1997 (9) TMI 102 - SC - Central Excise

Whether service charges are includible in the assessable value? Held that - Since there is no dispute that the bottles are durable and returnable containers, the activities referred to above undertaken by the appellant to ensure that the empty bottles which have been received back are available for reuse for bottling of aerated water, have to treated as part of the process of packing and not as part of the manufacturing process of aerated water. The appeals are allowed, the impugned judgment of Tribunal holding that service charges @ ₹ 3.00 per crate claimed by the appellant are to be included in the assessable value is set aside. Since the matters have already been remitted to the Assistant Collector of Excise for the purpose of verifying the actual rental charges of the bottles and re-determine the assessable value of the aerated water, it is directed that the Assistant Collector of Excise shall also verify the actual service charges and re-determine the assessable value of the aerated water after such verification.

Summary

Issues:
1. Inclusion of rental and service charges in the assessable value for excise duty.
2. Interpretation of Section 4(4)(d) of the Central Excise Act, 1944 regarding the exclusion of certain costs from the assessable value.
3. Whether service charges related to activities after manufacturing should be included in the assessable value.

Analysis:
1. The appellant, a manufacturer of 'MAAZA MANGO,' filed a price list with rental and service charges not included in the price. The authorities included these charges in the assessable value. The Tribunal, with a difference of opinion, referred the matter to a third member. The majority opinion held that service charges related to manufacturing and were includible, dismissing the appeal on service charges but allowing it on rental charges for verification.

2. Section 4 of the Act deals with valuation of excisable goods for excise duty. The definition of "value" under Section 4(4)(d) excludes costs of durable and returnable containers from the assessable value. The Tribunal's decision in a previous case affirmed this exclusion, stating that maintenance costs of such containers are not includible in the assessable value.

3. The Tribunal in the present case found that the bottles were returnable and durable. The service charges claimed by the appellant related to activities after manufacturing, such as sorting and cleaning bottles for reuse. The Court held that these activities were part of the packing process, not manufacturing, as the bottles were durable and returnable. Therefore, the service charges should not be included in the assessable value.

In conclusion, the Court allowed the appeal, setting aside the Tribunal's decision on including service charges in the assessable value. The matter was remitted to the Assistant Collector for verification of actual rental and service charges to determine the correct assessable value. The appellant was directed to provide necessary material for this verification. No costs were awarded in this judgment.