Commissioner Of Central Excise, ... vs Inox Air Products Ltd

(Arising out Order-in- Appeal Nos. AT/44 & 45/BEL/2004 dated 31.08.2004, AT/55/BEL/2004 dated 30.09.2004, AT/M-III/29/2004 dated 25.08.2004 & AT/8&9/BEL/2005 dated 05.01.2005 passed by the Commissioner of Central Excise (Appeals), Belapur/Raigad)

For approval and signature: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes

Commissioner of Central Excise, Belapur/Raigad Appellant

Vs.

Inox Air Products Ltd. Respondent

Appearance:

Shri V.K. Shastri, AC (AR) Advocate for the appellant Shri J.C. Patel, Advocate for the respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

Date of hearing : 06.08.2015 Date of decision : 06.08.2015

O R D E R No:..

Per: P.K. Jain:

Common issue is involved and hence all the four appeals are being taken up together. In all the four appeals, the appellant is revenue. Respondent is Inox Air Products Ltd. However, different appeals pertain to different units of Inox Air Products Ltd. Appeal no. E/3407, 3408/04 pertains to Inox Air Products Ltd., A/2, TTC Indl. Area, Pawne, Navi Mumbai. Appeal no. E/3482/04 pertains to Inox Air Products Ltd., A/5, MIDC Indl. Area, Patalaganga & E/483/05 pertains to Inox Air Products Ltd., C/109 & 110, TTC Indl. Area, Pawne, Navi Mumbai.

2. The brief facts of the case are that the respondent is engaged in the manufacture of Industrial gases such as oxygen and nitrogen. Such gases are delivered to the buyers at the factory gate and in most cases the buyers bring their own cylinders in which gases are delivered. However, some buyers do not bring their own cylinders for taking delivery of gases and in such cases respondent provides cylinders to the buyers on free loan for a certain period of time. If such buyer delays return of the cylinders beyond the free loan period, the respondent charges rent for which the cylinders are retained by the customers beyond the free loan period. Further, if the cylinders are damaged or lost by the buyers, the respondent charges for the loss or damage. Revenues contention is that the rent or compensation charges for the loss or damage will form part of the transaction value and duty is required to be paid on the said amount. In the impugned order, Commissioner (Appeals) has dropped the demands in view of the various decisions of this Tribunal. Aggrieved by said order, Revenue is in appeal.

3. The main ground of appeal is that the Board vide circular no. 643/34/2002-CX dated 01.07.2002 has clarified that the such charge are includable in the assessable value after the introduction of transaction value i.e. w.e.f. 01.07.2000. It is further submitted that the said amount is additional consideration as the amount is required to be paid by the buyer in connection with the sale of the goods. It is also submitted that rent and other charges could be termed as marketing charges inasmuch the industrial gases can never be marketed without the cylinders. The inherent nature of industrial gases requires specific equipment for it to be transported and thereby marketed. Further the empty cylinders individually are defunct. They are used to only fulfil their utility of transporting industrial gases. Further the concept of outward handling has a special meaning in the instant case. The cylinders are vehicles of outward handling as regards the industrial gases sold by the assessee. It is also submitted in Tribunals judgment in Grasim Industries has been challenged by the Revenue in the Hon'ble Supreme Court and the Hon'ble Supreme Court has referred the matter to the Larger Bench and hence pending in the Supreme Court.

4. Ld. counsel for the respondent relied upon the following case laws:-

Inox Air Products Ltd. vs. CCE 2008 (232) ELT 2338 Inox Air Products Ltd. vs. CCE 2010 (250) ELT 60 CCE vs. Kanoria Chem & Inds. Ltd. 2010 (261) ELT 265 Grasim Industries 2004 (164) ELT 257 Bhoruka Gases Ltd. 2008 (224) ELT 577 Govind Poy Oxygen Ltd. 2008 (231) ELT 299 BOC India Ltd. 2004 (175) ELT 236 Goyal M. Gases P. Ltd. 2014 (309) ELT 327 CCE vs. Indian Air Gases Ltd. 2015 (318) ELT 434 In support of his contention that the charges collected has nothing to do with the goods i.e. industrial gases and therefore, would not form part of the assessable or transaction value.

5. We have considered the submission of both sides.

6. We find that in appellants own case, the Bangalore bench of the Tribunal, in the case reported in 2008 (232) ELT 338 (T-Bang) has observed as under:-

4.?The appellants sell gases in cylinders. The cylinders have to be returned within a period of 30 days. When the cylinders are not returned within the stipulated period, certain amount is charged as rental charges. The question is, whether these charges have to be included in the assessable value of the gas sold or not. In the impugned order, the Commissioner (Appeals) has held that the said charges are part of the Transaction Value and, therefore, they are includible. The learned Advocate stated that the issue is covered by the Honble Apex Courts decision in the case of Indian Oxygen Ltd. - 1988 (36) E.L.T. 723 (S.C.) and also the Tribunals decision in the case of Grasim Industries Ltd. - 2004 (164) E.L.T. 257 (Tri). In spite of the well settled legal position, the lower authority confirmed the demand and the Commissioner (Appeal) upheld the order of the lower authority. It was urged that the Commissioner (Appeals) has relied on the Boards Circular dated 1-7-2002 erroneously. The Commissioner (Appeals) has also stated that the issue has not reached finality because the Department has gone in appeal against the orders favourable to the assessee. It was stated that unless there is a stay of the orders of the tribunal, the same has to be followed in the true spirit of judicial discipline. On a plain reading of the definition of Transaction Value, it can be seen that only that amount, which is collected for sale or in relation to sale and which forms part of the sale value of the goods are to be included in the Transaction Value. The cylinder rental charges cannot be treated as additional consideration for the goods sold, as the same is not included as sale of the final products. Moreover, imposition of penalty of Rs. 10,000/- under Rule 25 of the Central Excise Rules, 2002 is illegal and unjust. The demand of interest also cannot be sustained.

5.?On a very careful consideration of the issue, we find that the issue is covered by the Apex Courts judgment in the Indian Oxygen case cited supra. This Bench has followed the said decision of the Apex Court in the Final Order No. 1292/2007, dated 12-11-2007 in the appellants own case. We also do not accept the Commissioner (Appeals)s view that the issue has not reached finality and, therefore, is not bound to follow the ratio of the tribunal rulings. As long as there is no stay in respect of the tribunal rulings, the Commissioner is bound to follow them. In our view, the Boards clarification relied on by the Commissioner (Appeals) is patently erroneous. The rental charges are leviable when the cylinder is retained for a period longer than the stipulated time. When such is the case, how can one hold that such charges are in relation to the sale of the gases? Hence, we do not find any merit in the impugned order. We set aside the same and allow the appeal with consequential relief.

7. In view of the said judgement of this Tribunal in appellants own case, we dismiss the appeals filed by the Revenue. The cross objections filed by the respondents are also disposed of in above terms.

(Operative part pronounced in Court)

(S. S. Garg) (P.K. Jain) Member (Judicial) Member (Technical)

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E/3407, 3408/04