ORDER
I.J. Rao, Member (T)
1. The miscellaneous application for change of name was allowed without opposition.
2. The point that comes up for decision in this appeal is whether delivery and collection charges, and loading and unloading charges incurred by the appellants should be allowed deduction from the sale price so as to arrive at the assessable value of the goods which are industrial oxygen gas and acetylene gas sold in cylinders. In respect of the goods, there was a rate contract at the relevant time.
3. The Assistant Collector of Central Excise ordered the inclusion of these charges in the price, in order to arrive at the assessable price, he did note that according to Section 4(2) the cost of transportation from the place of delivery shall be excluded from “such price” (where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal).
4. All the same, the Assistant Collector rejected the appellant’s request for exclusion of these charges on the ground that such charges cannot be calculated as the contract mentions them on the basis of “average” irrespective of whether the delivery is to take place at 5 Km. or 500 Kms. away. The Appellate Collector upheld the order of the Assistant Collector and hence this appeal.
5. Shri R.K. Jain, Consultant for the appellants explained that the delivery and collection charges related to the delivery of filled gas cylinders and collection of empty gas cylinders. The charges on both cases were borne by the customers and the appellants did not incur the same. He further explained that loading and unloading charges relates to the loading of filled gas cylinders at the factory and unloading at the destination and loading of cylinders at customer’s premises and bringing them back to the factory for further use.
6. Shri Jain, Ld. Consultant referred us to the rate contract and submitted that contract with the Government Department and the reimbursement by the department would be limited to the ‘actuals’ which have to be satisfactorily proved. He emphasised that the price list was filed Under Section 4 of the Central Excise and Salt Act, 1944 (main provision) and not under Sub-section (2) thereof. He argued that delivery and collection charges were purely transportation charges and they have nothing to do with the manufacturing of the goods. Further any customer is free to pick up cylinders at the factory gate. The ex-factory price i.e. to say the factory gate price was available and the genuineness of the same was never questioned by the department according to the Ld. Consultant. Shri Jain relied on two Judgments in support of his argument; in Ashok Leyland Limited v. Union of India and Ors. [reported in 1986(26) ELT 676 (Bombay)]; and Union of India V. Bombay Tyre International (reported in 1983 ELT 1896 Supreme Court He also referred to the judgment of the Tribunal in Mecneili & Magor Ltd., Calcutta V. C.C.E., Calcutta [reported in 1986(25)-ELT-556] and submitted that even though loading of filled gas cylinders was done inside the factory, the charges incurred therefor included not only the expenses upto factory gate, but also from factory gate to the destination and therefore such charges should not be included. Shri Jain further argued that charges incurred for loading the cylinders into the goods train at the railway station should not be included at all while arriving at assessable value.
7. Shri V.M. Doiphode, Ld. SDR agreed that transportation charges incurred should be deducted from the sale price when price of the goods at the factory gate is not known. The Ld. SDR further submitted that the appellants did not declare the actual transportation charges but average charges. He emphasised that loading charges incurred inside the factory should form part of assessable value irrespective of who incurred the same. In this context the Ld. SDR relied upon a Judgment of the Supreme Court in Empire Industries Ltd. and Ors. v. U.O.I. and Ors. (reported in 1985-20-ELT-179-SC).
8. We have considered the arguments of both sides. As seen from the records of the case, the appellants filed a price list wherein the ex-factory prices were shown. The department after approving the price list provisionally wanted that delivery and collection charges and loading and unloading charges should be added to the ex-factory price. The sale price of the goods at appellant’s factory is therefore known. As argued by the Ld. Consultant, there is no allegation that this sale price is not genuine. The claim by the appellants that this price was the sole consideration for sale, has not been contradicted. The buyers in this case, a Govt. Deptt. are not related persons. The Hon’ble Supreme Court in their Judgment in Union of India and Ors. etc. v. Bombay Tyre International Ltd. etc. 1983-ELT-1896(SC) held cost of transportation had to be excluded for the purpose of arriving at assessable value and that such cost is excluded when charged on average basis. Therefore prima facie the appellants’ arguments are valid insofar as transportation charges are concerned.
9. In this view, the delivery and collection charges incurred by the appellants which have nothing to do with the manufacture of gas have to be excluded. Insofar as loading charges are concerned, we accept the argument of the Ld. SDR, keeping in view the Judgment of the Supreme Court in Bombay Tyre International Ltd. case. The charges incurred for loading the goods within the factory are to be included for the purpose of the value with no reference as to who pays the same as, the expenses incurred are within the factory gate and the price/value declared by the appellants is at factory gate. We accept the arguments of the Ld. Consultant that charges incurred for loading the cylinders into the railway wagon at the railway station should not be included as these are not incurred within the factory and for all purposes this is transportation charges.
10. Unloading charges too have to be excluded from the assessable value as these are outside the factory gate. This will be in consonance with law as it now prevails and according to the Case Law cited by both sides. In the result, we allow the appeal in respect of delivery and collection charges as also unloading charges and reject the same in respect of loading charges incurred within the factory premises. The appeal is thus partly allowed.