1993 (8) TMI 213 - AT - Central Excise

Summary

Issues:
1. Whether the cost of loss of empty bottles during the return journey should be allowed as a deduction for computing duty.
2. Whether the transport cost for the return of empty bottles to the factory should be deducted from the assessable value.

Analysis:

Issue 1: Cost of loss of empty bottles
The Department appealed, arguing that the Collector (Appeals) erred in allowing the deduction for the loss of empty bottles during the return journey. The Senior Advocate for the Respondents contended that the High Court directed the assessing authority to consider deductions permissible under relevant judgments. Revised price lists were submitted, including deductions for loss of empty bottles. The Senior Advocate cited various court decisions, arguing that expenses on loss of empty bottles are ancillary and not part of the manufacturing activity. Referring to previous judgments, it was argued that such expenses are not directly related to the cost of manufacture and, therefore, should not be included in the assessable value for excise duty calculation.

Issue 2: Transport cost for return of empty bottles
The Senior Advocate further argued that the expenses incurred for transporting empty bottles back to the factory are ancillary or allied services and should not be included in the assessable value. Citing the Tribunal's decision in a similar case, it was contended that such transportation costs are not related to the manufacturing process. The Senior Advocate emphasized that the expenses for bringing back empty crates were held not includible in a previous Tribunal decision. It was argued that these expenses are not connected to the manufacture of products and should be excluded from the assessable value.

The Revenue representative argued that the Collector (Appeals) did not correctly apply the Tribunal's judgment in a specific case. Referring to legal provisions, it was contended that deductions should be examined in light of the relevant sections of the Central Excises & Salt Act. The representative emphasized that the law allows deductions for freight charges only from the place of removal to the place of delivery. Citing a previous Tribunal judgment, it was argued that loading and unloading charges are includible in the assessable value. However, the Tribunal concluded that the cost of breakages of empty glass bottles should not be included in the assessable value, as the cost of packing is not includible. Additionally, the expenses for transporting empty bottles from the buyer's premises to the factory were held to be excluded from the assessable value, aligning with a previous Tribunal decision.

In light of the above findings, the appeals were dismissed, and any consequential relief was deemed admissible to the Respondents in accordance with the law.