GRASIM INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The appellants manufacture and sell chlorine. Chlorine is delivered either in the metal containers brought by the buyers or in the metal containers, called tonner, owned by the appellants. When supply is in the containers owned by the appellants, the buyer is charged @ Rs. 150/ - per MT for "durable and returnable tonner" in which chlorine is supplied. The impugned order has held that this charge of Rs. 150/ - per MT is liable to be included in the assessable value of chlorine and duty levied on that basis. The differential duty so demanded works out to about Rs. 20 lakhs. There is also a penalty of Rs. 5 lakhs. In the present application, waiver of requirement for pre -deposit of duty demand and penalty are prayed for.

(2.) We have perused the records and heard the ld. Counsel and ld. SDR. It is the submission of the appellants that the charge of Rs. 150/ - per MT is not a part of the price of chlorine. It is only in the nature of rental for use of the tonners. It is pointed out that the issue whether such a rental can form part of the value of the materials sold and thus form a part of the assessable value remains settled by the decision of the Apex Court in the case of CCE v. Indian Oxygen Ltd. [1988 (36) E.L.T. 730 (S.C.)] and the clarification dated 7 -7 -89 issued by the Central Board of Excise and Customs. As against this, ld. SDR brings to our notice the clarification issued by the Board in the context of the introduction of new section for valuation w.e.f. 1 -7 -2000. The relevant clarification under this circular dated 30th June, 2000 is reproduced below: It is the submission of the ld. SDR that the new section has specifically included the cost of metal containers also.

(3.) We are of the prima facie view that the Supreme Court's decision in the case of Indian Oxygen applies under the new section also. In that judgment, the Apex Court had concluded that though supply of cylinder is ancillary to sale of the goods, the charge collected for the cylinders is basically a rental charge and rental charge for the cylinders cannot form part of the price of the goods under sale. What is true for oxygen, is true for chlorine too. The question calling for answer is, was there one supply or two? Obviously, there were two, one sale of chlorine, and the other renting of tonner.