1997(05)LCX0119
IN THE CEGAT, COURT NO. I, NEW DELHI
Justice U.L. Bhat, President and Shri K. Sankararaman, Member (T)
UNIVERSAL DRINKS PVT. LTD.
Versus
COLLECTOR OF CENTRAL EXCISE, NAGPUR
Final Order No. 917/97-A, dated 28-5-1997 in Appeal No. E/2819/89-A
Cases Quoted
Indian Oxygen Ltd. v. Collector — 1988(07)LCX0081 Eq 1988 (036) ELT 0723 (S.C.) — Followed [Para 5]
Collector v. Indian Oxygen Ltd. — 1988(08)LCX0072 Eq 1988 (036) ELT 0730 (S.C.) — Followed [Para 5]
Advocated By : Shri K.K. Anand, Advocate, for the Appellant.
Shri M. Ali, JDR, for the Respondent.
[Order per : Justice U.L. Bhat, President]. - Order-in-Original No. 9/89, dated 3-4-1989 passed by the Collector of Central Excise, Nagpur is under challenge in this appeal.
2. Appellant, engaged in the manufacture of aerated waters falling under Chapter sub-heading 2202 and Bisleri Soda falling under Chapter sub-heading 2201 cleared the goods during the period 1-4-1986 till September, 1987 availing the benefit of SSI exemption under Notification No. 175/86. It appears that price lists had been filed (according to the appellant on insistence of the Department) showing the price as Rs. 14 per crate for aerated waters, Rs. 8/- per crate for Bisleri Soda and Rs. 6.26 per crate for Plain Soda. Under the notification, duty concession was available at different slabs, namely, clearances of the value of Rs. 15 lacs, clearances of the value between Rs. 15 lacs and Rs. 50 lacs, clearances of the value from Rs. 50 lacs to Rs. 75 lacs and no concession was available for clearances of the value beyond Rs. 75 lacs. During the period in question the appellant was paying duty as per slab system of the notification.
3. Subsequently investigation showed that over and above the price charged, appellant was collecting Rs. 3/- per crate from the dealers. It was also found that dealers were incurring expenditure on account of publicity and advertisement and also for sending empty crates back to the factory. It was further found that amount required to be paid by the appellant to Accountant (according to the learned Counsel `Sales Tax Consultant’) was paid by one of the dealers of the appellant on behalf of the appellant. Notice was issued stating that amounts covered by the four heads should be added to the assessable value, proposing demand of differential duty on the amount of assessable value suppressed and proposing imposition of penalty. The notice also invoked larger period of limitation under the proviso to Section 11A of the Act.
4. Appellant resisted the notice on several grounds including the one relating to limitation. The Collector overruled the contentions except partly in regard to rental charges for crate and advertisement and publicity charges. The dispute survives regarding part of the rental charges for crate and transport charges for empty crates. The learned Counsel for the appellant stated that he does not propose to address any arguments in regard to amount paid to the Sales Tax Consultant.
5. Appellant seeks to place reliance on two decisions of the Supreme Court reported at 723 and 730 of 1988 (036) ELT in the cases relating to Indian Oxygen Ltd. The dispute in these cases related to rental charges in connection with cylinders in which gas was being supplied. Supreme Court held that delivery charges for collection of empty cylinders cannot be included in the assessable value. In the decision reported at page 730, the Supreme Court held that rental charges for cylinders cannot be included in the assessable value. Though the assessee placed before the adjudicating authority both the decisions, the authority sought to look into only the decision reported at page 730 and distinguished the same on the ground that the tariff heading of aerated waters referred to bottles, while tariff heading of gas did not refer to cylinder. We fail to see how even assuming to be correct the distinction attempted by the adjudicating authority, he could have declined to follow the decision of the Supreme Court.
6. Tariff Heading 2201 referred to bottles with particular quantity of aerated waters. Chapter Heading 28 refers to gases supplied in cylinder. It is therefore not correct to say, as the adjudicating authority attempted to do, that while chapter heading of aerated waters refers to bottles chapter heading of gas does not refer to cylinder. Supreme Court indicated that supply of cylinder is ancillary to supply of gas but not incidental thereto as there are classes of persons who can take delivery of gases without supply of cylinders by the manufacturers. In such a case question of charging rental would not arise. Rental which may be ancillary would not be part of price for the manufacturer. It was on this basis that the decision at page 730 held against inclusion of rental charges in the assessable value of gas. The same logic should apply to rental charges of bottles in the case of supply of aerated waters. The decision reported at 723 relating to transport charges for return of empty crates should also be followed in the case of return of empty bottles and crates in respect of aerated waters.
7. Shri M. Ali, JDR referred to a few other decisions of the Tribunal. We find that these decisions were either before the pronouncement by the Supreme Court referred to above or immediately after such pronouncements and without taking note of the same. We are bound to follow the principles laid down by the Supreme Court and doing so we hold that the adjudicating authority was in error in including any part of the rent of the crate or transport charges in relation to empty crates in the assessable value and demanding differential duty on that basis. He has already dropped the demand in relation to advertisement and publicity charges. What remains is only the payment in respect of the amount paid by the dealer of the appellant to Sales Tax Consultant of the appellant. Learned Counsel for the appellant stated that the matter in this regard is not being pursued.
8. For the reasons indicated above we set aside the impugned order in relation to rental charges for the crates and charges for transport of empty crates from the premises of the dealer to the appellant’s factory. In view of the circumstance that bulk of the demand is now dropped, there is no justification for imposition of penalty and the same is set aside.
9. The appeal is allowed in part.
Equivalent 1997 (95) ELT 356 (Tribunal)
Equivalent 1997 (021) RLT 0486 (CEGAT)