1991 (2) TMI 221 - AT - Central Excise

Issues Involved:
1. Mis-declaration of turnover and exemption eligibility under Notification No. 148/82-CE.
2. Inclusion of transportation and handling charges in the assessable value.
3. Allowability of deductions for various expenses from the total sales value.

Issue-wise Detailed Analysis:

1. Mis-declaration of Turnover and Exemption Eligibility:
The appellants, manufacturers of aerated waters, filed classification lists for the financial years 1983-84 and 1984-85, claiming exemption under Notification No. 148/82-CE. The department alleged that the appellants mis-declared their turnover to avail the exemption, as the actual turnover exceeded the stipulated ceiling of Rs. 15 lakhs. The adjudicating authority confirmed the demand for duty and imposed penalties, asserting that the appellants' clearances were above the exemption limit.

2. Inclusion of Transportation and Handling Charges in the Assessable Value:
The department contended that the appellants collected transportation and handling charges higher than the actual amounts paid, leading to mis-declaration of the value of clearances. The appellants argued that these charges should not be included in the assessable value, citing an earlier order by the Assistant Collector which excluded such charges from the assessable value.

3. Allowability of Deductions for Various Expenses:
The appellants claimed deductions from their total sales for several expenses, including sales tax, central excise duty, maintenance and repair of vehicles, replacement of bottles and crates, delivery charges, and transportation charges payable to other agencies. The adjudicating authority allowed deductions for sales tax, central excise duty, and vehicle maintenance but disputed the deductions for replacement of bottles and crates, delivery charges, and transportation charges.

Detailed Analysis:

i. Replacement of Bottles and Crates:
The adjudicating authority denied the deduction for the cost of replacement and repair of bottles and crates, considering them durable and returnable assets, not part of the manufacturing cost. The appellants argued that these costs are perpetual and directly related to transportation. The Tribunal, relying on a previous decision, held that the cost of maintenance and repair of durable and returnable containers is deductible, as it forms part of the overall cost of packing.

ii. Delivery Charges:
The adjudicating authority found no evidence in the balance sheet for the expenses claimed under delivery charges and denied the deduction. The appellants contended that these charges were part of the transportation cost and shown under 'contract labour charges' in their accounts. The Tribunal, referencing the Supreme Court's decision, held that delivery charges, being part of transportation expenses, are deductible from the assessable value.

iii. Transportation Charges Payable to Other Agencies:
The adjudicating authority rejected the appellants' claim for transportation charges paid to other agencies, considering the supporting debit notes an afterthought. The appellants provided evidence of vehicle usage and gate passes correlating with the transportation of goods. The Tribunal accepted the appellants' argument, supported by the Supreme Court's judgment, that the liability for transportation charges is incurred when goods are transported, regardless of the payment timing. Thus, the deduction for transportation charges was allowed.

Conclusion:
The Tribunal concluded that the appellants' clearances did not exceed the stipulated limit of Rs. 15 lakhs for the relevant financial years, entitling them to the exemption under Notification No. 148/82-CE. Consequently, the appeals were allowed, and the demands for duty and penalties were set aside, providing consequential relief to the appellants.

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