VIJAYAWADA BOTTLING CO. LTD. versus COLLECTOR OF CENTRAL EXCISE, GUNTUR

Citation: [1997] SUPP. 3 S.C.R. 675 · Decided: 02-09-1997 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

-· 
VIJAYAWADA BOTILING CO. LTD. 
A 
v. 
COLLECTOR OF CENTRAL EXCISE, GUNTUR 
SEPTEMBER 2, 1997 
B 
[S.C. AGRAWAL AND M. JAGANNADHA RAO, JJ.] 
Excise-Central Excises and Salt Act 1944-Section 4 and Tariff Item 
1-B of First Schedule-Manufacture and sale of Aerated Water (Maaza 
Mango) in retumable bottles by the assessee-Se1vice Charges incu"ed and C 
realised by assessee in connection with re- use of such bottles-Held, process 
undertaken not pmt of manufacturing process of aerated water-But, to be 
treated as a palt of process of packin~Hence, amount realised not includible 
in assessable value of aerated water-Matter remitted for verification of actual 
service charges and for re-dete1mination of assessable value. 
The appellant, a manufacturer of 'Maaza Mango' (mango drink 
falling under Tariff Item 1-B of the First Schedule to the Central Excise 
D 
and Salt Act 1944), filed price-lists wherein amounts of Rs. 2.50 per crate 
towards rental and Rs. 3.00 per crate towards service charges were not 
included in the price of aerated water. The service charges incurred by the 
assessee pertained to the activities of unloading of empty bottle outside E 
the ·factory and sorting them brandwise, separating the defective bottles 
and thereafter, cleaning of bottles chemically in the factory wherein the 
bottles brought to the factory were placed in conveyors to automatic bottle 
washing plant from where they came out after washing. Then, the bottles 
were examined again in strong light to avoid contamination. The Assistant F 
Collector of Central Excise while according approval to the assessable 
value as shown in the price list included the said amount of rental .and 
service charges in the price. The stand of the Assistant Collector was 
affirmed by the Collector of Central Excise (Appeals). The Customs, 
Excise and Gold (Control) Appellate Tribunal held that rental charges G 
were includible in the assessable value and the matter was remitted to the 
Assistant Collector of Excise for the purpose of veril)'ing the actual rental 
charges of the bottles and re-determine the assessable value of aerated 
water. With respect to service charges, the Tribunal held that these charges 
collected by the appellant in respect of the activities undertaken related to 
manufacture of excisable goods in question and were therefore included in H 
675 
676 
SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R. 
A the assessable value of aerated water. Aggrieved, the assessee filed the 
present appeals. 
Allowing the appeals, the Court 
HELD : 1.1. The Tribunal was not right in holding that the service 
B charges claimed by the assessee is includible in the Assessable value. The 
process undertaken by the assessee relates to preparing the bottles used 
earlier to be re-used for the purpose of bottling of the aerated water 
produced by the appellant. Since the aerated water has to be supplied in 
packed bottles only, the activities for which the appellant was claiming 
C service charges related to the process of packing after the manufacture of 
aerated water. Since there is no dispute that the bottles are durable and 
returnable containers, the activities undertaken by the appellant is to· en-
sure that the empty bottles that have been received back are available for 
re-use for bottling of aerated water and is to be treated as part of process 
of packing and not as part of the manufacturing process of aerated water. 
D 
[680-B-D] 
1.2. Since the matter as regards rental charges is already remitted to 
the Assistant Collector of Central Excise for purpose of verifying the actual 
rental charges of the bottles and to re- determine the assessable value of 
aerated water, it is directed that the Assistant Collector shall also verify the 
E actual service charges and re-determine the assessable value of aerated 
water after such verification, on necessary material to be furnished by the 
appellant. [680-F] 
CCE v. Ce11twy Spg. a11d Mfg. Co. Ltd., [1997] 11 SCC 709, relied on. 
p 
CCE v. lndia11 oxyge11 Ltd., [1988] 4 SCC 139 and CCE v. Ce11tury Spg. 
a11d Mfg. Co. Ltd., (1988) 37 ELT 277 (CEGAT), referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 11445-47 
of 1995. 
G 
From the Judgment and Order dated 8.5.92 of the Customs Excise 
& Gold (Control) Appellate Tribunal, New Delhi in F.O. No. 277 to 279 
of 1992-A. 
Ravinder Narain and Ms. Arnita Mitra for the Appellant. 
H 
R. Mohan,. R.N. Verma and V.K. Verma for the Respondent. 
-· . 
VDAYAW
Excerpt shown. Read the full judgment & AI analysis in Lexace.