1996 (9) TMI 331 - AT - Central Excise

Summary

Issues:
1. Assessment of additional charges collected by the appellants not disclosed in the price list.
2. Calculation of demand based on various items.
3. Inclusion of hire charges for transportation in the assessable value.
4. Inclusion of interest on deposit in the assessable value.
5. Inclusion of hire charges for bottles and crates in the assessable value.
6. Inclusion of service charges in the assessable value.

Analysis:
The case involves the appellants manufacturing aerated waters and selling them through a network of dealers. The Departmental Officers discovered that additional charges were collected by the appellants from wholesale dealers, not disclosed in the approved price list. A show cause notice was issued, alleging a duty differential of Rs. 16,54,137.52, later confirmed by the Collector at Rs. 15,73,132.17, along with penalties and confiscation of plant and machinery. The appeal challenges this order.

The first issue concerns hire charges for transportation collected by the appellants from dealers. The Collector included these charges in the assessable value, citing transportation costs of empty and filled bottles. However, the Tribunal held, following precedent, that such charges were not related to manufacturing and should be excluded from the assessable value, leading to the duty liability on this count being unsustainable.

The second issue involves interest collected on deposits for crates, with the Collector including the difference in interest rates in the assessable value. The appellants argued that the interest was not includible, citing a Supreme Court judgment, which the Tribunal agreed with, holding that the duty confirmed on this count was not sustainable.

The third issue pertains to hire charges for bottles and crates supplied by the appellants to dealers. The Collector included these charges in the assessable value, but the Tribunal, following a Supreme Court judgment, held that such charges were not related to manufacturing and should be excluded, deeming the confirmation on this count unsustainable.

The final issue concerns service charges levied for transportation of filled bottles. The appellants argued that these charges were deductible, while the Revenue claimed they included costs for advertising and sales promotion. The Tribunal remitted this issue back to the Collector for detailed examination, as the contents of dealers' statements were not available, emphasizing the need for a thorough review.

In conclusion, the Tribunal held that interest on deposits and hire charges for bottles and crates were not includible in the assessable value. Charges for transportation of bottles were also excluded. The case was remanded to the Collector for further examination of service charges, with the order of confiscation of plant and machinery set aside pending the outcome of the reassessment. The Collector was directed to redetermine any penalty based on the findings of the reassessment.