S.C.Agrawal, J. - (1.) M/s. Vijayawada Bottling Co. Ltd., the appellant herein, is a manufacturer of MAAZA MANGO [mango drink] falling under Tariff Item 1-B of the erstwhile First Schedule to the Central Excise Act, 1944. The appellant filed for approval a price list No. 17/1984-85 dated August 6, 1984 in respect of the said product wherein the price was shown as Rs. 32/- per crate of 24 bottles. In the said price list there was a note to the effect that the appellant was realising Rs. 2.50 per crate towards rental and Rs. 3.00 per crate towards service charges and the said amounts were not included in the price. The Assistant Collector of Central Excise, Vijayawada, issued notice dated August 17, 1984 requiring the appellant to show cause why the said amount of rental and service charges should not be included in the price. The appellant submitted a reply to the said show cause notice. By order dated November 30, 1984, the Assistant Collector of Central Excise while according approval to the assessable value as shown in the price list included in the said amount of rental and service charge in the price. The Collector of Central Excise (Appeals) by his order dated April 26, 1986 dismissed the appeal of the appellant and affirmed the order passed by the Assistant Collector. The appeal of the appellant before the Customs, Excise and Gold (Control) Appellate Tribunal was first heard by a bench of two learned members of the Tribunal (Shri V. P. Gulati and Miss S. V. Maruthi). In view of the decision of this Court in Collector of Central Excise v. Indian Oxygen Limited, (1988) 4 SCC 139 , both the learned Members held that rental charges were includible in the assessable value. There was, however, difference of opinion among the learned Members on the question whether service charges are includible in the assessable value. The Judicial Member (Miss S. V. Maruthi), relying upon the order of the Tribunal in Collector of Central Excise v. Century Spg. and Mfg. Co. Ltd., 1988 (37) ELT 277, held that the service charges that were claimed related to unloading, sorting out the branded bottles, separating the broken bottles before the bottles are sent to automatic bottle washing plant and that these activities do not relate to the manufacture of aerated waters which are the subject-matter of the excise duty and that in view of Section 4(4)(d) of the Central Excise Act, 1944 (hereinafter referred to as The Act), the entire cost relating to durable and returnable containers should be excluded which include these miscellaneous service charges. The Technical Member (Shri V. P. Gulati) was, however, of the view that service charges have to be included in the price for the purpose of arriving at the assessable value. He held that the preparatory operations to ensure that the bottles are fit for bottling have to be considered a part of manufacturing process and the cost of the same has to be reckoned towards the manufacture of the appellants product. In view of the difference of opinion among the two learned Members, the matter was referred to the third Member of the Tribunal on the following point of difference:"Whether in the facts and circumstances of the case, the service charges do not relate to the manufacture of aerated water, as claimed by the appellants, and are, therefore, to be excluded for arriving at the assessable value as held (by) Member (Judicial) or these relate to the manufacture of aerated water and are, therefore, to be included for arriving at the assessable value as held by Member (Technical)."
(2.) The third learned Member of the Tribunal (Shri P. C. Jain) agreed with the view of the Technical Member and held that the service charges collected by the appellant in respect of the activities undertaken by them related to the manufacture of the excisable goods in question. In view of the majority opinion the Tribunal has held that the service charges, namely, for sorting out the printed bottles separating the broken bottles before they are sent to automatic bottle washing plant relate to manufacture of aerated water and are includible in the assessable value of aerated water. The appeal of the appellant as regards service charges was, therefore, dismissed, but the appeal was allowed in respect of the rental charges and the matter was remitted to the Assistant Collector to verify the actual rental charges and re-determine the assessable value of aerated water for deducting the same from the price of the aerated water. Feeling aggrieved by the decision of the Tribunal, relating to inclusion of service charges in the price, the appellant has filed this appeal.
(3.) Section 4 of the Act makes provision for valuation of excisable goods for the purpose of charging of excise duty in cases where under the Act duty of excise is chargeable on any excisable goods with reference to value. For the purpose of Section 4, the expression "value" is defined in clause (d) of Section 4(4). The relevant part of the said definition is produced as under: "(4)(d) "value" in relation to any excisable goods,- (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation.- In this sub-clause "packing" means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound;" ;