The English principles applicable to the issue of a writ of habeas corpus, therefore, apply here.
In fact the Courts in our country have always exercised the power to direct under section 491 in a fit case that the custody of an infant be delivered to the applicant: see Rama Iyer vs Nataraja Iyer (1), Zara Bibi vs Abdul Razzak (2 ), and Subbuswami Goundan vs Kamakshi Ammal (3).
If the courts did not have this power, the remedy under section 491 would in the case of infants often become infructuous.
We, therefore, set aside the judgment and order of the High Court and direct the respondents other than the State of Bombay to make over the custody of the child Anjum to the appellant.
Let the child be produced by the respondents before the Registrar, Appellate Side, High Court of Bombay, and the Registrar will than make over custody to the appellant.
The passport in respect of the child Anjum deposited in this Court by the respondents may be made over to the Advocate on record for the appellant.
The injunction restraining the removal of the child Anjum outside Greater Bombay will continue till she is delivered to the appellant.
Appeal allowed.
(1) A.I.R. 1948 Mad.
(2) (1910) XII Bom, L.R. 891 (3) Mad.

Output:
An unmarried Sunni Muslim mother of an illegitimate female child made an application under section 49I Of the Code of Criminal Procedure for the recovery of the child from the respondents.
Held, that under the Mohammedan Law the mother of an illegitimate female infant child is entitled to its custody.
The refusal to restore such a child to the custody of its mother would result in an illegal detention of the child within the meaning of section 49I of the Criminal Procedure Code.
A dispute as to the paternity of the child is irrelevant for the purpose of the application.
The Supreme Court will interfere with the discretionary powers of the High Court if the discretion was not judicially exercised.
Held, also, that before making the order for the custody of the child the court is called upon to consider its welfare.
Held, further, that the fact that a person has a remedy under the Guardian and Wards Act, is no justification for denying him the remedy under section 49I Of the Criminal Procedure Code.
Held, further, that in issuing writs of habeas corpus the courts have power in the case of an infant to direct its custody to be placed with a certain person.
The Queen vs Clarke, ; and The King vs Greenhill, , relied on.
Zara Bibi vs Abdul Razzak, (1910) XII Bom.
L.R. 891; Subbuswami Gounden vs K. Kamakshi Ammal, Mad.
72 and Rama Iyer vs Nata Raja lyer, A.I.R. 1948 Mad.
294, referred to.


Input:
Civil Appeal No. 1037 of 1988.
589 From the order dated 14.12.1987 of the Customs Excise and Gold (Control) Appellate Tribunal New Delhi in Appeal No. 469/87A order No. 807/87 A S.N. Kackar, R.K. Habbu, P.G. Gokhale, Ms. Sushma Manchanda and B.R. Agarwal for the Appellant.
The Judgment or the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L of the (hereinafter called 'the Act ').
The Superintendent of Central Excise returned the price list of the appellant with a covering letter satating that the price should include all the cost of packing and packing charges in terms of section 4(4)(d)(i) of the Act.
The appellant, a private limited company, manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
According to the appellant, it sold to the customers on wholesale basis the glass bottles manufactured by it, packed in gunny bags and cartons which it purchases from the market.
According to the appellant further, it has been paying duty on the value of the glass bottles including the cost of gunny bags or the cartons in which these are packed at the time of sale.
It appears, therefore, according to the appellant, that it has been paying duty on glass bottles on the basis of the assessable value which included the costs of packing material, namely, the gunny bags and the cartons.
The case of the appellant further is that the glass bottles are normally sold by it in the packing consisting of gunny bags which are durable and returnable and in several cases the gunny bags are returned by the buyers and are used by the appellant again for packing the glass bottles.
It is only when the customers specifically ask for delivered in cartons instead of in gunny bags that the appellant delivered the glass bottles packed in cartons which are also durable and returnable.
Towards the end of 1977 and early 1978 the appellant submitted price list in regard to the glass bottles manufactured by it for approval by showing separately the price at which such goods were actually sold in the course of "wholesale trade" and "the cost of packing".
By his letter dated 10th January, 1978, the Superintendent of Central Excise returned to the appellant the price list duly approved but nothing therein that the price should be inclusive of the cost of packing and packing charges in terms of section 4(4)(d) of the Act.
Section 4(4)(d)(i) as it stood read as follows: 590 "(4) For the purposes of this section: (a) `assessee ' means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) 'place of removal ' means (i) & (ii) x x x (c) xxx (d) 'value ', in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.
Explanation: In this sub clause, 'packing ' means the wrapper, container, bobbin, pirn, spool, reel or wrap beam or any other thing in which or on which the excisable goods are wrapped, contained or wound," Since then the appellant has been paying duty on the cost of packing under protest and lodging claims of refund.
The appellant, however, did not receive any refund nor any intimation that the claims of refund are or were being rejected.
Various representations made by the appellant were in vain.
The Assistant Collector of Central Excise wrote a letter dated 8th March, 1980 advising the appellant to file an appeal before the Appellate Collector if the appellant felt aggrieved.
Feeling aggrieved, the appellant filed a writ petition under Article 226 of the Constitution in the High Court of Bombay.
The High Court passed an interim order on 18th July, 1984 remanding the case back to the Assistant Collector of Central Excise and to decide the matter after giving the appellant fair and adequate opportunity to adduce evidence.
After considering the written statements filed by the appellant, the Assistant Collector passed an order on 29th April, 1986 rejecting the appellant 's refund claim for about Rs.17 lakhs for the period from 1st January, 1978 to 31st December, 1980 and demanding duty for the period 6th January, 1981 to 31st December, 1985 in terms of the bank guarantees executed by the appellant.
There was an appeal before the 591 Collector of Central Excise (Appeals).
The Collector on 21st January, 1987 rejected the appeal and upheld the order of the Assistant Collector.
The appellant filed an appeal before the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'CEGAT ').
CEGAT dismissed the appeal.
Aggrieved thereby the appellant filed the appeal in this Court.
The Tribunal noted that the appellant manufactured glass bottles.
It delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings hl cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
The appellant 's case was that these packings were also returnable and in many cases they were actually returned and re used by the appellant.
There were no evidence about the durability of the cartons and gunny bags but nothing to show that these were returnable.
The position seems to be as follows.
The Tribunal has rightly applied the returnability test.
In K. Radha Krishnaiah vs Inspector of Central Excise and others, , this Court observed that it cannot be said that the packing is returnable by the buyer to the assessee unless there Is an arrangement between them that it shall be returned.
Therefore, such arrangement has been established.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case after examining the facts, the Tribunal found that there was no clause about returnability of the cartons and gunny bags.
The appellant invited the attention of the Tribunal to the following clause in their standard contractor.
It reads as follows: "6.
All packing cases, other than such as may be supplied or paid for by buyer, shall be returnable in good order and condition within 30 days after receipt. " The Tribunal was of the view that the above clause related to cases".
It could have meant only the crates which belonged to the appellant and for which the customers had not paid anything.
The 592 property in the crates having remained with the appellant all along, the buyers were naturally obliged to return them to their rightful owners.
But that was not the case with the cartons and gunny bags.
The buyers pay for these and the property in these pass on to the buyers.
They could be asked to return them to the appellant only under a term of sale and on payment of the agreed amount and not for the free.
No such contract or agreement was forthcoming.
The Tribunal was not convinced that in the normal course of business anyone could be asked to part with its property, and in addition incur return freight therefor too for nothing.
In those circumstances, the Tribunal held that the cartons and gunny bags were not returnable in the accepted sense of the term.
The Tribunal further noted that since the statute insisted on the packing being returnable, in addition to being durable, the authorities are bound to see whether the transaction fulfilled the tests of returnability as per the Supreme Court and High Court judgments.
In that view of the matter, the Tribunal dismissed the appeal.
As noted above, this Court has considered the meaning of the expression "returnable" in the Section in K. Kadha Krishnaiah 's case (supra).
This Court held that so far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is return able.
While interpreting this word, we must bear in mind that what section 4(4)(d)(i) excludes from computation is cost of packing which is of a durable nature and is "returnable by the buyer to the assessee".
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
In that view of the matter we are of the opinion that in the facts found and the expressions used in section 4(4)(d)(i) of the Act which have been set out hereinbefore, there being no evidence of the agreement that the cartons and gunny bags were returnable, we are of the opinion that the Tribunal came to the correct conclusion.
This appeal fails and is rejected accordingly.
G.N. Appeal dismissed.

Output:
The appellant manufactured various types of glass bottles which were assessed to duty under Item No. 23A of the Central Excise Tariff.
It sold the glass bottles to the customers on wholesale basis packed in gunny bags and cartons which were durable and returnable.
According to the appellant it has been paying duty on glass bottles on the basis of the assessable value which included the cost of packing material, namely, the gunny bags and cartons.
The returned gunny bags and cartons were re used by the appellant.
The appellant submitted for approval, price list in regard to the glass bottles manufactured by it showing separately the price at which the goods were actually sold and the cost of packing.
Returning the price list duly approved, the Superintendent of Central Excise noted therein that the price should be inclusive of the cost of packing and packing charges in terms of Section 4(4)(d) of the Act.
The appellant was paying duty on the cost of packing under protest and lodged claims of refund.
As the appellant did not receive either the refund or any intimation rejecting the claim for refund, it filed a writ petition before the High Court which remanded the case back to the Assistant Collector for deciding the matter after giving the appellant fair and adequate opportunity to adduce evidence.
The Assistant Collector, after considering the written statements filed by the appellant rejected the appellant 's claim for refund and demanded duty for the subsequent period.
The appellant filed an appeal before the Collector of Central Excise (Appeals) which was rejected.
The appeal filed before the Customs Excise and Gold (Control) Appellate Tribunal was also dismissed.
This appeal under Section 35L of the Act is against the Tribunal 's judgment.
588 Dismissing the appeal, ^ HELD: 1.
In view of the facts of the case, and the expressions used in Section 4(4)(d)(i) of the Act, there being no evidence of the agreement that the cartons and gunny bags were returnable, the Tribunal was right in coming to the conclusion that the cartons and gunny bags were not returnable in the accepted sense of the term.
[592G, B C] 2.1 The appellant manufactured glass bottles and delivered these in two types of packing, namely, in open crates and in cartons and gunny bags.
So far as the crates were concerned, the same belonged to the appellant.
The customer was billed for the cost of glass bottles only.
The crates were returnable to the appellant within 30 days.
The revenue has not included the cost of such crates in the assessable value.
The revenue has also not included the cost of packing, if any, supplied by the customer himself.
There was no dispute about these packings.
So far as the packings in cartons and gunny bags were concerned, it was noted by the Tribunal, that these belonged to the appellant but their cost was realised from the customer along with the cost of glass bottles.
It cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned.
Actual return or extent of return is not relevant.
What is necessary is that if the buyer chooses to return the packing, the seller should be obliged to accept it and refund the stipulated amount.
In this case there was no clause about returnability of the cartons and gunny bags.
[591B F] 2.2.
So far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable".
What Section 4(4)(d)(i) excludes from computation in cost of packing which is of a durable nature and is returnable by the buyer to the assessee.
The packing must be one which is returnable by the buyer to the assessee and obviously that must be under an arrangement between the buyer and the assessee.
It is not the physical capability of the packing to be returned which is the determining factor because, in that event, the words "by the buyer to the assessee" need not have found a place in the section; they would be superfluous.
[592D F K. Radhakrishnaiah vs Inspector of Central Excise and others, referred to.