Issue:- Credit of duty paid on bought out items can be taken if their value included in assessable value.

PJ/Case Law/2013-14/2108

Case:- AJRI ENGINEERING INDUSTRIES PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, PUNE-II

Citation:- 2014-TIOL-439-CESTAT-MUM

Brief facts:- The appellant is in appeal against the impugned order denying CENVAT credit taken by them on certain inputs which were directly supplied by the appellant to their customers on payment of duty. Brief facts of the case are that the appellant is a manufacturer of sugar manufacturing equipments and parts thereof. To manufacture and operate these equipments the appellant requires certain devices like chopper, leveler, transformer etc. which they procured from the market and the same were directly supplied to their customers. The appellant took credit on these bought out items and included in the value of equipments and paid duty thereon. The Revenue was of the view that as these inputs were not received in the factory and not used in the final product therefore they are not entitled to take credit.

Appellant’s contentions:- The ld. counsel for the appellant held that if any inputs on which credit has been taken are cleared “as such' on payment of duty, the credit on the same could be availed.

Respondent’s contentions:- The Ld. Counsel for the respondent held that since the goods procured where sold by them directly to the customers instead of using them on their own. Thus the revenue was of the view that Cenvat credit shall not be allowed on such inputs.

Reasoning of judgment:- As the Tribunal in the case of Ajinkya Enterprises vs. CCE - 2013 (288) ELT 274 = (2011-TIOL- 1333-CESTAT-MUM) which was affirmed by the Hon'ble High Court of Bombay in 2013 (294) ELT 273 (Bom) = (2012-TIOL-578-HC-MUM-CX) wherein this Tribunal held that if any inputs on which the assessee has paid the duty and the same has been cleared and availed credit thereof which were cleared by them “as such” on payment of duty, the duty paid by them shall amounts to reversal of credit taken on these inputs. Therefore, in the light of Ajinkya Enterprises (supra), the issue is no more res integra. Accordingly, he held that the appellant is entitled to take credit on bought-out items which have been cleared on payment of duty.

In view of the above findings, the impugned order was set aside and the appeal was allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- The crux of this case is that credit of duty paid on bought out items may be availed by the assessee if their value is included in the assessable value on which again excise duty is paid. It was held that as the duty is paid again on clearance of bought out items along with final product, it amounts to reversal of credit taken on bought out items. Accordingly, the appeal of the assessee was allowed.

Comments

PJ/Case Law/2013-14/2108

Post a Comment

Query