2000 (3) TMI 425 - AT - Central Excise

Summary

Issues:
Assessable value inclusion of charges by employees at factory gate, mutuality of interest between subsidiary and holding company, hiring charges and security deposit, returnable containers' costs, transport charges in assessable value.

Assessable Value Inclusion of Charges:
The appeal challenged the order-in-original regarding the inclusion of charges in the assessable value of excisable goods collected by employees at the factory gate. The appellants argued that since the charges were invoiced by a separate company and the amounts went directly to them, there was no nexus with the appellants' goods. The tribunal agreed, emphasizing the lack of evidence that the amounts collected reached the appellants directly, and the absence of a clear mutuality of interests between the subsidiary and holding company.

Mutuality of Interest:
The tribunal analyzed the relationship between the appellants, a subsidiary, and the holding company, Spencer & Co. Ltd., in terms of profits and losses. It was noted that the order failed to demonstrate any flowback of profits from the holding company to the appellants, despite the appellants experiencing significant losses. The concept of mutuality of interest required proof of such profit flowback, which was absent in this case, leading to the dismissal of the department's argument for undervaluation based on this relationship.

Hiring Charges and Security Deposit:
Regarding hiring charges for bottles and security deposits, the tribunal highlighted that the agreements between buyers and Spencer & Co. Ltd. were on a principal-to-principal basis and did not legally involve the appellants. The costs associated with returnable containers, such as glass bottles, were considered separately as durable and not to be included in the assessable value of goods sold conditionally with the containers provided by buyers.

Transport Charges in Assessable Value:
The issue of transport charges was addressed concerning the sale of goods on an FOB ex-factory gate basis, where the appellants did not provide transport facilities to buyers. Consequently, the question of including transport charges in the assessable value did not arise, as the goods were sold at the factory gate without transport costs.

Conclusion:
Ultimately, the tribunal set aside the impugned order, allowing the appeal on its merits due to the lack of evidence establishing a connection between the charges collected at the factory gate and the assessable value of the goods. The decision emphasized the legal separation between the appellants and the holding company, the absence of profit flowback, and the distinct nature of agreements related to hiring charges, security deposits, and returnable containers, leading to the dismissal of the department's claims.