2007 (12) TMI 105 - AT - Central Excise

Whether the rental charges collected from customers on cylinders used for supply of their excisable goods (Industrial Gases & Medical grade Oxygen) is includable in the AV of goods or not - excise is a levy on manufacture & this holds goods even after amendment of Sec. 4 w.e.f.1-7-2000 - rental charges are entirely different & what is sold by appellant is only gas & not cylinder - every auxiliary activity of manufacturer is not liable for Excise duty & it cannot be includable in the AV of goods

Summary

Issues:
Whether rental charges on cylinders used for supply of excisable goods are includable in assessable value.

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals-I), Bangalore, regarding the inclusion of rental charges collected on gas cylinders in the assessable value. The appellants, engaged in the manufacture of industrial gases and medical grade oxygen, were contested by the Revenue for not including the rentals on gas cylinders in the payment of duty. The lower authority dropped the demand, but the Revenue appealed to the Commissioner (A) who allowed the appeal, setting aside the original order. The issue revolved around whether the rental charges should be included in the assessable value.

The Tribunal referred to the decision of the Hon'ble Apex Court in the case of CCE v. Indian Oxygen Ltd., where it was held that rental charges of cylinders are not includable as they do not constitute a manufacturing activity. This decision was supported by various Tribunal decisions and was considered applicable even after the amendment of Section 4 in 2000. The Commissioner's decision to disregard the Tribunal's rulings and allow the departmental appeal was deemed incorrect and against judicial discipline. The Tribunal emphasized that excise duty is levied on excisable goods and not on ancillary activities of the manufacturer. Therefore, the rental charges for cylinders should not be included in the assessable value of the goods.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellants. The decision highlighted the importance of following judicial discipline and reiterated that rental charges for cylinders are not to be included in the assessable value of excisable goods.