1990 (11) TMI 259 - AT - Central Excise

Summary

Issues Involved:
1. Addition of container hire charges and compensation for short lifting to the assessable value.
2. Denial of exemption u/s Notification 175/86.
3. Addition of transportation costs for returning empty bottles to the assessable value.

Summary:

Issue 1: Addition of Container Hire Charges and Compensation for Short Lifting to the Assessable Value
The appellants, a Private Limited company engaged in manufacturing aerated waters, recovered Rs. 5/- per crate as container hire charges from wholesale dealers due to delays in returning empty bottles and crates. Additionally, they received Rs. 4,35,176/- as compensation for short lifting the agreed quota of crates. The Collector added Rs. 3.15 and Rs. 3.65 per crate to the assessable value based on the difference between the actual hire charges and the cost of maintenance and depreciation of the crates. The Tribunal upheld the Collector's finding on container hire charges but disagreed with adding compensation for short lifting to the assessable value, citing it as income or profit for non-performance of the contract, not the price of the manufactured goods.

Issue 2: Denial of Exemption u/s Notification 175/86
The Collector denied the benefit of exemption Notification 175/86, arguing that clearances from both the appellants' factory and M/s. Vidharbha Beverages (P) Ltd. should be clubbed due to common financial interests and shared resources. The Tribunal found no sufficient evidence of financial flow back or common manufacturing activities between the two companies. It emphasized the independent legal identities of both companies and ruled that the clearances should not be clubbed, thus allowing the appellants to claim the exemption.

Issue 3: Addition of Transportation Costs for Returning Empty Bottles to the Assessable Value
The Collector added 80 paise per crate as transportation costs for returning empty bottles and crates from the dealers' premises to the appellants' factory to the assessable value. The Tribunal, agreeing with the appellants, held that these transportation costs are not related to the manufacture of the product and should be excluded from the assessable value.

Conclusion:
The Tribunal directed the Collector to redetermine the assessable value, excluding the compensation for short lifting and transportation costs, and to grant consequential relief. The penalties imposed were set aside, and the appeal was partly allowed.