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2022 (8) TMI 493 - AT - Central ExciseValuation - transaction value under section 4 (1) (a) of the Central Excise Act, 1944 - collection of some charges in the name of the Cylinder Holding Charges CHC from its customers if the customers do not return the re-usable cylinders within a specified period - inclusion in the assessable value or not - HELD THAT - The appellant are not liable to pay central excise duty on the rental charges, as has been decided in its own case by the Tribunal in M/S LINDE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE 2018 (12) TMI 1954 - CESTAT NEW DELHI where it was held that similar issue came up before the Tribunal in the case of BOC INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I 2004 (1) TMI 246 - CESTAT, KOLKATA wherein it was held that the said charges are not, in any way, related to or connected with the sale of the Gases. As such, the same cannot be said to be includible in the definition of the transaction value‟, as is appearing in the provisions of Section 4(3)(d). Additional Consideration for sale or not - HELD THAT - The appellant is not charging CHC as a condition for sale of its gases. In fact, any customer can buy the gas without paying the CHC and return the cylinder within the time and in such a case no CHC will be payable by the customer to the appellant. If the customer delays returning the cylinder the appellant recovers CHC from the customer in the form of a penalty for delayed return of the cylinder. Central excise duty should be charged on the value of gas for delivery at time and place of removal i.e. at the factory gate. This price does not include the CHC. The CHC is charged only if, after delivery, the customer does not return the cylinder in time. Therefore, it cannot be called an additional consideration for sale but can only be a penalty for not returning the cylinder within time after the sale is completed. Thus, the CHC is not includable in the assessable value - appeal allowed - decided in favor of appellant.
Issues:
1. Appeal against order-in-Appeal dated 26.11.2019 upholding lower authority's decision. 2. Inclusion of Cylinder Holding Charges (CHC) in the value for calculating central excise duty. 3. Interpretation of Rule 6 of the Valuation (Determination of Price of Excisable Goods) Rules 2000. 4. Applicability of CBEC Circular No. 643/34/2002.EX dated 01.07.2002. 5. Previous Tribunal decision regarding rental charges for containers in connection with the sale of goods. 6. Determining whether CHC is an additional consideration for sale or a penalty for delayed return of cylinders. Analysis: 1. The appeal was filed against the order-in-Appeal upholding the lower authority's decision. The appellant, a gas manufacturer, did not include Cylinder Holding Charges (CHC) in the value for central excise duty calculation, leading to the dispute. 2. The Revenue argued that as per Rule 6 of the Valuation Rules, CHC collected by the appellant from customers must be added to the transaction value for excise duty calculation. They relied on CBEC Circular No. 643/34/2002.EX to support their stance. 3. The appellant contended that a previous Tribunal decision favored their position, citing that rental charges for containers were not includable in the assessable value of the final product. They argued that CHC was not an additional consideration for sale but a penalty for delayed cylinder return. 4. The Tribunal examined the facts and found that the appellant did not charge CHC as a condition for gas sale, and customers could buy gas without paying CHC. CHC was only collected if customers failed to return cylinders promptly, making it a penalty, not an additional consideration for sale. 5. Relying on the previous Tribunal decision, the Tribunal ruled that CHC should not be included in the assessable value for central excise duty calculation, as it was deemed a penalty for delayed cylinder return, not an additional consideration for sale. 6. Consequently, the Tribunal held that the impugned order was not sustainable, allowing the appeal and setting aside the order with consequential relief to the appellant, based on the interpretation of relevant rules and previous Tribunal decisions. [Pronounced in open court]
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