SC: Confirmation of an Auction Sale Does Not Bar Judicial Scrutiny of Reserve Price Valuation  ||  Supreme Court Sets Aside Conviction of Four Men in a 1998 Gang Rape Case  ||  Supreme Court: Privy Purse Privileges of Princely Rulers are Not Enforceable Legal Rights  ||  Delhi HC: Repeated Court Summons May Distress and Re-Traumatize Child Sexual Assault Victims  ||  Jammu and Kashmir High Court: Labeling Someone as a Terrorist Associate Amounts to Defamation  ||  Delhi HC: Setting Aside or Altering a Judge’s Order by a Higher Court Doesn’t Affect Their Integrity  ||  Delhi High Court: Accused Cannot be Faulted For Smart Replies; Interrogator Must be Sharper  ||  Supreme Court: Belated Jurisdictional Challenge Impermissible After Participation in Arbitration  ||  Supreme Court: Failure to Prove Specific Overt Acts of Each Unlawful Assembly Member Not Fatal  ||  Supreme Court: Parental Salary Alone Cannot Determine OBC Creamy Layer Status    

Inox Air Products Ltd. Versus The Commissioner of GST and Central Excise - (Customs, Excise and Service Tax Appellate Tribunal) (20 Jun 2023)

Fixed Facility Charges has to be included in the assessable value for discharging cenvat credit

MANU/CC/0153/2023

Service Tax

The Appellant is registered with the department for providing various taxable services. They are engaged in the manufacture of goods viz. Liquid Nitrogen, Liquid Oxygen and they supply these goods to various customers. The liquid gases are transported by trucks in special vehicle transport tanks and delivered to the customers as per the requirement.

Appellant was receiving fixed facility charges (FFC) from their customers for providing storage tanks. The ownership, control, maintenance and insurance are undertaken by the appellant and the customers are restricted to use the said tanks for storage of the products purchased from the appellant alone. It therefore appeared to the department that the appellant is providing services in the nature of ‘supply of tangible goods’. Show cause notice was issued to the appellant demanding service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalty. On appeal, the Commissioner (Appeals) upheld the same. Hence, present appeal.

The period of dispute is from 16th May, 2008 to March 2009. The demand of service tax has been raised on the Fixed Facility Charges collected by the Appellant for supply of tanks for storing the liquid gases. Learned Counsel has explained that they are engaged in the manufacture of liquid gases and the said product being in the nature of liquid gas cannot be supplied to customers without arranging the proper facility for storage. The tanks have been thus bought by the Appellant which is installed in the premises of the customer. The Appellant collects FFC from the customers and as per the Board circular and directions, they have been discharging excise duty on the said charges.

The Appellant entertained doubts as to whether FFC has to be included in assessable value for discharging excise duty and also whether credit can be availed of such duty. Though letters were issued to department seeking clarifications, there was no response. The Appellant then filed writ petition before High Court of Bombay and, the High Court directed the Board to issue clarification. Pursuant to this, the Board vide circular dated 10th November, 2014 has clarified that, FFC charges has to be included in the assessable value for discharging cenvat credit.

During the disputed period, the Appellant has been discharging excise duty on the FFC which is not disputed by the department. Since it is also clarified by the Board in the appellant’s own case that, the said charges have to be included in the transaction value for payment of excise duty, there is no reason to hold that FFC charges are in the nature of consideration received by Appellant for providing supply of tangible goods. Relevant Board circular is binding on the department. The impugned order is set aside. Appeal allowed.

Tags : DEMAND   PENALTY   LEGALITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved