Whether duty payable on transaction value on ‘as such clearance’ of inputs?

PJ/CASE LAW/2016-17/3187

Case:-COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS AGP ENGG. P. LTD.

Citation:- 2016 (337) E.L.T. 279 (Tri. - Del.)

Brief Facts:-The brief facts of the case are that appellant is manufacturer of goods falling under CTH 72, 73 & 84 of Central Excise Tariff Act, 1985. During the period September 2002, the respondent cleared inputs as such, by reversing the Cenvat credit availed thereon. As respondents had sold the inputs on higher value, therefore, Revenue is of the view that respondent is liable to pay duty on the transaction value and consequential differential duty was asked from the respondent and a show cause notice was issued for demanding duty along with interest and for imposition of penalty. The adjudicating authority confirmed the demand of differential duty and imposition of equal amount of penalty along with penalty of Rs. 10,000/- under Rule 173Q of the Rules. The said order was challenged by the respondent before the learned Commissioner (Appeals), who set aside the adjudication order. Aggrieved from the said order Revenue is before Tribunal.

Appellant’s Contention:- Learned AR submits that the respondent is liable to pay duty in the light of C.B.E. & C. Circular No. 816/13/2005-C.E., dated 16-6-2005. Therefore, the respondents are liable to pay duty on the transaction value of the inputs.

Respondents Contention:-On the other hand, learned Counsel for the respondent opposed the contention of the learned AR and submits that respondent is not the manufacturer of the inputs. Therefore, duty cannot be demanded from the respondent on transaction value and as per Rule 3(5) of the Cenvat Credit Rules, respondent is required to reverse the Cenvat credit to the extent of availment. Therefore, impugned order is to be upheld.

Reasoning Of Judgement:-It is the admitted fact that respondent is not a manufacturer of the inputs. Consequently, the respondent is not liable to pay duty on the transaction value. As per Cenvat Credit Rules, 2004 the respondent is required to reverse the Cenvat credit availed on the inputs at the time of clearance of such inputs as such. Admittedly, in this case, the respondent has cleared the inputs as such. Therefore, the only liability of the respondent is that whatever credit they have availed on these inputs, the respondent is required to reverse the same. The respondent has already reversed the said Cenvat credit. Therefore, the impugned proceedings against the respondent were not warranted. In these circumstances, they do not find any infirmity in the impugned order, the same is upheld. Appeal filed by the Revenue is dismissed.

Decision:-Appeal dismissed.

Comment:-The crux of the case is thatas per Rule 3(5) of the Cenvat Credit Rules, assessee is required to reverse the amount equal to the Cenvat credit availed on inputs, at the time of their ‘as such clearance’. Hence, the contention of the revenue department to pay duty on transaction value is erroneous and beyond the provisions of law.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2016-17/3187

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