2000 (4) TMI 434 - AT - Central Excise

Summary

Issues:
1. Apportionment of value of glass bottles and plastic crates to the value of aerated water for assessable value calculation.

Analysis:
The judgment before the Appellate Tribunal CEGAT, New Delhi revolved around the issue of whether the value of glass bottles and plastic crates should be apportioned to the value of aerated water for the purpose of calculating the assessable value. The Appellant argued that since aerated water manufacturers claim 100% depreciation on glass bottles, the cost of these items should be included in the assessable value. The Respondent, on the other hand, contended that the depreciation is claimed for income tax purposes only, and industry practice indicates that glass bottles are used for an average of five years. The Respondent also cited a case where rental charges were not included in assessable value. The Tribunal noted that glass bottles and plastic crates are not sold with the aerated water, and industry practice suggests a lifespan of five years for these items. Consequently, the Tribunal held that a point of law arises regarding the apportionment of value based on the average lifespan of the bottles and crates. The Tribunal re-formulated the question to address this issue specifically.

In the detailed analysis, the Appellant's representative argued that the cost of glass bottles and plastic crates should be added to the value of aerated water due to the 100% depreciation claimed by manufacturers. The representative emphasized that since the depreciation covers the entire cost in one year, it should be proportionately added to the value of aerated water. On the other side, the Respondent's consultant contended that the depreciation claimed is for income tax purposes and that industry practice supports a five-year lifespan for glass bottles. The consultant also highlighted a previous case where rental charges were not considered in assessable value. The Tribunal considered these arguments and observed that glass bottles and plastic crates are reused in the industry for approximately five years, aligning with the depreciation value under the Companies Act. Consequently, the Tribunal found that a point of law arises regarding the apportionment of value based on the average lifespan of these items. As a result, the Tribunal allowed the Reference Application, emphasizing the need to re-formulate the question for consideration by the Hon'ble Allahabad High Court.

In conclusion, the judgment addressed the complex issue of apportioning the value of glass bottles and plastic crates to the value of aerated water for calculating the assessable value. The differing perspectives presented by the parties led to the Tribunal's decision to re-formulate the question to clarify the treatment of these items based on their average lifespan in the industry.