1992 (5) TMI 124 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of rental charges for bottles and wooden crates in the assessable value.
2. Inclusion of service charges for sorting, cleaning, and unloading bottles in the assessable value.

Detailed Analysis:

1. Inclusion of Rental Charges for Bottles and Wooden Crates:
The appellants manufacture Maaza Mango, falling under Tariff Item 1-B, and have filed price lists for the years 1984-85 and 1987-88, which included rental charges for bottles and crates. The Assistant Collector and Collector confirmed that these charges should be added to the assessable value. The appellants contested this, citing the Supreme Court judgment in CCE v. Indian Oxygen Ltd. and the Tribunal's order in Aqueous Victuals Pvt. Ltd. v. CCE, arguing that rental charges for crates are not directly related to the cost of manufacture and thus should not be included.

The Tribunal agreed with the appellants, referencing the Supreme Court's position that rental charges are ancillary but not incidental to the manufacture of the goods. Therefore, the rental charges are not includible in the assessable value.

2. Inclusion of Service Charges for Sorting, Cleaning, and Unloading Bottles:
The appellants also charged service fees for activities such as unloading, sorting branded bottles, and separating broken bottles before sending them to the automatic bottle washing plant. They argued that these charges are similar to maintenance costs for durable, returnable containers and should be excluded from the assessable value, referencing the Tribunal's decision in CCE v. Century Spg. & Mfg. Co. Ltd.

The department, however, argued that these charges should be included as they pertain to the manufacturing process. The Tribunal initially found that these activities do not relate to the manufacture of aerated waters and should be excluded. However, upon further review, it was determined that these preparatory operations are part of the manufacturing process and thus must be included in the assessable value.

Separate Judgments:
- Member (Judicial): Held that service charges do not relate to the manufacture of aerated water and should be excluded from the assessable value.
- Member (Technical): Held that service charges are part of the manufacturing process and should be included in the assessable value.
- Third Member (Technical): Agreed with the Member (Technical), stating that the activities of sorting, cleaning, and unloading bottles are essential to the manufacturing process and must be included in the assessable value.

Final Order:
In view of the majority opinion, the service charges for sorting out branded bottles, separating broken bottles, and other related activities are considered part of the manufacturing process and are includable in the assessable value of aerated water. The appeal is remanded to the Assistant Collector to verify the actual rental charges and re-determine the assessable value of aerated water, deducting the rental charges from the price of the aerated water. The appeal is partly allowed and remanded.