1996 (8) TMI 130 - SC - Central Excise

Summary

Issues:
1. Determination of assessable value of goods considering rebates obtained.
2. Inclusion of free supply items in the assessable value of goods.

Detailed Analysis:

1. The first issue in this case involved the determination of the assessable value of electric storage batteries supplied under a contract with the South-Eastern Railways. Initially, the contract included a rebate of Rs. 50/- for using old containers supplied by the Railways. Subsequently, the contract was amended to include a further rebate of Rs. 30/- per piece for lead acid supplied by the Railways. The dispute arose regarding whether these rebates should be considered in determining the assessable value of the batteries. The Assistant Collector considered the price of the batteries as the assessable value, while the Appellate Collector disagreed, stating that the contractual price less the rebate should determine the assessable value. The Central Government reviewed the matter and held that no abatement or deduction could be allowed for the value of the old containers. The High Court upheld the appellants' contention that since the containers were obtained free of charge, the rebate could not be part of the manufacturing cost. However, the Division Bench ruled that the cost of the batteries for assessable value had to include the cost of the battery inclusive of the rebate amount of Rs. 80/-.

2. The second issue related to the inclusion of free supply items in the assessable value of goods, as seen in contrasting judgments. In one case, involving the supply of gases in cylinders, the Court held that amounts earned from rental and interest on deposits for the cylinders were not includible in the assessable value of the gases as the supply of cylinders was ancillary and not incidental to the manufacture of gases. On the other hand, in a case involving the manufacturing of wagons, it was held that free supply items like wheel sets, which became part of the complete wagon and lost their identity in the manufacturing process, had to be included in the assessable value of the wagons. Following the latter judgment, the appeal in this case was dismissed with no order as to costs.