2018 (12) TMI 1954 - AT - Central Excise

Valuation - cylinder holding charges, collected by the appellants who are manufacturers of gas, after a free period of retention of seven days - to be added in the assessable value of the gases or not, after 1.7.2000 when the provision of Section 4 were amended? - HELD THAT - The similar issue came up before the Tribunal in the case of BOC INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I 2004 (1) TMI 246 - CESTAT, KOLKATA wherein it was held that the said charges are not, in any way, related to or connected with the sale of the Gases. As such, the same cannot be said to be includible in the definition of the transaction value‟, as is appearing in the provisions of Section 4(3)(d). Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether "cylinder holding charges" collected by gas manufacturers after a free retention period are required to be added to the assessable value of the gases post an amendment in Section 4 of the Central Excise Tariff Act, 1985.

Analysis:
The case involved M/s Linde India Limited appealing against the order passed by the Commissioner (Appeals), Central Excise & CGST, Jaipur regarding the inclusion of "cylinder holding charges" in the assessable value of gases supplied by the appellant. The Tribunal examined whether these charges, collected after a free retention period of seven days, should be considered part of the assessable value post an amendment in Section 4 of the Act. The Tribunal referred to a previous case involving BOC India Limited where it was held that such charges are not related to the sale of gases and should not be included in the transaction value. The Tribunal noted that the charges were only applicable when customers did not return the cylinders within the free period, serving as a penal provision for non-compliance with the contractual obligation. Therefore, the charges were not routine and not directly connected to the sale of gases, leading to the conclusion that they should not form part of the assessable value of the final product. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential benefits as per the law.

This detailed analysis of the judgment highlights the key issue of whether "cylinder holding charges" should be added to the assessable value of gases post an amendment in Section 4 of the Central Excise Tariff Act, 1985. The Tribunal's decision, based on a previous case, clarified that such charges are not part of the transaction value as they are not directly related to the sale of gases but rather act as a penal provision for customers who do not return the cylinders within the agreed free period. This distinction led to the conclusion that the charges should not be included in the assessable value of the final product. The judgment provides clarity on the treatment of such charges in the context of excisable goods and sets a precedent for similar cases in the future.