Judgment

SABYASACHI MUKHARJI, J. :- These appeals are under S. 35L(b), Central Excises and Salt Act, 1944 (hereinafter called the Act) directed against the decision of the Customs Excise (Gold) Control Appellate Tribunal, New Delhi (hereinafter called the CEGAT).

2. The respondent M/s. Indian Oxygen Ltd., Visakhapatnam, are manufacturers of dissolved acetylene gas and compressed oxygen gas (hereinafter called the gases). The respondent was supplying these gases in cylinders at their factory gate. For taking delivery of these gases, some consumers/customers used to bring their own cylinders and take the delivery, while others, used to have the delivery in the cylinders supplied by the respondents. For the purpose of such supply of cylinders, certain rentals were charged by the respondent and also to ensure that these cylinders are returned properly, certain amount of deposit used to be taken from the customers. On those deposits notional interest @ 18% per annum was calculated. These two amounts with which we are concerned, namely, the rentals of the cylinders and the notional interest earned on the deposit of cylinders are the subject-matters of the dispute herein. Whether these two amounts were includible in the value under S. 4 of the Act is the question. The revenues case is that the notional income on deposit of cylinders and the rental are part of the assessable-value and, hence, should be included in computing the assessable-value. The respondent, however, disputed that. They had neither included such rentals nor the interests received from the buyers in the price list for the assessment. Therefore, the revenue issued show-cause notices to the respondent. In their reply the respondent stated that the deposits from buyers were only to ensure return of the gas cylinders from the customers.

3. The Asstt. 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 R. 8 read with S. 11A of the Act, these are 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 S. 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 S. 4(l)(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) 1 SCR 347 as well as the ramifications thereof in Asstt. Collector of Central Excise v. Madras Rubber Factory Ltd., 1986 Supp SCC 751. In the light of the aforesaid principles it has to be borne in mind that the supply of gas cylinders is ancill