2009 (8) TMI 598 - AT - Central Excise

Tribunal Rules Hire Charges Not Assessable: Lack of Evidence on Buyer Consideration

The Tribunal overturned the decision of the Commissioner (Appeals) and ruled that hire charges paid by the owner of specialized tankers to the appellant ... Valuation- The appellants are the manufacturers of Calcium Hypo Chlorite, Ch Sulphonic Acid (CSA). Hydrochloric Acid (Hcl). Sulphuric Acid, Olium and Other allied chemicals falling under Chapter numbers 28 and 29 of the Central Excise Tariff Act 1985. They are clearing some of their products through tankers to their buyers. They are having specialized tankers essential for transport of their goods like. The Deputy Commissioner, has demanded duty on rental charges of tankers treating them as packing material. The duty so demanded was Rs. 1,10,781/- with interest under section 11A and also imposed penalty. The adjudicating authority confirmed the demand. Held that- the definition of the transaction value, it can be seen that the transaction value should include only an amount which is received directly or indirectly from the buyers of the appellant or if it is paid on behalf of the appellant. There is no evidence on record to show that the hire charges which are collected from the transporters are paid on behalf of the consignee or paid by the buyer to appellant. We find that the issue is now squarely covered by the decisions of CCE v. Indian Oxygen Ltd. Accordingly we find that the impugned order-in-appeal is unsustainable and the same is liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any Issues:Inclusion of hire charges in the transaction value for duty calculation.Analysis:The case involved a dispute regarding the inclusion of hire charges paid by the owner of specialized tankers to the appellant in the transaction value for duty calculation. The appellant, a manufacturer of various chemicals, provided specialized tankers to transporters on a rental basis for the clearance of goods. The central issue was whether these hire charges should be considered as part of the assessable value for duty calculation. The authorities contended that the hire charges were an indirect consideration received from the buyer and should be included in the assessable value. However, the appellant argued that the hire charges were for the rental of specialized tankers and not directly related to the sale of goods. The appellant relied on legal precedents, including decisions of the Hon'ble Supreme Court and various Tribunal cases, to support their position.The Commissioner (Appeals) upheld the inclusion of hire charges in the assessable value, considering them as indirect consideration received from the buyer in connection with the sale of goods. The Commissioner emphasized that the tanks provided by the appellant were essential for transporting hazardous/corrosive materials and were treated as packing material. Additionally, it was noted that the hire charges were collected in addition to the sale of goods, indirectly from the transporter. The Commissioner also highlighted that the tanks were specially made by the appellant for the convenience of transporting goods, as other tanks were not suitable for the purpose. The Commissioner concluded that the rental charges collected from the transporters should be included in the assessable value for duty calculation.Upon review, the Tribunal found that there was no concrete evidence or record to support the presumption that the hire charges were an indirect consideration received from the buyers. The Tribunal observed that the order-in-appeal was based on presumptions and surmises, lacking factual substantiation. Referring to the definition of transaction value under Section 4(3)(d) of the Central Excise Act, the Tribunal noted that the hire charges should only be included if they were received directly or indirectly from the buyers of the appellant or paid on behalf of the appellant. As there was no evidence to establish this connection, the Tribunal held that the hire charges should not be included in the assessable value for duty calculation. Relying on legal precedents cited by the appellant, the Tribunal set aside the impugned order-in-appeal and allowed the appeal with consequential relief, if any.