1995 (8) TMI 189 - AT - Central Excise

Summary

Issues Involved
1. Deduction of post-manufacturing expenses from the declared value for excise duty purposes.
2. Admissibility of specific post-manufacturing expenses such as rent on containers, shell repairing, and breakages of empty bottles.
3. Relevance of cited Supreme Court and Tribunal decisions to the current case.

Detailed Analysis

Deduction of Post-Manufacturing Expenses
Agra Beverages Corporation Pvt. Ltd. (hereinafter referred to as "Agra Beverages") was engaged in the manufacture of aerated waters, which were subject to central excise duty based on value. They filed their price list under Section 4(1)(a) of the Central Excises and Salt Act, 1944, claiming a deduction of Rs. 2.68 per crate for post-manufacturing expenses, later increased to Rs. 3/- per crate. The Assistant Collector of Central Excise, Agra, rejected these deductions, and the Collector of Central Excise (Appeals) upheld this decision, citing the Supreme Court's ruling in Union of India v. Bombay Tyre International Ltd. (1983).

Admissibility of Specific Post-Manufacturing Expenses
Agra Beverages restricted their claim before the Collector of Central Excise (Appeals) to rent on containers, shell repairing, and breakages of empty bottles. They argued that these expenses should be excluded from the assessable value under Section 4(4)(d) of the Act. The Collector of Central Excise (Appeals) dismissed these claims, stating that such charges were part of the wholesale price and necessary for bringing the excisable goods into a marketable condition.

Rent on Containers
Agra Beverages claimed that the rent on containers was a compensation for the loss of interest on containers and the difference between the purchase price and deposit price on containers. The Tribunal found no merit in this claim, stating that interest on inventories could not be deducted from the value, as per the Supreme Court's decision in Govt. of India v. MRF Ltd. (1995).

Shell Repairing and Breakages of Empty Bottles
Agra Beverages argued that the cost of repairing wooden crates and losses due to breakages of empty bottles should not be included in the assessable value. The Tribunal rejected this argument, noting that these expenses were part of the manufacturing activities and necessary for the goods to enter the wholesale market. The Tribunal further stated that the wooden crates were carrier trays, not containers, and thus any expenditure on their repair was not excludible.

Relevance of Cited Supreme Court and Tribunal Decisions
Agra Beverages cited several Supreme Court and Tribunal decisions to support their case. However, the Tribunal found these cases to be materially different from the present case. For instance, in Indian Oxygen Ltd. v. Collector of Central Excise (1988), the matter related to delivery charges and collection of empty cylinders, which was not analogous to the current issue of repairing wooden crates and loss of interest on containers.

The Tribunal also distinguished the present case from other cited decisions, such as Collector of Central Excise, Indore v. Premier Oxygen and Acetylene Co. Pvt. Ltd. (1985), and AIMS Oxygen Pvt. Ltd., Baroda v. Collector of Central Excise (1988), which dealt with rental charges for gas cylinders and not with the repair of wooden crates or compensation on loss of interest on containers.

Conclusion
The Tribunal concluded that the various activities for which Agra Beverages sought deductions promoted the marketability of their goods and entered into its value in the trade. Therefore, these expenses could not be excluded from the assessable value. The appeal was rejected, and the order-in-appeal was confirmed.