2004 (7) TMI 261 - AT - Central Excise

Summary

Issues:
1. Dispute over deductions claimed for Machine Hire Charges and Repair and Maintenance Charges of PMX machine.

Analysis:
The appeals involved common issues related to franchise bottlers of a company engaged in manufacturing aerated water and Post Mix Syrup Concentrate. Central Excise Officers suspected the creation of dummy units by the appellants and issued show cause notices for recovery of duty. The Commissioner's order upheld the charge that the dummy units were created but allowed deductions for certain charges while disallowing deductions for rental and repair charges of the PMX machine. The appellants challenged this order in appeal E/3931/03.

In another appeal E/1280-1286/04, the Commissioner confirmed demands of duty, interest, and penalties for various periods. The issue in dispute in all these appeals revolved around the permissibility of deductions claimed for Machine Hire Charges and Repair and Maintenance Charges of the PMX machine. The Commissioner disallowed these deductions stating that the PMX machine was an extension of the manufacturing activity. However, the Tribunal referred to a previous decision in the case of Pepsico India Holdings (P) Ltd. v. CCE, Mumbai, where it was held that lease charges on dispensing machines are not includible in the assessable value of syrup. The Tribunal further cited a Supreme Court decision to support this reasoning, allowing the deductions claimed by the appellants for repair and maintenance charges and rental charges of the PMX machine.

Based on the precedents and legal principles cited, the Tribunal held that the appellants were entitled to the deductions for repair and maintenance charges and rental charges of the PMX machine. The Tribunal set aside the Commissioner's order, allowing the appeals on the grounds of permissible deductions without delving into the issues of dummy units or the applicability of the extended period of limitation. The appeals were thus allowed, providing relief to the appellants regarding the disputed deductions.