2005 (3) TMI 559 - AT - Central Excise

Summary

Issues:
1. Whether blowing charges in respect of durable and returnable cylinders should be added to the assessable value of the gas manufactured by the appellant.

Detailed Analysis:

1. The main issue in this case revolves around the inclusion of blowing charges in the assessable value of gas manufactured by the appellant. The appellant argued that blowing is not part of the manufacturing process of gas but is related to the packing material, specifically in clearing residual gases from durable and returnable cylinders. The process is essential to prevent chemical reactions with the oxygen gas to be filled. The appellant cited a Supreme Court decision in support of their argument.

2. On the other hand, the Revenue contended that blowing charges were part of the manufacturing process of the gas, as they were charged from customers. The Tribunal examined the nature of the blowing process undertaken by the appellant on empty cylinders received in the factory. It was found that the process was crucial to remove impurities from the cylinders, as they were used by various gas manufacturers. The appellant also presented ISI specifications indicating the necessity of purging or evacuating cylinders before filling oxygen gas.

3. Referring to the Supreme Court case of Vijayawada Bottling Co. Ltd., the Tribunal found similarities in the present case. In the cited case, charges for cleaning empty bottles for refilling aerated water were held to be not assessable as part of the manufacturing process. The Supreme Court emphasized that activities related to preparing durable and returnable containers for reuse should be considered part of packing, not manufacturing. Drawing parallels, the Tribunal concluded that blowing/purging charges should be abated in the present case.

4. Consequently, the Tribunal set aside the impugned order and allowed the appeals, granting abatement for blowing/purging charges. However, the actual abatement amount was left to be determined by the proper authority after reviewing the cost data provided by the appellant. The decision was made in line with the Supreme Court's interpretation and application of similar circumstances, ensuring fairness and adherence to legal principles.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi, highlighted the distinction between manufacturing processes and ancillary activities like blowing charges, ultimately ruling in favor of the appellant based on legal precedents and the specific circumstances of the case.