Custom, Excise & Service Tax Tribunal
Cce, Jaipur Ii vs M/S Ajmer Industrial Gases Pvt. Ltd on 23 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING/DECISION : 23/04/2014. Excise Appeal No. 3663 of 2005 [Arising out of the Order-in-Appeal No. 514 (HKS) CE/JPR-II/ 2005 dated 31/08/2005 passed by The Commissioner (Appeals-II), Customs & Central Excise, Jaipur.] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? CCE, Jaipur II Appellant Versus M/s Ajmer Industrial Gases Pvt. Ltd. Respondent
Appearance Shri Jayant Sahay, Authorized Representative (DR) for the appellant.
Shri Bipin Garg, Advocate for the Respondent.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 52124/2014 Dated : 23/04/2014 Per. Rakesh Kumar :-
The respondent are manufacturers of Oxygen Gas and Dissolved Acetylene Gas chargeable to Central Excise duty under sub-heading 2804.10 and 2901.10 respectively of the Central Excise Tariff Act, 1985. The period of dispute in this case is from July 2000 to July 2001. During this period the respondent were selling the gases manufactured by them in their own cylinders and also in the cylinders brought by their customers. In respect of the gases sold in their own cylinders, the respondent were charging cylinders rental as well as cylinder maintenance charges and in the cases where the gases were sold by filling the same in the cylinders brought by the customers, they were charging cylinders maintenance charges. The rates of cylinders maintenance charges were, however, different for Oxygen Gas and Dissolved Acetylene Gas. The point of dispute is as to whether cylinder rental charges are includible in the assessable value of the gases. The Commissioner (Appeals) by the impugned order order-in-appeal dated 31/08/05 has set aside the duty demand for the period from 01/07/2000 to 01/01/2001 in respect of cylinder rental on the ground that cylinder rental during this period was not includible in the assessable value. It is against this order of the Commissioner (Appeals) that the present appeal has been filed by the Revenue.
2. Heard both the sides.
3. Shri Jayant Sahay, the learned DR, assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and emphasized that during the period w.e.f. 01/07/2000, the assessable value was the transaction value which includes in addition to the amount charges as price, any amount that the buyer is liable to pay to or on behalf of, the assessee, by the reason of or in connection with sale and that the cylinder rental charges have to be treated as the charges for the reason or in connection with sale of gases. He pleaded that the Apex Courts judgment in the case of Collector vs. Indian Oxygen Ltd. reported in 1988 (36) E.L.T. 730 (S.C.), which is in respect of the provision of Section 4 as the same stood during the period prior to 01/07/2000, is not applicable. The learned DR pleaded that the Commissioner (Appeals) has merely cited the judgment of the Tribunal in the case of Grasim Industries vs. CCE, Indore reported in 2004 (164) E.L.T. 257 (Tri. Del.), wherein it was held that cylinder rental charges are not includible in the assessable value, but he has not given any finding as to how this judgment is applicable to this case. He cited the judgment of the Apex Court in the case of CCE, Indore vs. Grasim Industries Ltd. reported in 2009 (241) E.L.T. 321 (S.C.), wherein in respect of the period w.e.f. 01/07/2000, the question of inclusion of cylinder rentals in the assessable value of the gases cleared has been referred by the Apex Court to a Larger Bench. Learned DR also cited the judgment of the Tribunal in the case of Kota Oxygen (P) Ltd. vs. CCE, Jaipur reported in 2000 (121) E.L.T. 369 (Tribunal), wherein it was held that cylinder maintenance charges and cylinder rental charges are includible in the assessable value of the gases. He, therefore, pleaded that the impugned order holding cylinder rental charges are not includible in the assessable value w.e.f. 01/07/2000 to January 2001 is not correct.
4. Shri Bipin Garg, Advocate, the learned Counsel for the respondent, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it and pleaded that the judgment of the Tribunal in the case of Kota Oxygen (P) Ltd. vs. CCE, Jaipur (supra) cited by the learned DR is not applicable to the facts of this case, as in that case, there was a specific allegation that the value of the gases had been under-declared and part of the value of the goods was being charges as cylinder maintenance charges and fixed rental charges, while there is no such allegation in the present case. Shri Garg cited a recent judgment of the Tribunal in the case of CCE, Indore vs. M/s Grasim Industries Ltd. reported in 2014 TIOL 573 CESTAT DEL., wherein it was held that when the goods are marketable as such, without being packed into cylinders, the cylinder rental or cylinder testing charges would not be includible in the assessable value. He pleaded that the fact that the gases were being sold by filling the same into the cylinders brought by the customers shows that the gases being manufactured by the respondent were marketable, as such, and hence the cylinder rental charges would not be includible in the assessable value.
5. We have considered the submissions from both the sides and perused the records.
6. The respondent manufacture of Oxygen Gas and Dissolved Acetylene Gas. There is no dispute that these gases are being sold by the respondent in their own cylinders as well as in the cylinders brought by the customers. The cylinder rental charges are charged only when the gases are supplied in the cylinders owned by the respondent. However in all the cases including the cases where the gases are sold in the cylinders brought by the customers, cylinder maintenance charges are recovered for testing of the cylinders and also for filling of acetone in case of supply of Dissolved Acetylene Gas. The dispute in this case is only on the question as to whether in the cases where gases are supplied by the respondent in their own cylinders, the cylinder rental charges would be includible in the assessable value or not. The period of dispute is the period w.e.f. 01/07/2000 when the assessable value was the transaction value at the time and place of removal.
7. During the period prior to 01/07/2000, in terms of the provisions of Section 4 (4) (d) (i), as the same stood during that period, the value of the goods where the goods are delivered at the time of removal in packed condition, would include the cost of such packing except the cost of packing which is of durable nature and is returnable by the buyers to the assessee. According to the Explanation to this sub-clause, packing means the wrapper, container, bobbing, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound. In the new Section 4 in force during the period w.e.f. 01/07/2000, the assessable value was the transaction value at the time and place of removal to independent buyers when the price is the sole consideration for sale and the term transaction value is defined in Section 4 (3) (d) as under:-
transaction value means the prices actually paid or payable for the goods, when sold, and includes in addition to the amount charges as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.
7.1 The point of dispute is as to whether during the period w.e.f. 01/07/2000, the cylinder rentals would be covered by the definition of transaction value. In respect of the period prior to 01/07/2000, the Apex Court in its judgment in case of Indian Oxygen Ltd. vs. CCE reported in 1988 (36) E.L.T. 730 (S.C.), has held that when oxygen gas was supplied in cylinders owned by the manufacturer, the cylinder rentals would not be includible in the assessable value. Here it may also be seen that unlike old Section 4, as the same stood during the period prior to 01/07/2000, in the new Section 4 in force w.e.f. 01/07/2000 there is no mention of the cost of packing whether the same is includible or not includible.
8. Apex Court in the case of Union of India & ors. vs. Bombay Tyre International Ltd. reported in 1983 (14) E.L.T. 1896 (S.C.) in para 51 of its judgment while construing the provisions of Section 4 (4) (d) (i) of the old Section 4, as the same stood during period prior to 01/07/2000, has held that we must remember that while packing is necessary to make 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 second 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 decree of packing whose cost can be included in the value of the article for the purpose of excise levy. To that extent, the cost of secondly packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate. Thus, the ratio of Apex Courts judgment in the case of Union of India and ors vs. Bombay Tyre International Ltd. (supra) is that the cost of only that packing, whether primary or secondary, is includible in the assessable value of the goods, which is necessary to make the goods marketable and in which the goods are generally sold in course of wholesale trade at the place of removal and the reasoning for this decision is that the statutory provision regarding inclusion of cost of packing in the assessable value calls for strict construction because the levy is sought to be extended beyond the manufactured article itself. The Apex Court in the case of Hindustan Polymers vs. CCE reported in 1989 (43) E.L.T. 165 (S.C.) while interpreting the provisions of Section 4 (4) (d) (i) of Section 4, as it stood during the period prior to 01/07/2000, has, relying upon to its judgment in the case of Bombay Tyre International 2002 TIOL 374 SC CX has held that the cost of packing would not be includible in the value of excisable goods, if the goods are marketable without being packed or contained in drums or containers and packing is not necessary for completion of manufacture of excisable goods and where the packing material is supplied by the customers/buyers. The Apex Court in the case of Indian Oxygen Ltd. vs. CCE (supra), has held that the cost of cylinder rental is not includible in the assessable value of the oxygen. In our view, though the above judgments of the Apex Court are with regard to provisions of Section 4 as the same stood during the period prior to 01/07/2000, the ratio of these judgments would be applicable even in respect of the Section 4 as the same stands w.e.f. 01/07/2000, as the principle that excise levy case not be extended beyond the manufactured article still holds good and including in the assessable value, the cost of packing which is not necessary to make the goods marketable and in which the goods are not generally sold at the place of removal and when the goods are marketable without being packed/put into containers, would amount to extending the levy of excise duty beyond the manufactured article itself. Therefore, the cost of only that packing would be includible in the assessable value, which is necessary to make the goods marketable and in which the goods are generally sold at the place of removal and accordingly if the goods are marketable as such without being packed or put into containers or cylinders, the cost of rental for such cylinders would not be includible in the assessable value. In the present case, the fact that the Oxygen Gas and Dissolved Acetylene Gas are being sold by filling the same in the cylinders brought by the customers shows that the gases are marketable, as such. Therefore, we are of the view that the cylinder rentals would not be includible in the assessable value. We find that same view has been taken by the Tribunal in the case of CCE, Indore vs. M/s Grasim Industries Ltd. reported in 2014 TIOL 573 CESTAT DEL.
9. The learned DR has cited the Tribunals judgment in the case of Kota Oxygen (P) Ltd. vs. CCE, Jaipur (supra), but in that case allegation of the Department was that the assessable value of the gases was being under-declared and part of the same was being recovered in form of cylinder rentals and cylinder maintenance charges. But in the present case, there is no such allegation. Therefore, the judgment of the Tribunal in the case of Kota Oxygen (P) Ltd. vs. CCE, Jaipur (supra) is not applicable to the facts of this case.
10. In view of the above discussion, we do not find any merit in the Revenues appeal. The same is dismissed.
(Operative part of the order pronounced in the open court.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
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