1998 (6) TMI 202 - AT - Central Excise

Summary

Issues:
1. Inclusion of return freight charges in Assessable value
2. Demand for duty on tanks fabricated in the factory premises

Analysis:

Issue 1: Inclusion of return freight charges in Assessable value
The case involved two appeals with similar issues, heard together. In Appeal No. E/V/217/98, three issues were raised, including the inclusion of return freight charges in the Assessable value. The appellant argued that both outward and inward freight costs should be deductible from the Assessable Value. They contended that the freight charges were transparent, reflected in their financial records, and were not retained as profit. The appellant cited various case laws to support their argument. The Revenue, however, claimed that the return freight charges were not included in the freight calculation separately in some instances. The Tribunal observed that the excess payments to contractors far exceeded the excess receipts, indicating no profit from the transportation operation. The Tribunal held that the freight charges beyond the factory gate were deductible, as established by previous case laws. Consequently, the demand for duty on the excess amount recovered was deemed unjustified.

Issue 2: Demand for duty on tanks fabricated in the factory premises
The second issue pertained to the demand for duty on tanks fabricated in the factory premises. The Revenue argued that since the tanks were not captively used within the factory, they were not eligible for exemption. Additionally, the Revenue contended that the appellants did not own the chassis on which the tanks were mounted. The appellant countered by stating that the exemption applied to materials used in fabrication and mounting, not ownership. They referenced a relevant notification and a Supreme Court decision to support their position. The Tribunal analyzed the notification and concluded that it did not mandate captive use of the tanks. As the fabricated tanks were indeed mounted on motor vehicle chassis, the demand for duty was deemed invalid.

In conclusion, the Tribunal set aside the Orders-in-Original and allowed the appeals, providing consequential relief to the appellants based on the detailed analysis of the issues involved in the judgment.