1985 (7) TMI 350 - AT - Central Excise

Summary

Issues:
- Whether retention/holding charges of gas cylinders collected by the Respondents should form part of the assessable value for central excise duty calculation.

Analysis:
1. The appeal was filed by the Collector of Central Excise, Indore against the Order-in-Appeal passed by the Collector of Central Excise (Appeals), New Delhi. The case involved M/s. Premier Oxygen and Acetylene Co. Pvt. LTD., Gwalior, manufacturing oxygen and acetylene gas supplied in durable cylinders to customers. The demand for duty on retention/holding charges of gas cylinders collected by the Respondents was contested. The Collector (Appeals) observed that if the charges were solely for retention/holding of cylinders beyond the free period, they should not be part of the assessable value unless used to cover part of the assessable value.

2. The Department argued that retention charges of cylinders were additional consideration and should be included in the assessable value as they influenced the gas price. On the other hand, the Respondents contended that the charges were not payment for gas but for post-clearance activity to ensure prompt cylinder return due to cylinder scarcity affecting production. Contracts with charges like rent per day and security deposit were produced to support this claim.

3. The Tribunal analyzed the provisions of the Central Excises and Salt Act, 1944. Section 3 levies excise duty on goods manufactured in India, while Section 4 determines assessable value based on the normal sale price. The Tribunal found that the retention charges were not directly related to the gas price at delivery and were mainly for cylinder return efficiency. As the charges accrued after delivery and were not integral to the selling price, they were not part of the assessable value. The Tribunal upheld the Collector (Appeals) order, rejecting the appeal by the Collector of Central Excise, Indore.

4. The judgment highlighted that the retention charges were collected post-delivery to ensure cylinder return efficiency and did not influence the gas price at delivery. Since the charges were not directly linked to manufacturing costs or selling price elements, they were not included in the assessable value for central excise duty calculation. The Tribunal accepted the Respondents' contentions and upheld the Collector (Appeals) decision, dismissing the appeal by the Collector of Central Excise, Indore.