1999 (11) TMI 96 - AT - Central Excise

Tribunal rules rent on containers not part of aerated water duty calculation

The Tribunal upheld the Commissioner's decision in a Central Excise case, ruling that rent on containers and external payments should not be included in ... Valuation (Central Excise) - Demand - Limitation Issues:1. Inclusion of rent on containers and amount received from another company in the assessable value of aerated water for Central Excise duty calculation.2. Valuation of goods under Rule 5 of the Valuation Rules for Central Excise.Analysis:1. The first issue in the judgment revolved around whether the rent on containers (ROC) and the amount received from another company should be included in the assessable value of aerated water for Central Excise duty calculation. The Central Excise authorities contended that both the ROC and the amount received were part of the price of the aerated water and should be added to the wholesale dealer price to determine the assessable value. The respondents argued that ROC was charged only from a few wholesale buyers and was not related to the value of the beverages. They also maintained that the amount received from the other company was immaterial to the wholesale price as the sale was on a principal-to-principal basis. The Commissioner accepted the respondents' submissions and dropped the duty demand. The Revenue appealed, claiming that the exclusion of ROC and the amount received led to undervaluation of the goods. The Tribunal upheld the Commissioner's decision, citing legal precedents and industry practices to support their ruling.2. The second issue involved the application of Rule 5 of the Central Excise (Valuation) Rules for determining the value of goods. The Rule specifies that any additional consideration flowing directly or indirectly from the buyer to the assessee should be added to the price if the price is not the sole consideration for the sale. The Revenue contended that the Commissioner erred in not adding the amount received from the other company to the assessable value. The respondents argued that the price was the sole consideration for the sale, and Rule 5 did not apply in this case as the other company was not a buyer of the beverages. The Tribunal agreed with the respondents, stating that Rule 5 only applies when additional consideration flows from the buyer to the assessee. The Tribunal dismissed the Revenue's appeal, emphasizing the clear provisions of Rule 5 and the correct interpretation of the statute by the Commissioner.In conclusion, the judgment addressed the issues of including rent on containers and external payments in the assessable value of goods for Central Excise duty calculation, as well as the application of Rule 5 for valuation of goods. The Tribunal upheld the Commissioner's decision, emphasizing legal precedents, industry practices, and the clear provisions of Rule 5 in their rulings.