2001 (7) TMI 441 - AT - Central Excise

Summary

Issues:
1. Inclusion of bank charges in the assessable value of water tankers
2. Inclusion of transportation cost in the assessable value of water tankers

Analysis:

Issue 1: Inclusion of Bank Charges
The appellants were contesting the demand of duty imposed on them, arguing against the inclusion of bank charges in the assessable value of water tankers. The contention was that the bank charges paid for securing a bank guarantee for the safe return of chassis to the manufacturer were not related to their manufacturing activities and should not be considered in the assessable value. The Tribunal agreed with the appellants, emphasizing that such bank charges had no nexus with the manufacturing process. Referring to legal precedents and the explanation in Notification No. 4/97, the Tribunal concluded that the bank charges were not includible in the assessable value of the water tankers. Therefore, the demand of duty based on bank charges was not justified, and the appeal was allowed in favor of the appellants.

Issue 2: Inclusion of Transportation Cost
Another issue raised in the appeal was the inclusion of transportation cost in the assessable value of water tankers. The appellants argued that the transportation cost incurred for delivering duty-paid chassis to their factory gate should not be added to the assessable value of the water tankers manufactured on those chassis. Citing legal precedents such as the Supreme Court's decision in Indian Oxygen Ltd. v. Collector of Central Excise and the Tribunal's decision in Herbertsons Ltd. v. Commr. of Central Excise, the Tribunal agreed with the appellants. The Tribunal noted that the transportation cost of the chassis was directly related to the value of the chassis itself, which was not to be considered for determining the value of water tankers as per the explanation in the relevant notification. Therefore, the Tribunal held that there was no justification for including the transportation cost in the assessable value of water tankers. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants on both issues, rejecting the inclusion of bank charges and transportation cost in the assessable value of water tankers. The judgment provided a detailed analysis based on legal principles and precedents, ultimately leading to the decision to allow the appeal and provide relief to the appellants.