Gas cylinder supply charges not part of assessable value; duty, interest, and penalty demand could not survive.

Charges for supplying gas-filled cylinders to customers' premises were not includible in the assessable value of industrial oxygen gas because the supply or rental of cylinders was not incidental to manufacture. The valuation issue had already been settled in the assessee's own case by a coordinate Bench, following Supreme Court authority, and the same principle applied to facility charges for cylinders mounted on trailers and consumed at the customer's premises. As the charges were excluded from assessable value, the consequential demand of duty, interest, and penalty could not survive, and the impugned order was set aside.

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Issues: Whether the facility charges collected for supplying gas-filled cylinders at the customers' premises were includible in the assessable value of industrial oxygen gas, and whether the consequential demand of duty, interest, and penalty could survive.

Analysis: The valuation question was already settled by a coordinate Bench in the assessee's own case, following the Supreme Court's ruling that the supply or rental of gas cylinders by a gas manufacturer is not incidental to manufacture and that such rental is not includible in the assessable value of the gas. The same reasoning governed the present dispute over facility charges collected for the mode of supply where cylinders mounted on trailers were taken to the customers' premises and consumed there.

Conclusion: The facility charges were not includible in the assessable value of the gas, and the demand of duty, interest, and penalty could not stand.

Final Conclusion: The appeal succeeded and the impugned order was set aside in full.

Ratio Decidendi: Charges for supply or rental of gas cylinders that are not incidental to manufacture cannot be added to the assessable value of the gas for central excise valuation.

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