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Issues: (i) Whether charges recovered for hydraulic testing, repair and maintenance of cylinders formed part of the assessable value of chlorine cleared through cylinders; (ii) whether rental charges for cylinders retained beyond the free period were includible in the assessable value.
Issue (i): Whether charges recovered for hydraulic testing, repair and maintenance of cylinders formed part of the assessable value of chlorine cleared through cylinders.
Analysis: The Explosive licence permitted periodic testing of cylinders in the manner prescribed before clearance of chlorine, and the assessee was also carrying out such activities for others as a commercial service. The activity was separately subjected to service tax under the Finance Act, 1994. On these facts, the testing, repair and maintenance charges were not shown to be a regular pre-clearance activity integrally connected with the sale of chlorine.
Conclusion: The charges for testing, repair and maintenance of cylinders did not form part of the assessable value and the finding was in favour of the assessee.
Issue (ii): Whether rental charges for cylinders retained beyond the free period were includible in the assessable value.
Analysis: The rental was collected only for the period beyond the agreed free period and had no direct connection with the sale of the goods. The issue was covered by the Tribunal's earlier view referred to in the order, and no contrary basis was shown to include such rental in valuation.
Conclusion: The rental charges beyond the free period were not includible in the assessable value and the finding was in favour of the assessee.
Final Conclusion: The revenue's challenge to inclusion of both sets of charges failed, and the assessment-related valuation dispute was decided against the revenue.
Ratio Decidendi: Charges are not includible in assessable value where they relate to a separately permitted and separately taxed service or to post-sale rental unconnected with the sale of goods.
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