Advocates Appeared:
S. Krishnamurthy,P.G. Gokhale, R.C. Pandey

ORDER

Harish Chander, Member (J)

1. Aqueous Victuals Pvt. Ltd. has filed an appeal being aggrieved from order in appeal No. 378 -CE /KNP/85, dated 12.7.85 passed by Collector of CE. (Appeals), New Delhi. The appeal before the Collector (Appeals) was against order in original No. V/130/SRP/156/80/Pt. II, dated 18.2.84 despatched on 21.2.84. Collector (Appeals) had partly rejected the appeal and on certain issues had been remanded to the Assistant Collector for de novo adjudication. Thereafter, the Assistant Collector made de novo adjudication vide order dated 16-10-1985 and being aggrieved from the de novo adjudication order dated 16-10-1985, the assessee had failed an appeal to the Collector (Appeals) and the Ld. Collector (Appeals) had allowed the appeal vide order in appeal No. 12-CE/KNP/86, dated 24-2-1986. Being aggrieved from the aforesaid order the Collector of Central Excise, Kanpur has filed an appeal before the Tribunal. Since both the appeals pertain to the same period and the same appellant and order in original, the same are disposed of by this consolidated order.

2. M/s. Aqueous Victuals Pvt. Ltd. are manufacturer of aerated water falling under Tariff Item No. 1D of the Central Excise Tariff. During the period 1.11.81 to 28.2.83 the assessee had collected a sum of Rs. 18,36,158.12 through debit notes, the details of which are as follows:-

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The Assistant Collector of Central Excise, Bareilly issued show cause notice dated 1.5.82 intimating that inasmuch as value would be collected from the buyers as per declaration recorded on foot note of the price list, the same was to form part of the normal price as per Section 4(1)(a) and as such duty was chargeable on this value and called upon the assesses to show cause as to why the value collected from the so-called post-manufacturing expenses, be not included to form the assessable value. In reply to the show cause notice the appellant stated as follows:

(1) Expenses on account of transportation of excisable goods amounting to Rs. 6,17,654.89 during the period 1.11.81 to 31.10.82 and Rs. 34,377.40 during the period 1.11.82 to 28.2.83 should be deducted from the amounts collected on the debit notes because the equalised freight was also deductible to arrive at the assessable value in view of the Hon'ble Supreme Court judgment in the case of Union of India v. Bombay Tyres International;

(2) That the octroi paid at Rs. 95,760.31 + 6052.84 shall be deducted because octroi was a tax levied by the Municipal Authorities and was deductible to arrive at the assessable value as per Section 4(4)(d)(ii);

(3) That higher charges of empty crates at the rate of Re. 1/- per crate was also deducted because these charges were in respect of bottles for aerated water which were of durable and returnable in nature and the cost of each crate was Rs. 55/- and could be used 25 to 30 times as the appellant collected Rs. 35/- per crate from the wholesale dealer towards the cost of the crates and Re.1/- per crate was rental charge each trip.

3. The Ld. Asstt. Collector had taken the view (i) that rental charge of Re. 1/- per trip was charged towards the actual breakage of bottle and the deduction of rental charges of the bottles was not therefore permissible in law in view of the fact that these charges were being charged on account of actual breakage of bottle and had ordered that these charges are to be included in the assessable value, (ii) He had allowed the deduction of octroi charges, (iii) However, regarding transport charges at Rs. 6,52,032.29, he had found that an amount of Rs. 89,746/- was paid by the manufacturer for transporting empty bottles from the places beyond the jurisdiction of the factory, Rs. 1705/- was paid transportation of concentrate and Rs. 1800/- for transportation of gas cylinders; and as such the sum of Rs. 92,651/- was not in respect of transportation of excisable goods viz. aerated water and the total expenditure after deducting Rs. 92,651/- comes to Rs. 5,59,381.29. The transportation charges of aerated water were incurred towards to and from journeys of vehicles from the factory to the destination for transporting aerated water filled crates and then back to factory with crates of empty bottles. Since the empty bottles were not excisable goods in the present context but a necessity for the completion of manufacturer of aerated waters, hence the transportation charges paid for collection of empty bottles from the buyers upto the factory could not be deducted under Section 4(4)(d)(ii) of the Central Excises Salt Act, 1944 and after dividing the expenses by 2, the actual expenses incurred by the assessee for the relevant period on the transportation of aerated water worked out at Rs. 2,79,690.65 and the net amount of Rs. 14,59,571.12 was to be added towards the assessable value for the calculation of Central Excise duty. Accordingly he had demanded a duty of Rs. 5,83,828.45 + Rs. 29,191.42 as special excise duty. Being aggrieved from the aforesaid order the assessee had filed an appeal to the Collector (Appeals). The Ld. Collector (Appeals) had confirmed the findings of the Assistant Collector as to collection of rental charges as breakages and held the same to be includible in the assessable value. On the transportation charges, the assessee had urged before the Collector (Appeals) that assigning of 50% of transportation cost towards return journey with empty bottles was not correct; and according to them charges for return journey were considerably less. The assessee had also produced a copy of the contract with the transporters in support of their contention indicating that in case the truck was sent on one-way basis or if the truck did not bring empty bottles and crates, 10% of the value of freight charge would be deducted and there was another plea for the rectification of the two calculation errors for fixing the post-manufacturing expenses at Rs. 18,36,158.12 and fixing freight at Rs. 6,54,832.29. The Ld. Collector (Appeals) had remanded the matter for recalculation of transportation charges for the return journey and also for correcting the calculation errors viz. collection by debit note at Rs. 18,36,158.12 instead of Rs. 18,41,030.92 and freight charges at Rs. 6,54,832.29 instead of Rs. 6,52,032.29. Being aggrieved from the aforesaid order the assessee came in appeal before the tribunal. The Ld. Asstt. Collector, keeping in view the directions of the Ld. Collector (Appeals) readjudicated the matter and ordered that the excise duty demandable from the assessee was Rs. 5,83,268.33 and special excise duty of Rs. 29,162.42. He had rejected the claim of empty bottles for the return journey at 10% of the total freight. Being aggrieved from the said re-adjudication order, the assessee had filed an appeal to the Collector (Appeals). The Ld. Collector (Appeals) had allowed the appeal with the directions for the grant of deduction towards freight/transport cost while computing the assessable value of the amount less the portion held back by the assessee from the transporters by contract. On one way movement and when empties are not brought back as well as for the recalculation of the demand In this manner. Being aggrieved from this order the revenue has come in appeal before the Tribunal.

4. Shri P. G. Gokhale, Advocate with Shri R.C. Pandey, Advocate has reiterated the facts and contentions made in the appeal petition. Shri Gokhale has raised the following points:

(i) rental charges not includible in the assessable value;

(ii) on the transportation charges of the return journey, of bottles only 10% of the freight charges recovered by the assessee should be included in the assessable value.

Shri Gokhale has argued that the rental charges received by the appellant/assessee cannot be termed as breakages and the charges recovered by way of debit notes by the assessee are not to be included in the assessable value. Shri Gokhale has pleaded for the acceptance of the appeal and has pleaded for the dismissal of the revenue's appeal.

5. Shri S. Krishnamurthy, SDR, states that he does not press his Cross Objection No. E/Cross/6/86-A and also application for condonation of delay No. E/COD/403/86-A in support of the cross-objection. On rental charges, he argues that the same are includible in the assessable value and relies on the orders passed by the Assistant Collector and the Collector (Appeals). On transport charges, he relies on the order in original passed by the Assistant Collector and states that the subsequent order passed by the Collector (Appeals) is not correct in law. He has stated that reliance by the assessee on the agreement with the transporter should not be taken into account as the agreement was not produced before the Central Excise authorities. He has pleaded for the dismissal if the assessee's appeal and acceptance of the revenue's appeal.

6. We have heard both the sides and have gone through the facts and circumstances of the case. The assessee had recovered rental charges from dealers at the rate of Re.1/- per crate at Rs. 6,17,920/-. The assessee has claimed deduction of rental charges collected separately as permissible deduction under Section 4(4)(d)(ii) as the containers viz. bottles being of durable nature and returnable. Durable and returnable character of the bottles in which aerated water was transported is not disputed. The Tribunal in the matter of C.C.E, Indore v. Premier Oxygen Acetylene Co. (P) Ltd. reported in MANU/CE/0132/1985 : 1985 (22) ELT 61 had held that rental charges for retention or holding of gas cylinders are not includible in the assessable value as such charges are not directly relatable to the cost of the manufacture of the excisable goods. This ratio is fully applicable to the facts of the present matter. Accordingly we set aside the findings on this and order that Re. 1 /- (Rupee one only) per crate as rental charges shall not form part of the assessable value.

7. Now coming to the issue of exclusion of transportation charges for the return journey of the bottles to the factory. The Assistant Collector had calculated the same on the basis of 50% for the journey from the factory to the destination for the aerated water and the remaining 50% for the return journey. The assessee had all along claimed that only 10% of the transportation charges should be included for the return journey of the empty bottles as there are agreements with the transporters that where a transporter does not bring back the bottles only 10% freight charges are to be deducted from his bill. The assessee has contended that the Assistant Collector has solely based his findings on the bill of the transport contractors and in most of the cases the assessee had paid lesser amount than the billed amount. The Ld. Collector (Appeals) in his subsequent appellate order had allowed the claim of the assessee on the basis of transport bills and the revenue had come in appeal against the same before us. It is a matter of common knowledge that transportation of aerated bottles is normally done in especially made trucks for this purpose and the truck which carries the bottles will normally bring them back. The assessee has claimed that he had paid for the return journey a lesser amount. We are of the view that in case the version of the assessee is to be accepted, he has to satisfy the adjudicating authority with each and every transaction of the transportation and exclusion of transportation charges for the assessable value has to be allowed on the basis of actuals since the appellants had volunteered to pay 10% of the freight, this ratio is applicable only In the present case. Accordingly we remand the matter to the Assistant Collector of Customs and Central Excise to recompute the transport charges for the return journeys on the basis of actuals paid by the assessee and for the journeys where the actuals are not available, he should take 10% of the transport charges. We also direct that while taking the data for the actual transport charges for the return journey of the bottles, the Assistant-Collector should satisfy himself that the evidence and the records produced by the assessee are genuine. With these directions both the appeals are disposed of accordingly.