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TMI Blog1992 (5) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... service charges at the particular rate. The Supdt. issued a show cause notice dated 26-3-1985 and the Assistant Collector issued another show cause notice on 26th August, 1987 proposing to add the rental charges and the service charges realised by the appellants to the assessable value. On receipt of the reply the Assistant Collector added to the assessable value, the said charges. On appeal the Collector confirmed the order of the Assistant Collector. Hence the appeals before us. 5. The appellants relying on the judgments of Supreme Court in CCE v. Indian Oxygen Ltd. [1988 (36) E.L.T. page 730 (SC)] and the order of this Tribunal in Aqueous Victuals Pvt. Ltd. v. CCE [1988 (38) E.L.T. page 42] submitted that the rental charges for the crates are not includible in the assessable value as such charges are not directly relatable to the cost of manufacture. 6. As regards the service charges, he submitted, that the service relates to unloading, sorting out the branded bottles, separating the broken bottles, before the bottles are sent to automatic bottle washing plant. Towards this service Rs. 3/- is charged. He also contended relying on the order of this Tribunal in CCE v. Century ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(4)(d). It is also not in dispute that the excise duty is leviable on the aerated waters as duty under the Excise Act is on the manufacture of aerated waters. Therefore, when the cost of durable and returnable containers is not includible in the assessable value it is not clear how the cost incurred on account of maintenance of these bottles is includible. To the same effect is the order of this Tribunal in CCE v. Century Spg. Mfg. Co. Ltd. [1988 (37) E.L.T. 277] wherein it was held that once the department accepts that the containers in the present case were durable and returnable and for that reason, their cost was deductible from the assessable value the cost has to be full cost of packing which should take not only the initial purchase price of the container but also the further expenses on its manufacture and repairs." 11. In the instant case the service charges claimed relate to sorting out branded bottles, separating the broken bottles before the bottles are sent to automatic bottle washing plant. These activities do not relate to the manufacture of aerated waters which are the subject matter of excise duty. Secondly, in view of Section 4(4) (d) the entire cost re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried out in the factory and by the manufacturers themselves as it is for them to ensure that the bottles which are taken in are rendered fit for bottling and in respect of this work the cleaning etc has to be done under the supervision of the staff of the manufacturing Unit. The question therefore that arises is whether the cost of this operation could be considered as attributable to the cost of manufacturing of aerated water etc. or not. It may be mentioned that even when new bottles are brought into the factory, the appellants staff has to inspect the same and also the same are required to be cleaned before these could be taken for manufacturing purposes. For this reason, it has to be held that preparatory operations of this nature have to be considered a part of manufacturing process of the appellants product. That the operations are carried out outside the premises of the appellants factory does not really make much of a difference. The appellants are recovering the expenses of the said operations from the buyers and once it is held that this operation of cleaning etc is preparatory to the manufacturing process and the cost of the same has to be reckoned towards the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Learned Technical Member, on the other hand, has observed as follows :- I observe that a distinction has to be made between the capital cost incurred on the cylinders for maintenance and repair and cleaning and sorting of bottles which are in the nature of operations preparatory to the manufacture of aerated or bottled drinks. In the nature of things this operation has to be carried out in the factory and by the manufacturers themselves as it is for them to ensure that the bottles which are taken in are rendered fit for bottling and in respect of this work the cleaning etc. has to be done under the supervision of the staff of the manufacturing Unit. The question, therefore that arises is whether the cost of this operation could be considered as attributable to the cost of manufacturing of aerated water or not. It may be mentioned that even when new bottles are brought into the factory, the appellants staff has to inspect the same and also the same are required to be cleaned before these could be taken for manufacturing purposes. For this reason, it has to be held that preparatory operations of this nature have to be considered a part of manufacturing process of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove. He relies on 1991 (52) E.L.T. 455 [Jabalpur Oxygen Co. v. CCE]. 22. Shri Dev, learned consultant in his rejoinder urges that Jabalpur Oxygen s case does not apply because the activity of unloading and stocking therein occurred in the factory whereas the activities here have taken place outside the factory. 23. I have carefully considered the pleas advanced on both sides and have also gone through the available record. The short question before me for decision is whether the activities taken in respect of old bottles, namely sorting out the old empty bottles brandwise, separating the defective ones, cleaning them, loading them into the trolleys and placing them into the conveyor to automatic washing plant which would constitute manufacturing activities for the excisable goods food product falling under TI 1-B. If these are to be treated as activities essential for manufacturing of the excisable goods then cost incurred in respect of them would form part of the value of the excisable goods because excise duty is relatable to manufacture of the excisable goods. On the other hand, if these activities do not relate to the manufacturing activities of the excisable product in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no indication in those judgments that duty was leviable on gases in cylinders. It was simply leviable on gases as such. It had, therefore, been held by the Apex Court in Indian Oxygen Ltd., mentioned supra, that any activity required for maintenance of the cylinders is merely an activity ancillary to the manufacture of the excisable goods. Therefore, the Supreme Court ruled that the expenses collected by the assessee on any such ancillary activity would not form part of the assessable value of the goods i.e. gases. In the instant case, however, the position, as mentioned above, is different. Excisable goods are prepared or preserved foods ordinarily intended for sale in unit containers; the unit containers, therefore, form part of the value of the excisable goods. Unit containers, however, are durable and returnable containers in the process of distribution of the excisable goods adopted by the assessee. Section 4(4)(d)(i) includes the cost of packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation 4(4)(d)(i) defines packing as meaning the wrapper, container, bobbin, pirn, spool, reel or warp, beam or any other thing in which or on which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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