Customs, Excise and Gold Tribunal - Delhi
Cce vs Punjab Alkalis And Chemicals Ltd. on 12 March, 2004
Equivalent citations: 2004(96)ECC71, 2004(186)ELT82(TRI-DEL)
JUDGMENT
K.K. Usha, J. (President)
1. The issue raised in this appeal at the instance of the Revenue is whether hydraulic testing charges collected by the assessee from its customers has to be included in the assessable value of caustic soda, hydrochloric acid, hydrogen gas, liquid chlorine manufactured by the assessee. Commissioner (Appeals) took the view that in the light of the Board's Circular No. 7/89-CE dated 7.7.89 such charges are not liable to be added to the assessable value of the products manufactured by the assessee. Aggrieved by above, the Revenue has come up in appeal.
2. Respondent is engaged in the manufacture of caustic soda, Hydraulic Acid, Hydrogen Gas, Liquid Chlorine etc. Show cause notice sought to add hydraulic testing charges collected by the assessee from its customers as part of value of goods produced by the assessee. Before filling the gas into tonners hydraulic test is conducted with respect to the tonners. The assessee collected charges from their customers. Revenue contended that hydraulic testing process is an essential part of the manufacturing process/filling of gas and, therefore, testing charges collected from the customers are to be added to the assessable value. The adjudicating authority confirmed the demand of Rs. 1,79,0900 and imposed a penalty of equal amount.
3. Commissioner (Appeals) relying on the Board's circular No. 7/89-CE dated 7.7.89 and the decision of the Supreme Court in Collector of Central Excise, Bombay-III vs. M/s Century Spinning & Mfg. Co. 1997 (94) ELT 16 (SC) took the view that hydraulic testing charges are not includible in the assessable value.
4. Learned Departmental Representative submitted that Board's circular as well as the decision of the Supreme Court would not be applicable in the facts of the present case. According to him since hydraulic test is conducted on the tonners before it is filled with chlorine gas manufactured by the assessee, the charges collected for the hydraulic test has to be added as assessable value. We heard the Learned Counsel for the respondent.
5. In Century Spg. & Mfg. Co. Ltd. 1997 (94) ELT 16, the Supreme Court held that service and maintenance charges in respect of tonners/cylinders which are durable and returnable cannot be added to the assessable value of the chlorine manufactured by the assessee and supplied to the customers in tonners/ cylinders. In Board's. In Board's circular 7/89-CE dated 7.7.89 it was clarified that in the case of durable and returnable containers their value is not required to be included in the assessable value. Therefore the question of including any maintenance and repair charges of such durable containers in the assessable value does not arise. The view taken by the Board was that the activity of supply of cylinders is not an activity of manufacturing of gas and, therefore, anything charged for such activity would not be a price for manufacture of gas.
6. We are of the view that the same principle should apply in the present case also. Hydraulic test conducted in respect of tonners/cylinders has no connection with the manufacture or caustic soda etc. Testing charges are received from the customers for an entirely different activity. We therefore, find no error in the order passed by the Commissioner. The appeal filed by the Revenue is therefore dismissed.