2009 (12) TMI 806 - AT - Central Excise

Including Rental Charges in Assessable Value for Excise Duty

COMMISSIONER OF C. EX., GHAZIABAD Versus MODI GAS & CHEMICALS LTD.

The appeal challenged the exclusion of rental charges for gas cylinders from the assessable value for excise duty purposes. The Tribunal held that ... - Issues Involved:1. Whether the rental charges for gas cylinders should be included in the assessable value for excise duty purposes.2. Applicability of the concept of 'transaction value' post 1st July 2000.Summary:Issue 1: Inclusion of Rental Charges in Assessable ValueThe appellants challenged the order dated 27th December 2004 by the Commissioner (Appeals), Gaziabad, which set aside the Original Authority's order confirming a duty demand of Rs. 69,650/- along with interest and penalty. The respondents, engaged in manufacturing Carbon Dioxide Gas, were asked to furnish details of cylinder rent and testing charges. Despite reminders, the respondents only provided cylinder rent details and stated they did not charge testing fees. A show cause notice was issued, and the Adjudicating Authority confirmed the demand. The Commissioner (Appeals) set aside this order based on precedents which the Departmental Representative argued were not applicable post-1st July 2000.Issue 2: Applicability of 'Transaction Value' Post 1st July 2000The Departmental Representative argued that the Commissioner (Appeals) erred by relying on decisions applicable to the period before 1st July 2000, ignoring the revised definition of 'transaction value' u/s 4 of the Central Excise Act, 1944. The Tribunal's Larger Bench in Commissioner of Central Excise, Mumbai-III v. Supreme Petrochem Ltd. clarified that post-1st July 2000, the assessable value must consider the transaction value, including any amount the buyer is liable to pay in connection with the sale. The rental charges for cylinders, being in connection with the sale, should be included in the assessable value. Rule 6 of the Central Excise Valuation Rules, 2000, and Circular No. 643/34/2002-CX., dated 1st July 2002, support this inclusion.The respondent's argument, based on earlier decisions, was rejected as those were applicable to the period before the amendment. The Tribunal noted that excluding such charges would effectively amend the definition of 'transaction value.' The Tribunal referred to the decision in Kota Oxygen (P) Ltd. v. Commissioner of Central Excise, Jaipur, which was upheld by the Supreme Court, confirming that rental charges should be included in the assessable value.Consequently, the appeal was allowed, the impugned order was set aside, and the order of the Adjudicating Authority was confirmed with consequential relief.