2000 (6) TMI 50 - AT - Central Excise

Summary

Issues Involved:
1. Deduction of interest on receivables for finding out the assessable value.
2. Deduction of bank charges or collection charges.
3. Exclusion of cylinder maintenance charges.
4. Computation of excise duty and arithmetical errors.
5. Imposition of penalties under Rule 173Q and Section 11AC of the Central Excise Act, 1944.

Summary:

1. Deduction of Interest on Receivables:
The primary issue was whether interest on receivables should be deducted from the sale price to determine the assessable value of goods. The Tribunal referred to the Supreme Court's decisions in the Madras Rubber Factory Ltd. cases (1987 and 1995) and concluded that interest charged from the date of delivery till the realization of the price should be deducted from the value of the goods. The Tribunal found that the circular issued by the Central Board of Excise and Customs, which stated that interest cannot be deducted if not separately mentioned in the invoice, was contrary to the Supreme Court's decisions. Therefore, the interest on receivables for the period mentioned in the invoice is deductible.

2. Deduction of Bank Charges or Collection Charges:
The Tribunal held that claims for deductions on account of bank charges or collection charges are not supported by the provisions of the Central Excise Act, 1944. The Tribunal found no justification for granting such deductions based on the Supreme Court's decisions in Bombay Tyres International Ltd. and MRF Ltd. cases. Therefore, manufacturers are not entitled to deductions for bank charges or collection charges over and above the deduction for interest on receivables.

3. Exclusion of Cylinder Maintenance Charges:
The Tribunal addressed the issue of excluding cylinder maintenance charges from the assessable value. It referred to the Supreme Court's decisions in Indian Oxygen Ltd. cases and held that charges like rentals for cylinders and notional interest income are for ancillary services and not an activity of manufacture. The Tribunal concluded that the manufacturer is entitled to recover the total cost of the cylinder in installments spread over its life span and deduct these costs from the sale price of the gas.

4. Computation of Excise Duty and Arithmetical Errors:
The Tribunal found that the Commissioner failed to deduct excise duty payable on the price at which Carbon Dioxide was sold by M/s. Chemicon Pvt. Ltd., as required u/s 4(4)(d)(ii) of the Central Excise Act, 1944. The Tribunal remanded the matter back to the Commissioner for recomputation of the tax liability, applying the principles stated in the Supreme Court's decisions and correcting arithmetical errors in calculating the sale value.

5. Imposition of Penalties:
The Tribunal found that the penalty imposed u/s 11AC of the Central Excise Act, 1944, for transactions prior to 28-9-1996 was unjustified and vacated it. Additionally, the Tribunal vacated personal penalties imposed on M/s. Chemicon Pvt. Ltd., Shri K.C. Kini, and Shri Suresh Kamath, as the circumstances for such penalties were not stated in the order. The Tribunal remanded the matter back to the Commissioner for reassessment of penalties and requantification of the demand of duty.

Conclusion:
The Tribunal remanded the appeals for fresh consideration by the adjudicating authority, directing the deduction of interest on receivables, exclusion of cylinder maintenance charges, recomputation of excise duty, and reassessment of penalties. The appeals were disposed of accordingly.