2003 (12) TMI 101 - AT - Central Excise

Valuation (Central Excise) - manufacture of liquid chlorine - inclusion of packing charges in assessable value post amendment to Section 4 - HELD THAT - The ratio of the decision in CCE v. Indian Oxygen 1988 (8) TMI 98 - SUPREME COURT , would still be applicable in spite of the amendment brought to Section 4(1)(a). When we examine the decision, we find that the Supreme Court has treated the supply of the gases and the supply of the cylinders as two separate transactions. Transactions in the present case are identical in nature. If that be so, the supply of chlorine and supply of tonners are to be treated as two separate transactions. Once these transactions are treated as separate, it cannot be contended that the rental paid by the buyer is an amount which he is liable to pay by reason of, or in connection with the sale. Admittedly, sale is only that of chlorine. The tonner in which it is supplied is durable and returnable packing. We cannot, therefore, agree with the Commissioner that the rental paid by the buyer to the appellant in respect of the tonners has to be treated as part of the transaction value. In the present case, there is no allegation or finding that the buyers of the goods are related and that delivery was not at the time and place of removal and price is not the sole consideration for sale. If that be so, there is no scope for taking recourse to Valuation Rules. A similar view has been taken by us on the scope of amended Section 4(1) in Filament India and Ors. v. CCE, 2003 (6) TMI 110 - CESTAT, NEW DELHI . Thus, there is no merit in the Revenue seeking to rely on clarification issued by the Board under Circular No. 354/81/2000-TRU, dated 30-6-2000 in the context of introduction of new section for valuation w.e.f. 1-7-2000. In the result, we set aside the order impugned and allow the appeal.

Summary

Issues involved: Appeal challenging order u/s 11A of Central Excise Act, 1944 and penalty u/r 25 of Central Excise Rules, 2001 regarding inclusion of packing charges in assessable value post amendment to Section 4.

Summary:
The appeal was against an order imposing a penalty under Rule 25 of the Central Excise Rules, 2001, based on the inclusion of packing charges in the assessable value of liquid chlorine. The appellant contended that the amendment to Section 4 of the Central Excise Act did not change the legal position regarding assessable value calculation. The Commissioner disagreed and upheld the demand, leading to the appeal.

The appellant argued that the legal position established by the Supreme Court in previous cases should still apply, emphasizing the distinction between the supply of gases and the supply of cylinders. The Revenue contended that the introduction of 'transaction value' in Section 4(1)(a) post-amendment rendered the previous Supreme Court decisions inapplicable. However, the Tribunal found merit in the appellant's argument, maintaining that the supply of chlorine and tonners should be treated as separate transactions.

Regarding the application of Rule 6 of the Central Excise Rules, 2000, the appellant asserted that it was unnecessary in this case. The Tribunal concurred, highlighting that under Section 4, recourse to Valuation Rules is only required when the conditions under Clause (a) are not met. As the buyers were unrelated, and price was the sole consideration for sale, Valuation Rules were deemed unnecessary.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the Revenue's reliance on a circular in the context of the new valuation section was unfounded in light of the legal position established.