• 31ieirbm.44 (3rEftR .-v)terzr ocuicoi 2.1(Kt) * 60-11 2.10-4)

1411?.c4)Pc-4-) 141e-1, 3-ITTIVEaft,

— 380015.

tt sico

th-1-0 : File No : V2(28) 48 /Ahd-I/2013 (7(

311tc4T e-ksLii Order-In-Appeal No..AHM-EXCUS-001-APP-062-13-14

ft9t- Date : . 23.12.2013 ci -ffr-'41. Date of Issue -114 \ 0-15 $sfr 3TrOW FIR 311zi (31-0- -V) r T tf[f

Passed by Shri. Anil Kumar, Commissioner (Appeal-V)

Assistant Commissioner, Div.-III A'bad-I 3TikT MP/03/AC/DIV.IV/13-14 30/08/20133-)• cl

Arising out of Order-in-Original No.MP/03/AC/DIV.IV/13-14 Dated 30/08/2013 Issued by ASSISTANT COMMR., Central Excise, Div.-Ill Ahmedabad-I.. 3iilleict,o1 4 -114-r . Licil Name & Address of the Appellant / Respondent

AIMS INDUSTRIES Ahmedabad

arfr *fl 3.171rF3T1 T 3IT#Ff 3C1#4cn c11 nl c16 *fl 31Tk71 vf 724-0q-10- Td-rq. Tfam 3-Truwrt 3r6i)- TIT -s-9-trawr 3Trkq-# seicbeil t

Any person a aggrieved by this Order-In-Appeal may file an appeal or revision application, as the one may be against such order, to the appropriate authority in the following way :

\Lisect)IsZ TT 9aTur 314-<9. Revision application to Government of India :

(1) \30-11q.-1 3Tf4f4tr#, 1994 4 frI 131dci TaN 4 1" 411 1-1A 6,11 E1- \I .ThT C121# 34—d-FIT H9-&-T7 31T R9 3T cif' se-Ncrk,

f4-Trrr, tcr : 110001 cbst 4 w -4t (i) A revision application lies to the Under Secretary, to the Govt. of India, Revision Application Unit Ministry of Finance, Department of Revenue, 4 th Floor, Jeevan Deep Building, Parliament Street, New Delhi - 110 001 under Section 35EE of the CEA 1944 in respect of the following case, governed by first proviso to sub-section (1) of Section-35 ibid :

(ii) zrff ITI-F 4 TUFO- .44 \Jul T-ftt- cb I e e.q 1 f 1.1- F11R• TIT 3is-Qf # TIT 711:31-#R T=ft ITEWF[R 4-11c1 vl I c) § trr zfr W

cl->N51 ,$) Trr f -FrF 41Iei 4 qft-zu qlsets1 §4. t- 1 (ii) In case of any loss of goods where the loss occur in transit from a factory to a warehouse or to another factory or from one warehouse to another during the course of processing of the goods in a warehouse or in storage whether in a factory or in a warehouse.

(U) f7i7 ?Tr q---vr fe4nc-i Trr-6 ER TIT Trr- Trr- -cr7 4 ,-11#ff-a ft—eft vrt trr f -zrrd-d- t. ►

In case of rebate of duty of excise on India of on excisable material used in to any country or territory outside India

Trft TT 3j-Tr-d-m f4-91 w-67

goods exported to any cpuntry.or territory outside

the manufacture of the oods which are exported

'TAT tit ( -crrF11--d-r4 ci->) ftatff

In case of goods exported outside India export to Nepal or Bhutan, without payment of

duty.

30-g \icillq.-1 ISFUR zket #Z 9 1 '0 ii4 311zr a 0

q7T 74 ftzlli rFNM 311T, 34ra. 111ftff tH TIT f i3Tifikazi 0.2) 1998

UFT 109 .gT.- 1 f4z1-0 ft7 TT7

(d) Credit of any duty allowed to be utilized towards payment of excise duty on final

products under the provisions of this Act or the Rules made there under and such order

is passed by the Commissioner (Appeals) on or after, the datei appointed under Sec.109

of the Finance (No.2) Act, 1998.

f*Fli 9 *AU 8 ed-zr)' C0-11

74 31t-F (1) (3111) 1. -1 111ciel1, 2001

-1:4-d 3Ithf mid 31-rtvr 1110

v-rd-zr)' Ti-r2T Th-T ITT 35— f+--ar \AN] i-Peq I \3 ,(4 wit

Trd1-9' TiV TNT ef3T17-6 -El I q11-1 Mt Irrd. f40-1

The above application shall be made in duplicate in Form No. EA-8 as specified under

Rule, 9 of Central Excise (Appeals) Rules, 2001 within 3 moniths from the date on which

the order sought to be appealed against is communicated anid shall be accompanied by

two copies each of the 010 and Order-In-Appeal. It should also be accompanied by a.

copy of TR-6 Challan evidencing payment of prescribed fee as prescribed under Section

35-EE of CEA, 1944, under Major Head of Account.

(2) RM74 31-r4-4-9. 1-12T ci"-f --LT-4 TIT ∎3 -k) ci-)41 200/-

c i

thti

.ffiq 30 wet AFT l ch cal r \ I I Iter c l000/—

The revision application shall be accompanied by a fee of s.200/- where the amount

involved is Rupees One Lac or less and Rs,1,000 /- where t e amount involved is more

than Rupees One Lac.

71)-17 ,*--41-zr arefrAzr cf

Appeal to Custom, Excise, & Service Tax Appellate Tribunal.

—41zr \30-11q -1 gj 3Trftzfli, 1944 f tINT 35--4 / 35—

Under Section 35B/ 35E of CEA, 1944 an appeal lies to

31-4-Rr-d- Trri=0- - f1-4Tr \50-114-1

4 itAisf -4. 3. 3118. 'pi, ft- C ct)) 74

the special bench of Custom, Excise & Service Tax Appe late Tribunal of West Block

No.2, R.K. Puram, New Delhi-1 in all matters relating to clasOication valuation and.

cilci-Pf 3110)11 ifart4wRiir

3

\301-1DNcI tift 2 (1) T. zl cicIN 31T-Irt 3MT4T (61 31-cir, 3ftirk- TTITO 4 ATITT ■.3o4N -1 c k;ci -1-Frifq7b-7ur (ftr- J c, tuft-cm a-)1171 ltit(TT, 3161q1EIN

61R4trf cl-) 4-141\3u5, #EIjurf -1 4 N", 316INIE111-380016.

To the west regional bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at 0-20, New Metal Hospital Compound, Meghani Nagar, Ahmedabad: 380 016. in case of appeals other than as mentioned in para-2(i) (a) above.

Zi% \3041q.1 1 04, (31-41- ) .ProS111-4At 2001 MI- MT 6 c 31c1 4 [(-1 PEZTOff fI 31 '11 311:MTZT =TIZITr4Zb-Rt 3T1t1 3ITITR -clk red-et Trfta ISVi \Ic414

4-ti wr T er 31)• 0 4 1111 wcr7 5 zur \ift1-1 (1) 4-1 e ci6I WcN l000/— INT '4,141

uleI \Jc(-114 c > 111, :117 Thrt e1111i 1 11 Tii#T • ,-)k-Nr 5 ca' -r-G ZIT 50 .-T-Qq Oct) i7 5000 / — tbaRT Altf I vIel \10-IN Fi Th°1 111, UTT7 4)11. 311 (11111 11I -TENT --147 50

* cl iRT)cr 10000/— ttm cf t j , -16R1c1) 4-T Tcrz 4 ,(14q- c r r?J I 16 Turd \1 f1 Wri c F+-4- -9T1#ff •114uPci, -q-)11 VERT M-1" u16-1 3WI cbc1 trd t I Nz- tiq V1T2T Wcf- 500 /— taRT .4-w4t Bfirfr

The appeal to the Appellate Tribunal shall be filed in quadruplicate in form EA-3 as prescribed under Rule 6 of Central Excise(Appeal) Rules, 2001 and shall be accompanied against (one which at least should be accompanied by a fee of Rs.1,000/-, Rs.5,000/- and Rs.10,000/- where amount of duty / penalty / demand / refund is upto 5 Lac, 5 Lac to 50 Lac and above 50 Lac respectively in the form of crossed bank draft in favour of Asstt. Registar of a branch of any nominate public sector bank of the place where the bench of any nominate public sector bank of the place where the bench of the Tribunal is situated. Application made for grant of stay shall be accompanied by a fee of Rs.500/-.

(3) zi-ft *'ti 31-171 Ff ch 3Tr i 31 ct)1 4 4 1 71 ft--zrr zikc T22 c .R74-4-rrNm-Tur Zii

7i-41 zr 6)(11 t .ff)r '511TFarr 3fi-q-rzr f ttm 7,1 4 1c11-1 3 ctc-1 6)() V 711 f 1RT u 1 m-vi -c1'). -ft-47 Z1 off-3TEM'rzT

.) 310q-1

In case of the order covers a number of order-in-Original, fee for each O.I.O. should be paid in the aforesaid manner not withstanding the fact that the one appeal to the Appellant Tribunal or the one application to the Central Govt. As the case may be, is filled. to avoid scriptoria work if excising Rs. 1 lacs fee of Rs.100/- for each.

(4) --q1L11(-14 1 3Tre4ZFI 1970 ziP-TT 34-VIt4d- cbr)3T-Tft-1 ft-7 31T-1H 3qTf 4-kr1 3TTkT ATTitf 311- T . cr) Pit 1=17 x.6.50 1)•) WI -1111(11

c1711 61.11 -rft-7

One copy of application or O.I.O. as the case may be, and the order of the adjournment authority shall a court fee stamp of Rs.6.50 paise as prescribed under scheduled-1 item of the court fee Act, 1975 as amended.

* -1 #-t-d- TiTTTc fi (hl fkz -o-r ci0 f 1 1 3117 '41 arr-4 3#0741 ft-zrr TAIdl ATTU , Zb\--ZT 3TtlA1fzl -RTRITI4T70T (Th-Rfir4T4) f#TH, 1982 4 f*o-

Attention in invited to the rules covering these and other related matter contended in the Customs, Excise & Service Tax Appellate Tribunal (Procedure) Rules, 1982.

(5)

V.2(28)48/Ahd-(/ 2013 & St y Appl.No.18/2013 4

ORDER-IN-APPEAL

The present appeal alongwith stay application dated 13.11.2013 has peen filed by M/s. Aims

Industries Ltd., L.K.Patel Timber Mart, B/h- Lake View Hotel, Narol, Ahmed

referred to as "the appellant") against 010 No.M13103/AC/Div.IV/2013-14 dat

referred to as the "impugned Order") passed by the Assistant Commissioner, Ce

((hereinafter referred to as the "adjudicating authority"). The appellant are enga

excisable goods e.g. Industrial Gas i.e. Oxygen, Nitrogen, Carbon Dioxide and ME

Chapter heading 28 of the First Schedule to the Central Excise Tariff Act, 1985

registration certificate No.AACCA3233CXM006 and availing the facility of CENV

Credit Rules, 2004.

3. Letter F.No.AR-II/Aims/SCN/2012 dated 25-09-2012 and 26-10-2012 wer issued to the appellant by

the Range Superintendent to provide the data of such retention charges collec ed from January- 2012 to

August-2012.The appellant vide their letter dated 29-10-2012 received on 30-10• 012 furnished the required

data. On the basis of the information/data furnished by the appellant it is noticed that the appellant has also

collected Rs. 114846 on account of cylinder retention charges from their cu tomer by raising separate

invoices, but not discharged their duty liability on such charges at the applicabl rate at the material time.

The details worked out as under:-

bad-382405 (hereinafter

30.08.2013(hereinafter

tral Excise Div.IV, A'bad-

ed in the manufacture of

l ical Oxygen falling under

and holding central excise

T credit under the Cenvat

Sr.No. Period Amount Collected Rs.

Rate of Duty

1 01-01-2012 to 29-02-2012

33876 10.3

2 01-03-2012 to 31-08-2012

80970 12.36

Total 114846

Amount of duty not paid Rs. 3489.25

10007.90

13497.15

observed that the appellant

ustomer by raising separate

the returnable container i.e

to the sale and considered

he costing of the product as

lot be term as rental charges

and not renting of tangible

4. During the course of audit, on verification of the accounting records it was.

were collecting the amount on account of cylinder retention charges from their

invoices, one for selling it's product i.e Gas in its own cylinder and the other f or

cylinder, without which the sale of the product is not possible, so it is in relatio

as escalation in the price of the product, as the same is also not included in

amortized cost, so it is escalation in the price of product i.e Gas and which can

for tangible asset, as the activity under taken by the appellant is selling ga

assets. Further, it is not included in the costing of the product.

5. Thus, escalation in the price of product i.e Gas, as the cylinder retentio

the costing/pricing of the product and collected separately in guise of retentio

for selling it product gas. Further, on verification of invoice issued for retenti

was observed that the VAT is also paid, as per Sales of Goods Act, (3 of 1

retention as deemed sales price, so also escalation in price of product. Furt

charges for tangible asset, as the activity under taken by the appellant is

tangible assets, as it is in relation to sale. Hence, the retention charges

amortized cost not included in costing of product as per the appellant b

invoice instead of excise invoice is considered to be as addition consideratio

charges are not included in

charges from the customers

n charges by the appellant, it

30), considering the value of

- r, it cannot be term as rental

elling gas and not renting of

ollected by the appellant as

preparing separate retail tax

, as it is the activity in relation

V.2(28)48/Ahd-I/2013 & Stay Appl.No.18/2013 5

to sales of goods i.e Industrial Gases. So, the amount so collected is extra consideration and the value of

deemed sales should be included in transaction value as defined in Section 4 of Central Excise Act 1944

which includes receipt/recoveries or charges incurred or expenses provided for in connection with the

manufacturing, marketing, selling of excisable goods to be the part of the price payable for the goods sold.

In other words , whatever elements which enrich the value of the goods before the marketing and were held

by Hon'ble Supreme Court to be includible in " Value" under the erstwhile Section 4 would continue to form

the part of Section 4 value even under new Section 4 definition. Where the assessee charges an amount as

price for his goods , the amount so charged and paid or payable for the goods will form the assessable

value. If however, in addition to the amount charged as price from the buyer." the assessee also recovers

any other amount " by reason of sale " or " in connection with sale" , then such amount shall also form part

of the transaction value for valuation and assessement purposes. Thus, if assessee splits up its pricing

system and charges a price for the goods and separately charges for packaging, the packaging charges will

also form the part of assessable value as it is a charge in connection with production and sale of the goods

recover from the buyers.

6. Thus, the cylinder retention charges not included in the costing/pricing of the product, at the time of

sales as a part of amortized cost of cylinder, so it is to be considered as addition consideration, which is in

relation to sales.

7. The appellant have contravened the provisions of Rule 4, 5, and 6 of Central Excise Rules, 2002,

in as much as, they have failed to determine the correct central excise duty and also failed discharge duty

liabilities on the finished goods on which they have collected retention charges from their customers, Rule

11 of central excise Rules, 2002 in as much as they have failed to issue any Central Excise invoices in

respect of finished goods cleared from their factory, Rule 10 of the Central Excise Rules, 2002 in as much

as they have failed to maintain true and correct account of finished goods, Rule 8 of the Central Excise

Rules, 2002 in as much as they have failed to debit the appropriate Central Excise duty as prescribed in the

said rule and Rule 12 of the Central excise Rules, 2002 in as much as they have failed to submit the correct

details/information in the prescribed returns. All these acts of contravention on the part of the appellant

appears to have been committed by way of willful suppression of actual facts of collecting or receiving

retention charges with male fide intention to evade payment of Central Excise duty. Therefore, the duty on

Rs. 114846/-collected as cylinder retention charges which should have been paid by them at the time of

receiving or collecting retention charges, is required to be demanded and recovered from them along with

interest under the proviso to Section 11A(1) of the Central Excise Act, 1944. All these acts of contravention

appear to constitute the offences of the nature and type as described in the provisions of Rule 25 of the

Central excise Rules and therefore, the appellant have rendered themselves liable for penalty as provided

under Rule 25 of the Central Excise Rules, read with Section 11 AC of the Central Excise Act, 1944 and also

that the goods so cleared are liable for confiscation under the provisions of Rule 25 of the Central Excise

Rules.

8. The appellant have suppressed from the department the fact of collecting or receiving retention charges

from their customers. Therefore, the retention charges wrongly collected from customer and not paid Central

excise duty during the period January - 2012 to August-2012 can be recovered from the appellant under

section 11A of the Central Excise Act .

9. Accordingly SCN F.No. IV/16-21/Aims/SCN/12-13 dated 23/11/2012 was issued to the appellant as'

to why:

V.2(28)48/Ahd-l/2013 & tay Appl.No.18/2013 6

(a) The central excise duty of Rs. 13497.15 not paid by them on the additional payment/consideration

in guise of retention charges collected from their clients/customers reco ered from them along with

interest under the proviso to Section 11A(1) of the Central Excise Act, 944 at the rates specified

under the provisions of Section 11AB of the Central Excise Act, 1944, a d

(b) penalty should not be imposed on them under the provisions of Rul: 25 of the Central Excise

Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944.

(c) Interest at the prescribed rate should not be recovered from them under the provisions of Section

11AA of Central Excise Act,1944.

(d) All the goods cleared during the period from January- 2012 to August-2012 should not be

confiscated under Rule 25 of the Central Excise Rules,2002.

10. The said SCN was adjudicated vide the Impugned Order dated :0.08.2013 passed by the

adjudicating authority. Being aggrieved by the impugned order the present appee I alongwith stay application

has been filed by the appellant on the following grounds :

10.1 That they are basically engaged in production and clearance of Industria Gases. It is also a question

of fact that Industrial Gases, are supplied in Cylinders or Metallic Containers, owner by them.

10.2 That the Metallic Containers or Cylinders, in which Industrial Gases are

heavy investment on their part and therefore, they should like to see that the e

back by the Customers promptly and therefore, in order to see that the Customer

their valuable asset, namely Cylinders in which industrial gases were supplie

practice all over the Country, to charge Retention or Detention Charges, to the C

period.

filled and 'supplied call for a

pty Cylinders are returned

oes not unnecessarly retain

by them, there is normal

stomers after a certain free

10.3 Sample agreement for charging retention or Detention Charges were

authority.

10.4 That in the premises, it is also a question of fact that during the period of

Retention or Detention Charges, to the tune of Rs.1,14,846/-.

so given to the adjudicating

ispute, they have recovered

10.5 That it is also a question of fact that they did not pay any Central Excise uty, on the said Retention or

Detention Charges, recovered by them, from the Buyers of our Industrial Gases. However, the Central Excise

Authority, has maintained that the said Retention or Detention Charges, eamed them, is a part and parcel of

the Transaction Value of our Industrial Gases, as per Section 4 of the Central Exc se Act.

10.6 That the contention raised in the impugned Order is unsustainable, as per

manifestly maintain that any Service Charges or other Charges, collected by

Gases in the form of Cylinder Rent; Cylinder Retention or Detention Charges,

Assessable Value of the excisable goods and hence, not chargeable to Central

upon the following jugmements :

he following decisions, which

a Manufacturer of Industrial

tc., do not form a part of the

Excise Duty and have relied

1994(72)ELT.80(Tribunal)STEEL and BEVERAGES (P) LTD. Vs. C.C.E.P NA.

2008 (232) E.L.T. 338 (Tri.-Bang.) INOX AIR PRODUCTS LTD. VERSUS .C.E., BANGALORE.

2009(244)E.L.T.83(Tri.-Chennai)C.C.[.,CHENNAI VERSUS GOYAL MG LASES LTD.

2009 (246) E.L.T. 170 (Tri.-Chennai) C.C.[., CHENNAI Vs GOYAL MG G A SES LTD.

2010 (250) E.L.T. 60 (Tri.-Bang.) INOX AIR PRODUCTS LTD. Vs C.C.E. (A PEALS-I), BANGALORE.

V.2(28)48/Ahd-I/2013 & Stay Appl.No.18/2013 7

2010 (261) E.L.T. 265 (Tri.-Del.) C.C.E., ALLAHABAD Vs KANORIA CHE1V1. & INDUSTRIES LTD. and

various others judgements have been quoted by the appellant.

10.7. The appellant further stated that the judicial pronouncements are binding on the Adjudicating

Authority, in order to maintain judicial discipline, as directed by the Honourable Apex Court of India, in case of

KAMALAKSHI FINANCE CORPORATION LTD. and that in the premises, the impugned Order is required to

be set-aside, in toto.

11. Personal hearing in the matter was fixed for 17.12.2013 but the appellant did not turn up for the

personal hearing and informed vide letter dated 17.12.2013 that they are not able to attend personally for

above hearing and have requested to pass speaking order in the matter at the earliest. In view of the above,

I proceed to decide the case.

12. I have gone through the records of the case, appeal memorandum filed by the appellant and the

submissions made by the appellant.

13. I find that the Appellants have filed stay application dated 13.11.2013 against above impugned Order

dated' 30.08.2013 and for recovery of confirmed dues against them. With regard to disposal of stay

application I prima facie find that amount involved in the present appeal is meager and I have

also decided to dispose off the present appeal straight away, I dispense with the requirement of pre-

deposit of duty under Section 35 F of the Central Excise Act,1944 for hearing the appeal.

13.1 The moot issue to be decided in this case are :-

1)Whether the amount collected from the customer for selling their product i.e. GAS on account of

cylinder retention charges to be included in the cost of product as amortized cost and will form part of

assessable value

2) whether penalty can be imposed on party under Section 11AC of Central Excise Act 1944 for act

of omission/commission .

14. The first point needs to be examined in light of new Section 4 of the Central Excise Act,1944, and

judgments ruled by Apex Court. The appellant are engaged in manufacture of Industrial gas i.e. Oxygen,

Nitrogen, Carbon Dioxide and Medical Oxygen and selling the same after filling in gas cylinders. From the facts

on record I find that the appellant are issuing two separate invoices, one for supply of industrial gas

manufactured by them, and other for returnable gas cylinder in which gas is filled. I find that the appellant have

been supplying gas in cylinder on returnable basis withih stipulated period i.e. 90 days from the date of delivery

as per agreement with their dealers. I find that the appellant charged the dealers a fixed charges Rs. 1.00 per

day per cylinder for all types of gas cylinder from the date of issue. However the appellant were not charging

duty of excise on element of cylinder retention charges on the ground that the same do not form part of

assessable value of the excisable- goods and not chargeable to duty of excise.The relevant text of transaction value " as enumerated under new Section 4 of the Central Excise Act,l944 which reads as follows :

Section 4 : Valuation of excisable goods for purposes of charging of duty of excise. -

(3) For the purpose of this section,

(a)

(b)

(c

V.2(28)48/Ahd-l/2013 & tay Appl.No.18/2013 8

hen sold, and includes in

ay to, or on behalf of, the

of the sale or at any other

r, advertising or publicity ,

, warranty, commission or

ether taxes, if any, actually

(d) "transaction value" means the price actually paid or payable for the goods,

addition to the amount charged as price, any amount that the buyer is liable to

assessee, by reason of, or in connection with the sale whether payable at the WTI

time, including, but not limited to, any amount charged for, or to make provision f

marketing and selling organization expenses, storage, outward handling, servicin

any other matter; but does not include the amount of duty of excise, sales tax and

paid or actually payable on such goods.

15. On going through the said definition of "transaction value" it is crystal clear that the expression

"transaction value " which includes any amount that buyer is liable to pay by reason of or in connection with il the sale and the expression used should be read in context of extensive in nature a d not restricted in terms of

expression "includes" used. In P. Kasilingarn and Others v. P.S.G. College of Tech ology and Others, reported

in AIR 1995 SC 1395 the Apex Court clearly brought out difference in the m aning between the terms

"means", "means and includes" and "includes" in the following words :-

"A particular expression is often defined by the Legislature by using the word ; 'm

Sometimes the words 'means and includes are used. The use of the word 'means'

hard and fast definition and no other meaning can be assigned to the expression th

The word 'includes' when used, enlarges the meaning of the expression defined so

such things as they signify according to their natural import but also those things wt

they shall include. The words 'means and includes' on the other hand, indicate "a

the meaning which, for the purpose of the Act, must invariably be attached to these

ans' or the word 'includes'.

dicates that "definition is a

a t is put down in definition".

as to comprehend: not only

ich the clause declares that

exhaustive explanation of

words or expressions".

(Emphasis supplied)

old" should be understood

d which is totally extensive

buyers are undoubtedly in -

The expression used as " the price actually paid or payable for the goods, when

under Sale of Goods Act,1930 as far as inclusive part of the definition is concern

and very wide. In the present case, the charges towards cylinder retention paid b

connection With industrial gas sold.

n value" under new-Section

make specific reference to

e section 4 and any amount

:ble to pay to manufacturer

ct 4 ibid inclusion of cost of

ary or secondary etc. and

tion 4 ibid this is irrelevant. I

any amount paid or payable

t included in the price of the

ent of goods on concept of

"excisable goods" as per

It may be pertinent to note that after introduction of concept of "transacti

4 ibid, the self assessment of duty of excise on goods sold which does not

packing charges whether it may be durable or returnable, as mentioned in erstwh

charged in connection with or by reason of sale which buyers/customers are I

should be included in the transaction value of goods sold. Under the erstwhile S

packing in the assessable value was related to the nature of packing such as pa

there was specific exclusion of durable and returnable packings. While in new se

therefore find that any charges recovered either for packing in whatever nature o

in connection with sale is to be included in the transaction value if the same is ni

goods. It is note that now the issue is res judicata after introduction of assess

transaction value under new Section 4, and also the scope of definition

Explanation to Section 2(d) ibid have been extended by Legislature as under :-

Section 2 Definitions.— In this Act, unless there is anything repugnant in the sub ect or context, -

(d) "excisable goods" means goods specified in the First Schedule and the Se 'nd: SchedUle to the Central

Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includ s salt ;

Q772,7„,- Explanation For the purposes of this clause, "goods" includes any article, material or substance which is

capable of being bought and sold for a consideration and such .00ds shall be d med to be marketable

V.2(28)48/Ahd-l/2013 & Stay Appl.No.18/2013 9

16. I also find that Board vide Circular No.643/34/2002-CX dated 1.7.2002 have clarified that rental charges

or cost of reusable metal containers like gas cylinder are included in the transaction value since such amount

has been charged by reason of or in connection with the sale of goods. CBEC vide above cited Circular also

clarified about how is the cost of reusable containers to be determined in the transaction value. In the present

case, it is not in dispute that the cost of gas cylinder has not been amortised and included in value of the

products. Thus, the cylinder retention charges recovered from buyers must become part of the assessable

value of the goods sold because the same are recovered in connection with sale and not included in value of

the goods sold. For the sake of easy reference, the relevant para of above Cited Circular dated 1.7.2002 is

reproduced below :-

SI.

No.

Point of doubt (Clarification

4. Packing :-

(a) whether cost of (a) No. There is no provision for such a deduction secondary packing is to be in the concept of transaction value. excluded from the transaction

. value ?

(b) How is the cost (b) Normally the cost of reusable containers ofreusable containers to be (glass bottles, crates etc.) is amortised and included determined for inclusion in in the cost of the product itself, Therefore the the transaction value ? question of adding any further amount towards this

account does not arise, except where Audit of accounts reveals that the cost of the reusable container has not been amortised and included in the value of the product.

(c) Whether rental charges (c) Yes, since the amount hasbeen charged by or cost of maintenance of reason of, or in connection with the sale of goods, reusable metal containers this amount will be added to the transaction value. like gas pylinders etc. are to be included in the transaction value ?

(d) What about cost of (d) Since in such cases the price will not

containers supplied by the be the sole consideration for the sale, the buyer ? valuation would be governed by Rule 6 and

the cost of such packing, whether durable

or not, will be included in the transaction

value of the goods. In respect of packing

which can be used repeatedly the cost will

have to be amortized over the life span of

the packing material as is done in the case

of dies, moulds etc. supplied by the buyer.

17. Thus it it can be deduced that whether the cost of packing is includible or not, must depend upon the necessity or essentiality of packing for selling the excisable goods. The question is not for what purpose a

particular kind of packing is done. The test is whether a particular kind of packing is done in order to put the

goods in the condition in which they are generally sold in the market and if they are generally sold in the market

at the factory gate in a packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. In the present case the

products sold by the appellant are in gaseous form and easily evaporate in air and thus it must be packed in

V.2(28)48/Ahd-l/2013 & Stay Appl.No.18/2013 10

metal cylinder which is sufficient and enough to show that without packing in cylin

sold and marketed. In other words, it is necessitated to pack industrial gas in met

cannot be sold and marketed. Any charges recovered in any form or under an

recovered in relation to sale of the goods and thus would become part of the tra

element of cost of cylinder retention charges should be included in the transact

purpose of charging duty of excise unless the same is ammortised and not include

er, industrial gas can not be

I cylinder, otherwise, goods

description are obliviously

saction of goods. Thus, the •

n value of the goods for the

in value of as sold.

18. After reviewing majority of decisions of Hon'ble Supreme Court I find that

down principles on exclusion or inclusion of packing charges for determina

excisable goods is first that one has to verify whether it is necessary for manufact

in packing for the purpose of selling and marketing the product. If so, then it stan

whatever it may be must be included in the assessable value of goods and eleme

of excise. In the present case use of metal container to fill up gas is necessary

goods, and industrial gas is sold in cylinder packed condition. It is not a case that

or for the safe transportation of goods, industrial gas manufactured by assessee is

eneral proposition and laid

on of assessable value of

rer to pack the goods to say

s concluded that its charges

t of charges is liable to duty

or selling and marketing the

nly at the instance of buyers

filled in metal containers.

d reported at 1983 (14) ELT

mber that while packing is

r strict construction because

19. In the case of Union of India & Others etc. V/s. Bombay Tyre International L

1896 (S.C.), Hon'ble Supreme Court of India observed that " We must rem:

necessary to make the excisable article: marketable, the statutory provision calls f

-the levy is sought to be extended beyond the manufactured article itself'.

20. In Civil Appeal No.3819/1999 in the case of Commissioner of Central

Hindustan Safety Glass Works Ltd. against CEGAT Order No.264/99-A (circulat

814/10/2005-CX) Hon'ble Supreme Court of India held that even though they ma

the cost of wooden cases are includible in the value of the glass sheets sold, a

made which is reproduced below :-

.7.111

Excise, Allahabad Vs. M/s.

by CBEC vide Circular No.

be considered to be durable

following observations are

" In my opinion, the views expressed by the majority of the Judges in

consonance with the views of this Court in the Bombay Tyre International case.

purpose a particular kind of packing is done but the test is whether a particular p

the goods in the condition in which they are generally sold in the wholesale ma

they are generally sold in the wholesale market at the factory gate in certain pa

be the reason for such packing, the cost of such packing would be includible

assessment to excise duty."

odfrey Philips case were in

The question is not for what

cking is done in order to put

ket at the factory gate and if

ked condition, whatever may

n the value of the goods for

11.Reference was then made to the Geep Industrial Syndicate Ltd. case and it was held as follows :-

"In my opinion, the correct position seems to be that the cost of th

primary or secondary, which are required to make the articles marketable would

much packing is necessary to make the goods marketable is a question of fact t

of the correct approach. Packing, which is primarily done or mainly done for pr

making the goods marketable should not be included.... The question is not wh

sold, but the question is whether these goods are so sold usually and as such

such manner." (emphasis supplied)

21. Thus I find that it is clear that in the case of Geep Industrial Syndicate Lt

that the correct position seems to be that the cost of that much of packings,

which are required to make the articles marketable would be includible in th

much of packings, be they

e includible in the value. How

be determined by application

ecting the goods, and not for

ther these goods could be so

sed to become marketable in

supra it is categorically held

e they primary or secondary,

value. In the present case

V.2(28)48/Ahd-l/2013 •Stay Appl.No.18/2013 11

without filling industrial gas in metal containers the product i.e. gas can never be marketed and at no point of

time this aspect has been challenged by the appellant in their case and has accepted the universal facts.

22. In view of above findings and discussion I reach on conclusion deliberately suppressed by them from

the knowledge of the department. This omission is on the part of the appellant clear their malafide

intention was absolutely to fraudulently evade the duty of excise. I find that the criteria of invocation

of the extended period is completely satisfied as there is deliberately failure on part of them to

declare or intimate regarding such recovery of cylinder retention charges. In his recorded statement

dated 6.1.2011 admitted that they did not inform Central Excise department prior to audit conducted

about collection of such cylinder retention charges. Therefore I find that the extended period of five

years as per proviso to the Section 11 AC of Central Excise Act,1944 is correctly invoked in this

case and the contention of appellant as regards to invocation of extended period and matter is barred by

limitation is not sustainable.

23. I find that appellant being a Limited company, was very well aware about the relevant provisions of

law. It proves that all such facts are deliberately suppressed by appellant from the knowledge

of department. Also, I find that no point of time appellant has come forward before the department to know •

or for any clarification sought whether the cylinder retention charges are liable to duty of excise

under Section 4 ibid or otherwise. Hence, it is a clear case that they have deliberately acted with

fraudulent mindset and this omission clearly manifest that their malafide intention was to evade

the duty of excise.

24. Since the facts revealed was intentionally suppressed by them with deliberate deception and in

absence of any clarification sought for by appellants , the principles of universal knowledge for the

limitation can not be attracted as held in the case of CCE, Calicut Vs Steel Industries Kerala Ltd [2005 [188] ELT 33 [Tribunal-Banglore]] and Coalter Chemical Manufacturing Co. Vs Union of India [ 2003 [158] ELT 402 [S. T]I.

25. I find that appellants on their own misinterpretation deliberately failed to pay duty of excise. Hence

I find that this is a fit case for invocation of Section 11 AC ibid for imposition of penalty on them

and rules made there under as the department has made out a strong case against appellants. It is

clearly established in the facts and circumstances of the case that appellants have wilfully

suppressed all the material facts deliberately and intentionally to evade the duty of excise and thus

render them liable for penalty under Section 11 AC ibid.

26. The ingredients mentioned in Section 11 AC ibid are completely satisfied. It is well settled that

once the duty is confirmed under section, the adjudicating authority have no discretion or option

available either to quantify the duty or to reduce the penalty levied. In short in such case the

adjudicating authority have no discretionary to impose lesser amount of penalty in light of the

Apex Court decision of Dharmendra Textile Processors & Others [ 2008 (231) E.L.T. 3 (S.C.)] and Rajasthan Spinning & Weaving Mills [ 2009 [238] E.L.T 3 (S.C.) ] and the mandatory penalty equivalent

amount of duty determined under Section should be imposed. In view of above facts penalty

equivalent to credit wrongly availed imposed on appellants under Section 11 AC ibid is sustainable.

F.NO.V.2(28)48/Ahd.1/2013

Atteste

.P. VYAS) perintendent (Appeals-V)

Central Excise, Ahmedabad. By Regd. Post A.D.

v.2(28)48/Ahd-(/2013 & tay Appl.No.18/2013 12

27. In view of above discussion and findings, I pass the following Order :

ORDER

I uphold the impugned order and reject the appeal filed by the appellan on merits. The appeal and

stay application are disposed off accordingly.

(11<tn 11> (Anil Kumar)

Commissioner (Appeals-V) central Excise, Ahmedabad.

To, M/s. Aims Industries Ltd., L.K.Patel Timber Mart, B/h- Lake View Hotel, Narol, Ahmedabad-382405

Copy to:

1. The Chief Commissioner, Central Excise, Ahmedabad.

2. The Commissioner, Central Excise, Ahmedabad-I.

3. The Assistant Commissioner, Central Excise Division-IV, Ahmedabad-I.

A'. The Assistant Commissioner (System), Central Excise, Ahmedabad-I.

5. Guard file. 6. P. A. File.

Dated, .12.2013