Per C.N.B. Nair :

These appeals involve common issues. Therefore, it is expedient to consider them and dispose them of together.

2. Appeal No. 2438/98-A is by the Revenue. The issues as presented in it may be taken as representative for the purpose of decision of all the appeals. The respondent in that appeal, namely, M/s. Coolade Beverages Ltd. are manufacturers of aerated waters/beverages duly liable to Central Excise duty. The manufacturing activity basically consists of bottling. They obtained the concentrate for aerated water from M/s. Britco Food Company Ltd. which is a wholly owned subsidiary for Coca Cola Corporation. The bottled drink is Coke. They sell the bottled beverage to wholesale dealers. Central Excise duty was paid based on the wholesale price of the beverage to dealers. The Central Excise authorities observed that the respondents were collecting from some wholesale dealers rent on containers (ROC) @ Rs. 7.50 per crate. Similarly, they received over Rs. 26 Lakhs from Britco under credit note as price support incentive. Credit Note No. 240 dated 18.12.95 of Britco to Coolade Beverage Ltd. states as under:-

"We have credited your account with Rs. 67,500/- towards sales generating assets placed in the franchise market for the year 1995."

3. The Central Excise authorities issued Show Cause Notice alleging that the cost of ROC and the amount received from M/s. Britco are liable to be treated as part of the price of the aerated water, and the value obtained by addition of these to the wholesale dealer price should be taken as the assessable value of the aerated water. It was contended that in terms of Rule 5 of Central Excise (Valuation) Rules, any additional consideration has to be treated as includable in the assessable value.

4. The respondents contested the Show Cause Notice. They maintained that ROC has no relation to the value of the beverages; it is charged only from a few wholesale buyers (about 3%); leasing bottles is a separate activity from manufacture of beverages and realisations from that ancillary or allied activity is not includable to the value of beverages. The appellants also maintained that the issue was covered in their favour by the decision of the Hon. Supreme Court in the case of Collector of Central Excise Vs. Indian Oxygen Ltd., 1988 (36) ELT 730 (SC) and the decision of the CEGAT in the case of Herbertson Ltd. Vs. CCE, 1997 (89) ELT 553. With regard to the amounts received from M/s. Britco, it was maintained that this payment was immaterial to the wholesale price of the beverages. The sale of the beverage to the wholesale dealers was on principal to principal basis and the wholesale price was the sole consideration. Therefore, the sale price constituted the normal price of the goods at which goods have to be assessed under Section 4 (1) (a) of the Central Excise Rules. It was maintained that Rule 5 of the Central Excise Rules had no relevance in the instant case. The Central Excise Rule comes into play only where the buyer is a related person and the price is not the sole consideration for the sale. Further, Rule 5 specifically stipulated that "the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee" only is to be added to the price where the price is not the sole consideration for the sale. In the instant case, M/s. Britco are not buyers of the beverages.

5. The Commissioner accepted the submissions of the appellant and dropped the duty demand contained in the Show Cause Notice. The Revenue have filed this appeal, contending the order of the Collector to be not legal or correct. Their contention is that the respondent had under-valued the beverages by excluding the ROC and the per unit equivalent (Rs. 1.66 per crate) of the price support. The Revenue have contended that the Collector had not correctly appreciated the facts and evidence inasmuch as he failed to appreciate that the appellants did not have a practice of char