GRASIM INDUSTRIES Vs. CCE, INDORE

JUDGEMENT

(1.) THIS is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise & Customs, Indore dated 28.2.2003 under Section 11A of the Central Excise Act and imposing penalty of Rs. 5 lakhs under Rule 25 of the Central Excise Rules, 2001. The appellants are engaged in the manufacture of liquid chlorine and are clearing the same to customers either in their own tonners or the tonners supplied by the customers. When chlorine was supplied in their own tonners, appellant was collecting packing charges at Rs. 150/ - PMT. This amount was not included in the assessable value of liquid chlorine for the purpose of payment of duty. The price of the liquid chlorine remained the same irrespective of the fact whether tonners were supplied by the appellants or by the buyer. Prior to 1.7.2000 department accepted the position taken by the appellants that Rs. 150/ - PMT collected by them when they provide their own tonners, is not includible in the assessable value. Department also agreed with the assessee that when tonners were provided by the buyers, assessable value is only the price of the chlorine.

(2.) WITH effect from 1.7.2000 Section 4 of the Central Excise act has been substituted by new Section 4 which provides that the assessable value on each removal of the goods where goods are sold by the assessee to unrelated buyer for delivery at the time and place of removal shall be the transaction value where price is the sole consideration for sale. Contending that the amendment has been brought in a change in the legal position, show cause notice was issued to the appellant alleging that the amount of Rs. 150/ - received as packing charges per metric tonne has to be added to the assessable value of the chlorine. It was also alleged that in cases where tonners are supplied by the customers amortized cost of tonners at Rs. 150/ - PMT, was required to be includible in the assessable value. The assessee contended that amendment to Section 4 has not brought any change in the legal position and that there is no necessity to include the amount of Rs. 150/ - collected as packing charges to the assessable value of chlorine. The Commissioner did not accept the contention of the assessee and affirmed the demand. Aggrieved by the above, the assessee has come up in appeal.

(3.) WE find merit in the contention raised by the appellant. The ratio of the decision in CCE, v. Indian Oxygen referred above, would still be applicable in spite of the amendment brought to Section 4(1)(a). When we examine the above decision, we find that the Supreme Court has treated the supply of the gases and the supply of the cylinders as two separate transactions. Transactions in the present case are identical in nature. If that be so, the supply of chlorine and supply of tonners are to be treated as two separate transactions. Once these transactions are treated as separate, it cannot be contended that the rental paid by the buyer is an amount which be is liable to pay by reason of, or in connection with the sale. Admittedly, sale is only that of chlorine. The tonner in which it is supplied is durable and returnable packing. We cannot, therefore, agree with the Commissioner that the rental paid by the buyer to the appellant in respect of the tonners has to be treated as part of the transaction value.