2024-VIL-406-CESTAT-KOL-CE

CENTRAL EXCISE CESTAT Cases

Central Excise - Valuation of goods stock transferred to sister unit – non-inclusion of costs in CAS-4 – Demand of differential duty – HELD – initially the assessable value was arrived at by the appellant on the basis the previous year’s cost. At the end of the financial year, when the actual figures were available, CAS certificate was obtained and the differential duty was paid along with interest and the same was also intimated to the Department. However, demand has been raised on the appellant holding that certain elements of cost have not been added while ascertaining the assessable value - the department has not adduced any evidence to the effect that which cost was not included and why such cost is to be included. In the absence of any specific cost not added in the assessable value by the appellant, the allegation of the department is not substantiated - when the entire exercise is revenue neutral, the demand is not sustainable as the duty paid will be available as credit for their sister unit and there is no loss of revenue to the exchequer - the entire exercise is revenue neutral and thus the demand is liable to be set aside on this ground alone - Since the demands of central excise duty and the reversal of Cenvat Credit confirmed in the impugned order are held to be not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise – the impugned order and appeal is allowed - Valuation of goods sent free of cost to customers – Dept case that value adopted is lower than the value at which the same is sold to customers – HELD - the appellant has adopted the valuation method of 110% of the cost, to pay duty on the free supplies to customers - The department wants the appellant to adopt the value of similar goods sold by the appellant for delivery at any other time nearest to the time of removal of goods under assessment. The Appellant submits that the goods sent free of cost are samples and there is no comparable sale made to any other customer - when similar goods are not sold by the appellant, the valuation adopted by the Appellant is valid and thus there is no short payment of tax. Accordingly, the demand confirmed in the impugned order on this count is not sustainable and set aside - CENVAT Credit taken on goods rejected, returned to the supplier, and subsequently replaced/received in the factory – HELD – when the goods are purchased as inputs but are later returned for being defective and are replaced by the supplier, credit cannot be denied to the supplier - Regarding proof of replacement of goods, the SAP entries will prove that the goods retuned have been replaced or not. However, credit on the goods returned cannot be denied to the appellant on only procedural ground. Accordingly, demand confirmed in the impugned order on this count is not sustainable and hence set aside - CENVAT Credit of services not used in relation to manufacture of final products – HELD - the credit in this case has been availed by the Appellant on certain installation and other services which were availed in respect of Erection, Commissioning, Installation provided by the appellant at the head office. There is no specific finding in the impugned order for denial of this credit to the appellant. Accordingly, the appellant is eligible for this credit - Demand of duty on account of difference in book stock and physical stock in respect of Plate Hardox and MS Plate-removal without payment of duty – HELD – duty has been demanded from the appellant on the assumption that the said goods have been removed without payment of duty - the department has not produced any evidence to substantiate the allegation that the goods have been clandestinely removed by the Appellant without payment of duty. It is a settled law that no demand can be raised without any evidence or proof of clandestine removal. Since there is no evidence available on record to substantiate the allegation of clandestine removal, the demand confirmed in the impugned order on this count is not sustainable and set aside.

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