1986 (3) TMI 202 - AT - Central Excise

Summary

Issues:
1. Inclusion of maintenance and service charges in the assessable value.
2. Exclusion of rental charges from the assessable value.
3. Claim for deduction under Section 4(4)(d)(i) on the cost of packing.
4. Allegation of recovery exceeding the actual cost of packing.

Analysis:

Issue 1: Inclusion of maintenance and service charges
The respondents supplied Chlorine in durable and returnable containers, claiming deductions for packing charges. The Asstt. Collector held that maintenance and service charges were includible in the assessable value based on the Supreme Court's clarification in Bombay Tyre International case. However, the Collector (Appeals) allowed the appeals, stating that expenses towards replacement of parts should be excluded under Section 4(4)(d). The Department contended that the expenses represented maintenance charges, and the recovery would exceed the cost of packing.

Issue 2: Exclusion of rental charges
The Department argued that rental charges should not be excluded from the assessable value, claiming that recovery would exceed the cost of packing. The respondents explained that retention charges were for delayed returns, not related to manufacturing. The Appellate Tribunal relied on the Premier Oxygen case, holding that such charges are not part of the manufacturing cost.

Issue 3: Claim for deduction under Section 4(4)(d)(i)
The respondents justified their spread-over recovery of packing costs, claiming it was equalized recovery. The Tribunal agreed that the deduction under Section 4(4)(d)(i) was permissible as the packing was durable and returnable. The Department's allegation of excessive recovery was dismissed due to lack of evidence.

Issue 4: Allegation of recovery exceeding actual cost
The Department failed to prove that the respondents were making further deductions on the cost of packing. The Tribunal found no evidence of recovery exceeding the actual cost of packing containers. The Collector of Central Excise's orders were upheld, dismissing the appeals.

In conclusion, the Tribunal dismissed the appeals, ruling in favor of the respondents regarding the exclusion of maintenance, service, and rental charges from the assessable value. The deductions claimed under Section 4(4)(d)(i) were deemed permissible, and the Department's allegations of excessive recovery were not substantiated.