2017 (11) TMI 1378 - AT - Central Excise

CESTAT Chennai: Gas Tanker /= Packing Material, Valuation Ruling

The Appellate Tribunal CESTAT Chennai ruled that the gas tanker mounted on a lorry cannot be considered packing material, and the valuation of gases ... Valuation - includibility - freight element for the transportation of gases - Held that: - though the appellant claimed that for later period they were adopting weighted average, the ld. counsel admitted that this can be subjected to verification and on production of support evidence, abatement as eligible as per the valuation provisions can be allowed to them. We direct that such verification can be done by the jurisdictional authorities. Valuation - whether the tanker on the lorries to be treated as packing material? - Held that: - The gas tanker mounted on the lorry is part of a transport vehicle and cannot be considered as a packing material. The same is neither factually or legally tenable. Validity of SCN - time limitation - Held that: - earlier two show cause notices were issued for finalization of provisional assessment on the same issue. Accordingly, the third notice cannot be issued invoking extended period - the third notice will be restricted to the demand period within normal period of limitation, if any. Appeal allowed in part. Issues: Valuation of carbon-di-oxide; Treatment of lorry containers as packing materialIn this judgment by the Appellate Tribunal CESTAT Chennai, the primary issue revolves around the valuation of carbon-di-oxide manufactured and cleared by the appellants, specifically concerning the inclusion of the freight element for gas transportation. The second issue pertains to the classification of lorry containers used for gas transportation as packing material. The appellant, represented by Shri S. Muthuvenkataraman, argued that the lower authorities delved into unagitated issues from the show cause notice. The appellant initially claimed abatement of transportation charges based on actual distances, later shifting to a weighted average method, which was disputed by the Revenue due to wide variations in claimed distances. The Tribunal found that the lower authorities erred in treating the tanker lorries as packing material and adding the claimed depreciation value for duty purposes. The Tribunal ruled that the gas tanker mounted on the lorry is part of the transport vehicle and cannot be considered packing material. The judgment highlighted that the valuation of gases transported in smaller cylinders should adhere to the proposal made by the department. The Tribunal directed the verification of abatement eligibility based on supporting evidence for the weighted average transportation charges claimed by the appellant. Additionally, the Tribunal deemed the third show cause notice invoking an extended period as invalid, limiting it to the normal period of limitation. Consequently, the appeals were partly allowed, except for the valuation of gases in smaller cylinders and the determination of freight based on actual or weighted average evidence.