ORDER
G.R. Sharma, Member (T)
1. In this case we are dealing with 2 appeals. Appeal No. E/4400/92-A and No. [E/4843/92-A] filed by the Collector, Central Excise, Bhubneshwar. Both the appeals arise out of a common Order-in-Appeal No. 183-184/BBSR/91, dated 6-12-1991. These 2 appeals are, therefore, being disposed of by a common order.
2. The Department has come up in appeal on the grounds that the Collector (Appeals) erred in holding that the cost of loss of empty bottles occurring during the return journey of the truck shall be allowed deduction from the price for computing duty and that the transport cost for the return of empty bottles to the factory has to be deducted from the assessable value; that the Collector (Appeals) in coming to the above conclusions has misplaced total reliance on the Tribunal’s judgment in the case of M/s. Aqueous Victuals Pvt. Ltd. reported in 1988 (38) E.L.T. 42.
3. Shri A.K. Ganguly, the learned Senior Advocate with Ms. S. Bhat-tacharya, Advocate appeared for M/s. Mamta Drinks & Industries Ltd. The ld. Sr. Advocate argued that he is addressing his arguments on all the issues involved in the 2 appeals. The ld. Sr. Advocate argued that the Hon’ble High Court of Orissa in its judgment dated 26-8-1988 in Writ No. OJ C-42 of 1980 directed that the assessing authority should permit the assessee to submit its statement of deduction with the price lists already filed and also with fresh price lists for, proper determination of excise duty liability and take into account the deductions that are permissible under the judgments and orders of the Supreme Court in the Bombay Tyres case etc. by 20th September, 1988.
4. The ld. Sr. Advocate argued that in accordance with the directions of the High Court, revised prise lists were submitted on 19-1-1989 showing deductions towards inward carriage charges of empty bottles, expenses incurred on loss of empty glass bottles in the return journey from the buyer’s premises to the factory. The A. C. approved the price lists by including the above amount and finalised the assessment. The ld. Sr. Advocate cited a number of decisions by various Courts and this Tribunal.
5. Quoting extensively from the judgments referred to by him, ld. Sr. Advocate argued that the twin issues of exclusion of the actual expenses incurred on account of transport of empty bottles to the factory and actual expenses incurred on loss of empty glass bottles in the return journey are fully covered, the ld. Sr. Advocate argued that the Hon’ble Supreme Court in the case of C.C.E. v. Indian Oxygen held that “But here the changes like rentals for cylinders and the notional interest income are for ancillary or allied services and that is not an activity of manufacture. The ld. Sr. Advocate argued that on the ratio of this judgment the expenses on loss of empty bottles are for ancillary and allied service and that is not an activity of manufacture and hence cannot be included in the price for computing Central Excise duty. This is further supported by the decision of the Hon’ble Tribunal in the case of Aqueous Victuals v. CCE reported in 1989 (38) E.L.T. 42 wherein it was held that rental charges for crates are not includible in the assessable value as such charges are not directly relatable to the cost of manufacture. The ld. Sr. Advocate also referred to the decision in the case of Vijaywada Bottling Company v. C.C.E. reported in 1993 (63) E.L.T. 526 and argued that in this case the Hon’ble Tribunal held that “In view of the Tribunal’s judgment in the case of C.C.E. v. Century Spinning & Mfg. Co. reported in 1988 (37) E.L.T. 277 that the deduction of cost from the value of the excisable goods has to be the cost of packing. It was held that “Once the Department accept that the containers in the present case were durable and returnable and for that reason their cost was deductible from assessable value, the cost has to be full cost of packing which should take not only the initial purchase price of the container, but also further expenses on its manufacture and repairs. In view of the above referred judgments and many other judgments on the issue, the ld. Sr. Advocate argued that their case for deduction of loss of empty glass bottles during the course of return journey is covered by these judgments fully.
6. The ld. Sr. Advocate argued that it is a matter of common knowledge that transportation of aerated water bottles is normally done in specially made trucks for this purpose and the truck which carries the bottles normally brings them back. He stated that certain expenses are incurred in bringing these bottles back, but the question is whether this activity of bringing back empty bottles to the factory is a manufacturing activity or it is only an ancillary or allied service. The ld. Sr. Advocate argued that it was an ancillary or allied service and therefore the expenses incurred on this service cannot be included in the assessable value as supply of empty bottles is not a manufacturing activity. The ld. Sr. Advocate argued that in the case of Spring Fresh Drinks v. C.C.E. reported in 1991 (54) E.L.T. 333, the Tribunal held – cost of transportation for bringing back empty crates from buyers premises to the factory of appellants not includible having nothing to do with manufacture of products. Concluding his arguments, the ld. Sr. Advocate argued that he adopts all the pleas made before Collector (Appeals) and that their case was on all fours covered by the decided cases and hence prayed for rejection of Department’s appeals.
7. Shri Prabhat Kumar, the ld. SDR for Revenue argued that the Collector (Appeals) has not correctly applied the ratio of the judgment of the Hon’ble Tribunal in the case of M/s. Aqueous Victuals (P) Ltd. v. C.C.E. reported in 1988 (38) E.L.T. 42. He argued that these deductions are to be examined in the light of the provisions of Section 4(4)(d)(i) of the Central Excises & Salt Act, 1944 despite the fact that the contract price which is deemed to be the normal price under proviso 1 to Section 4(1)(a) of the Act does not envisage for any deduction on account of freight and maintenance charges of crates and carriage of empty bottles. The ld. SDR argued that the law is quite clear on the issue that deduction of freight charges is permissible from place of removal to the place of delivery and not vice versa. Citing from the judgment of the Tribunal in the case of Jabalpur Oxygen Co. v. C.C.E. reported in 1991 (52) E.L.T. 455 the ld. SDR argued that it was held “As already stated above Supreme Court’s judgment reported in 1988 (36) E.L.T. 723 has clearly held that such loading charges are includible in the assessable value. Unloading charges of cylinders from the vehicle in which they are brought in the factory and also stacking charges should form part of assessable value as they are charges incurred by the assessee before the gas is packed in cylinders”.
8. We have heard the arguments of both sides perused the grounds for appeal and considered them. We have to observe that there is no dispute that the bottles are durable and returnable and therefore the cost of packing is not includible in the assessable value. The loss of empty bottles is a cost to the assessee. Can this cost be separated from the cost incurred on replacement of bottles? If not, this cost clearly covers the breakages during the return journey of empty bottles. After all nothing which is durable and returnable can last for all time to come. Everything becomes unserviceable because of wear and tear during handling. Therefore, every durable and returnable article of packing comes to an end and consequently its cost also vanishes. As the cost of packing is not includible in the assessable value, we hold that the cost of breakages of empty glass bottles will not be includible in the assessable value.
9. Now coming to the question of expenses incurred for transportation of empty bottles from the wholesale buyer’s premises to the factory, we agree with the ratio of judgment in the case of Spring Fresh Drinks v. C.C.E. reported in 1991 (54) E.L.T. 333 and hold that these expenses have to be excluded from the assessable value.
10. In the light of the above findings, the appeals are dismissed.
11. Consequential relief, if any, will be admissible to M/s. Mamta Drinks & Industries Ltd. in accordance with law.