C.Ex. - Valuation - Deduction of charges like retention charges and charges incurred for maintainance and services of the durable and returnable containers from the assessable value - Instructions regarding - Central Excise - 7/89-CX.1

C.Ex. - Valuation - Deduction of charges like retention charges and charges incurred for maintainance and services of the durable and returnable containers from the assessable value - Instructions regarding Circular No.7/89-CX.1 Dated 7-7-1989 [From F. No. 6/50/88-CX.1 ] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : C.Ex. - Valuation - Deduction of charges like retention charges and charges incurred for maintainance and services of the durable and returnable containers from the assessable value - Instructions regarding. I am directed ro refer to Board's Circular No. 2/88-CX.I, dated 2-2-1988 from F. No. 6/78/86-CX.1 and Circular issued from F. No. 6/73/79-CX.1, dated 10-5-1982 regarding inclusion of retention/rental charges and cost incurred on the maintenance and service charges of durable and returnable containers in the assessable value and to state that the matter has been reviewed in the light of subsequent judical pronouncements. Similar issues came up before the Tribunal in the case of M/s. Ramakrishna Oxygen Ltd. v. Collector of Central Excise, Coimbatore and before the Supreme Court in the case of Collector of Central Excise v. Indian Oxygen Ltd. In the case of M/s. Ramakrishna Oxygen Ltd. v. Collector of Central Excise, Coimbatore, the Tribunal in its order No. 584/88A, dated 28-12-1988 has held that the maintainance and service charges etc. in r/o durable returnable containers are not required to be included in the assessable value in terms of Section 4(4)(d)(i) of the Act when the value of the containers is not required to be included in terms of this Section. In case of Collector of Central Excise v. Indian Oxygen Ltd. the Supreme Court [1988 (36) E.L.T. 730 (S.C.)] has held that "Here the sale is of the gases. The levy is on the manufacture of gases and the excisable goods are these gases. It has to be borne in mind that the supply of gas cylinders is ancillary to the supply of gases but it is strictly not incidental thereto because there are classes of persons who can take delivery of these gases without supply of cylinders by the manufacturers and in those cases no question of charging rental could arise. Therefore, rental would be though ancillary but would not be the price for the manufacturer, and accordingly would not constitute part of the assessable value. Any income either in the shape of interest on deposit notional or real may be earned on the deposit for the safe return of cylinders would be though ancillary but would not be the price for the manufacture of gas; accordingly it would not constitute part of the assessable value. It is well settled that the levy under the Act, is on the manufacture. In the instant case the respondent are manufacturers of gas, which is subject to excise duty, but this gas is supplied in gas cylinder. The activity of supply of cylinders is not an activity of manufacturing of gas therefore anything charged for it would not be a price for manufacture of gas. These might be a profits or gains, if any, of any ancillary or allied venture. Therefore, as per the principles of Section 4(i)(a) these would be excluded while computing value of excisable goods." 2. The matter has further been examined in the Board and it is felt that in the case of durable and returnable containers, their value is not required to be included in the assessable value. So the question of including any maintainance and repair charges of such durable containers in the assessable value does not arise. The Board has accepted the Supreme Court decision and CEGAT decision supra. 3. In view of the above the two Board's Circulars, dated 2-2-1988 and 10-5-1982 cited above in para 1 may be treated as withdrawn and charges like the retention charges/rental and charges incurred for maintainance and service of the durable and returnable containers may not be included in the assessable value. 4. The field formations may be informed accordingly. 5. The receipt of this circular may please be acknowledged.