Gas Transportation Charges Exempt from Service Tax under Central Excise - Precedents Upheld

The Tribunal held that fixed facility charges recovered from customers for gas transportation through pipelines were not liable to service tax. It was determined that these charges should be included in the transaction value for Central Excise duty, based on precedents and clarifications from the CBEC. The appeal was allowed in favor of the appellant, setting aside the demand for service tax on fixed facility charges.

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Issues:
- Whether fixed facility charges recovered from customers are liable to service tax under the category of "transport of goods through pipe lines or other conduit"Rs.
- Whether the fixed facility charges are includible in the assessable value for payment of Central Excise duty or service taxRs.

Analysis:
1. Issue 1 - Liability of Service Tax on Fixed Facility Charges:
The case involved a dispute regarding the liability of service tax on fixed facility charges recovered from customers for the transportation of gases through pipe lines. The Department contended that these charges constituted consideration for the service of gas transportation and were thus liable to service tax under the relevant category. The appellant, on the other hand, argued that they had already discharged service tax under the category of "transportation of gas pipe lines" for the gas supplied within the premises of the customers. Additionally, they highlighted that the Central Excise duty was paid on the value of gas supplied up to the point of removal, including a portion of the facility charges. The appellant also referred to a similar dispute decided by the Delhi Bench of the Tribunal, which held that no service tax was payable once the facility charges were included in the assessable value for Central Excise duty payment.

2. Issue 2 - Inclusion of Fixed Facility Charges in Assessable Value:
The Tribunal examined whether the fixed facility charges should be included in the assessable value for the payment of Central Excise duty or service tax. The appellant argued that all expenses, including a portion of the facility charges up to the delivery point (boundary wall), were already included in the assessable value for payment of service tax. They cited a clarification from the CBEC and a letter from the Commissioner of Central Excise, Bhubaneswar, which stated that fixed facility charges were part of the transaction value for Central Excise duty. The Tribunal, relying on a similar case involving M/s Inox Air Products Ltd., Bombay, concluded that the fixed facility charges should form part of the transaction value for Central Excise duty, thereby setting aside the demand for service tax on these charges.

3. Conclusion:
Based on the arguments presented and the precedents cited, the Tribunal held that there was no justification for the demand of service tax on the fixed facility charges recovered from customers for the transportation of gases through pipe lines. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The decision was influenced by the clarification provided by the CBEC and the consistent interpretation of including fixed facility charges in the transaction value for Central Excise duty payment.

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