2023 (10) TMI 523 - AT - Central Excise

Payment of duty on facility charges recovered from other customers claiming that the agreements are different - HELD THAT - The issue is no more res integra and the issue is covered by the judgment of this Tribunal in the case BOC India Ltd. 2018 (3) TMI 854 - CESTAT NEW DELHI . This Tribunal after taking note of the Board Circular dated 10.11.2014 and 24.4.2014 held that The appellants are engaged in manufacture supply of gases liable to Central Excise duty. They have put up storage facilities inside the clients premises to store such gases for subsequent consumption. For such activity, they are collecting fixed facility charges apart from the sale consideration for the gas. Admittedly, the clarification dated 10-11-2014 issued by the Board on similar set of facts, as well as, the clarification dated 24-4-2014 issued in respect of appellant s unit in Orissa are applicable to the present dispute. There are no reason not to follow the aforesaid judgment of this Tribunal. Hence, the facility charges, escalation charges, etc., collected from all customers are includable in the value of gases sold/supplied to their customers. However, in the facts and circumstances of the case, there are no reason to confirm the penalty imposed on the appellant - the impugned order is modified to the extent of setting aside the penalty of Rs. 5,00,000/- under Rule 25 of the Central Excise Rules, 2002 and duty amount confirmed along with interest is upheld. Appeal disposed off.

Summary

Issues:
The appeal involves the issue of inclusion of facility charges recovered from customers by the appellant during the relevant period of November 2006 to October 2007.

Facts:
The appellant, a manufacturer of Industrial gases, entered into agreements with customers for the manufacture and supply of gases. A show-cause notice was issued alleging that facility charges collected should be included in the assessable value of the gases. The demand was reduced on adjudication, and a penalty was imposed. The appellant contested the duty on facility charges and escalation charges related to agreements with customers other than M/s. Tata Steel Ltd.

Contentions:
The appellant submitted that the demand related to clearances to M/s. Tata Steel Ltd. had been paid and was not contested. However, they contested the duty on facility charges and escalation charges for clearances made to other customers due to differences in agreements. The Revenue argued that facility charges should be included in the assessable value of the gases based on previous Tribunal decisions and Board Circulars.

Decision:
The Tribunal found that the issue revolved around the inclusion of facility charges in the value of gases sold to customers. The appellant did not provide agreements with other customers despite multiple opportunities. Relying on previous judgments and Board Circulars, the Tribunal upheld the inclusion of facility charges in the value of gases sold to all customers. The penalty imposed was set aside, but the duty amount confirmed with interest was upheld. The appeal was disposed of accordingly.