TMI Blog2014 (8) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Inclusion of differential freight charges - Held that:- even if the appellant make profit from their activity of arranging transport by charging higher amount than the expenses actually incurred on transportation, the differential freight would not be includible in the assessable value and in this regard, the Apex Court judgement in the case of Baroda Electric Meter [1997 (7) TMI 126 - SUPREME COURT OF INDIA] would be applicable. - Decided in favour of assessee. Classification of medical grade oxygen - Held that:- When the tariff does not provide that the classification would be determined by the condition of the end use, the condition of end use cannot be brought in for deciding the classification and just because the medical grade oxygen manufactured by a manufacturer and sold by him to his customers was further sold to other dealers for non-medical, use the classification of the oxygen manufactured and cleared by the manufacture cannot be changed to non-medical oxygen. - notwithstanding the statement of some of the dealers that the medical grade oxygen purchased by them from the appellant company was sold by them to some other persons for non-medical use the oxygen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amounts are charged. About 40% of the appellant's sales of gases are on their own cylinders and about 40% to 45% of the sales of gases are in the cylinders brought by their customers. In the remaining 15% to 20% cases, the gas is cleared either through pipe line or in tankers. The appellant also arrange transportation of the gases to the customers premises whenever a request for this is made by the customers' for which they separately charge some amount from them. 1.3 There are four points of dispute in these appeals. 1.3.1 The first point of dispute is as to whether the cylinder rental and maintenance charges in cases of supply of gases in the appellant's own cylinders and the charges for testing of the cylinders in the cases of supply of gases in the cylinders brought by the customers would be includible in the assessable value of the gases sold or not? The Department is of the view that these charges would be includible in the assessable value. 1.3.2. In respect of the transportation charges, the objection raised by the department is that actual expenses incurred by the appellant for arranging the transportation of gas filled cylinders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 11AC and penalty of ₹ 50,000/- on Shri P.K. Gupta, Vice President of the appellant company. The amount of demand confirmed along with interest includes the Cenvat Credit demand of ₹ 9,05,971/- on the cryogenic storage tanks. The dispute in respect of period from 1.11.2002 to 31.12.2004 for which 5 show cause notices had been issued were adjudicated by the Commissioner vide order-in-original dated 22.11.2005 by which total duty demand of ₹ 1,95,85,117/- along with interest under Section 11AB was confirmed and besides this, penalty of equal amount under Section 11AC was imposed. In both these orders, the Commissioner held that cylinders rentals and maintenance charges in the cases where gases were supplied in the appellant's own cylinders, the cylinder testing charges, in the cases where the gases were supplied in the cylinders brought by the appellants, and the differential freight i.e. the difference between the freight expenses actually incurred by the appellant and the amount charged by the appellant towards freight would be includible in the assessable value of the goods. On the question of classification of medical grade oxygen, the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73-CESTAT-DEL, wherein the Tribunal in para 5.1 of the judgement relying upon the Apex Court judgement in the case of Bombay Tyre International reported in 1983 (14) ELT 1896 (SC) had held that if some goods are marketable without being put into containers, the cost of containers including their testing charges would not be includible in the assessable value, that the ratio of this judgement is squarely applicable to the facts of this case and accordingly, the cylinder rental and maintenance charges in the case where the gases are supplied in the appellant's own cylinder would not be includible in the assessable value, that in any case, in respect of the period prior to 1.7.2000, the issue of inclusion of cylinder rental/maintenance charges in the assessable value stands decided by the Apex Court in the appellants favour in its judgement in the case of Indian Oxygen Ltd. reported in 1988 (36) ELT 730 (SC), that as regards cylinders testing charges in cases where the gases were supplied in the cylinders brought by the customers, the same would not be includible in the assessable value in view of the above mentioned judgement of the Tribunal in the case of CCE Vs. Grasim Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the deemed normal price concept of the erstwhile Section 4(1)(a) of the Central Excise Act and whether the Section 4 of the Central Excise Act, 1944 as substituted w.e.f. 1.7.2000 and the definition of 'transaction value' in Section 4 (3)(d) are subject to Section 3 of the Act, to a Larger Bench. With regard to the inclusion of the differential freight in the assessable value, he pleaded that the same would be includible in the assessable value of the goods and the judgement of the Apex Court in the Baroda Electric Meter being with regard to the provisions of Section 4, as the same stood during the period prior to 1.7.2000, would not be applicable to the facts of this case. On the question of classification of medical grade oxygen, he pointed out to the statements of certain dealers who have stated that the medical grade oxygen purchased by them from the appellant in cryogenic tankers had been sold by them to several buyers for non-medical use. He emphasized that since this oxygen had not been supplied in cylinders, its use for medical purposes cannot be insured and hence, it would not be classifiable as medical grade oxygen under heading no.2804.11 and would be correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses, but this is not the department's case and there is neither any allegation and nor any evidence in this regard. In view of this, the impugned orders confirming duty demand on the freight differential are not sustainable. 8. As regards the inclusion in the assessable value of the cylinder rental and maintenance charges in the case where the gases were supplied in the appellant's own cylinders and the charges for cylinder testing done at the request of the customers, in the cases where the gases were supplied in the cylinders brought by the customers, it is not disputed that the gases, in question, were marketable as such in as much as a substantial quantity of the gases was being supplied in tankers as well as through pipe line and also in the cylinders brought by the customers and as such, the packing of the gases into cylinders is not necessary for making the gas marketable. In view of this factual matrix, the ratio of the Tribunal's decision in the case of CCE Vs. Grasim Industries Ltd. reported in 2014-TIOL-573-CESTAT-DE would be applicable to this case and these charges would not be includible in the assessable value. 9. Coming to the classification of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BOC India Ltd.; K.S. Rao Kalyan Mukhopadhyay Vs. CCE, Jamshedpur, reported in Manu/CK/0230/2007. Therefore, notwithstanding the statement of some of the dealers that the medical grade oxygen purchased by them from the appellant company was sold by them to some other persons for non-medical use the oxygen gas, in question, would be correctly classifiable as medical grade, oxygen under sub-heading 2804.11, as the fact that it is more than 99.5% pure is not disputed. Therefore, the duty demand confirmed by the Commissioner on this count is also not sustainable. 10. As regards the Cenvat Credit demand on the used cryogenic tanks, which have been removed, it is not disputed by the department that the appellant at the time of clearance of the used cryogenic tanks had reversed the Cenvat Credit equal to the amount of duty paid on the transaction value. In view of this, no amount over and above amount already reversed would be recoverable from the appellant in view of the judgments of the Hon'ble Madras High Court in the case of CCE, Salem Vs. Rogini Mills Ltd. (supra) and the judgement of the Hon'ble Punjab Haryana High Court in the case of Raghav Alloys Pvt. Ltd. (Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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