1989 PLP 2454 (MLD)

3. The Assistant Collector, Central Excise, Visakhapatnam, by an order dated 3-6-1965 held that the respondent had to pay excise duty on the interest earned @ 18% during the relevant period. He further held that since the respondent had suppressed this fact from the revenue, in the past 5 years, under Sub.8 read with section 11A of the Act, these arc includible. He also included the rentals of these cylinders in the value. On an appeal the Collector of Central Excise, Madras upheld the said order with certain modifications.

4. Dissatisfied with the aforesaid, the respondents appealed to the CEGAT. In its order under appeal, the Tribunal observed, inter alia, as follows: "As regards charge on account of rental for the cylinders and the interest which accrues on account of deposit receipts for the supply of gases in returnable cylinders, we are not persuaded that either of these charges is related to the cost of manufacture of the goods as such." 5. 'The Tribunal, therefore under section .4 deleted from the value, rentals for the cylinders and interest which accrued on account of deposit receipts for the supply of gases. Hence, this appeal by the Collector.

6. It is well-settled that the levy under the Act is on the manufacture. Under SA(1)(a) of the Act, excise duty is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section be deemed to be the normal price thereof that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. Here the sale is of the gases. The levy is on the manufacture of gases and the excisable goods are these gases.

7. The scope of S.4 has been explained by this Court in Union of India v. Bombay. Tyre International Ltd., (1984) I SCR 347 as well as the ramifications thereof m Asstt. Collector of Central Excise v. Madras Rubber Factory Ltd., 1986 Supp SCC 751. 1n the light of the aforesaid principles it has to be borne in mind that the supply of gas cylinders is ancillary to the supply of gases but it is strictly not incidental thereto because there are classes of persons who can take delivery of these gases without supply of cylinders by the respondent and in those cases no question of charging rental nor interest on those deposits for cylinders would arise. It is true that the gas being a commodity of peculiar nature had to be delivered in cylinders but these cylinders might be supplied either by the supplier as an ancillary activity or brought by the consumers or purchasers at their own risk and cost. For purchasers taking it in their own cylinders supplied by them there was no charge for them. This is not an activity for the manufacture of gases. This is ancillary to it but not incidental. Any income either in the shape of interest on deposits, notional or real, may be earned on the deposit for the safe return of cylinders, or any rental would be though ancillary but would not be the price for the manufacture. These might be profits or gains, if any, of any ancillary or allied venture. If that is the true position, then on the principle under Section 4(1)(a) of the Act the Tribunal was right in excluding these two amounts while computing the value of the excisable goods.

8. Mr. A. K. Ganguli, learned counsel appearing for the revenue, sought to urge before us that there are two different classes of buyers, one class of such buyers was who used to bring their own cylinders and the others used to get their supplies through the cylinders of the suppliers. According to him, different rates for these two classes of buyers, in fact, constitute two different markets and are permissible. This, according to him, is contemplated under the first proviso to section 4(1)(a) of the Act which reads as follows: "(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers."

9. There may be different classes of buyers for different classes of goods, section 4(1)(a) of the Act emphasises that if the goods is of the same type, the prices should also be the same. The proviso to the said section postulates that where in accordance with normal practice such goods, namely, the gases are sold to different classes of buyers then different prices may be charged. If gases had been sold to different classes of buyers at different rates, it is possible that there might be different markets for the same. But here the charges like rentals for the cylinders and the notional interest income are for ancillary or allied services, and that is not an activity of manufacture. Hence, section 4(1)(a) proviso can be of no avail to the revenue.

10. It is a case of two different supplies. One is supply of gases and the other is incidental supply of cylinders for rent. In that view of the matter, in our opinion, the Tribunal was right in the view it took. The interest, notional or real, I accruing on deposits for the safe return of cylinders as well as the rentals would not constitute part of the assessable value.

11. In the aforesaid view of the matter the order of the Tribunal needs no interference. The appeals, accordingly, fail and are dismissed. There will be no order as to costs. M.B.A./10/F.C. Appeals dismissed.