The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) sets aside the demand of Excise Duty based on value of goods mentioned in price list even after the appellant claimed discount stating written of value in books of accounts.
M/s Forbes Marshall Pvt. Ltd, the appellants engaged in the manufacture of Pressure Reducing Stations, etc., falling under Chapter 84 of the Central Excise Tariff Act, 1985. During the disputed period, the appellants had written off/written down the value of raw material/inputs in their books of account, without reversing the CENVAT Credit availed on those written off/written down inputs.
The department had proceeded against the appellants on the ground that, in terms of the provisions of Rule 3(5B) of CENVAT Credit Rules, 2004, the appellants were required to reverse the CENVAT Credit attributable to inputs, which were availed as CENVAT Credit during the time, those were received in the factory.
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The appellants had negotiated the price with their customers in respect of the components supplied to them. On the net value of the goods (after providing discount), the appellants had discharged the central excise duty liability. However, the department has objected to payment of central excise duty at the lesser value. They have contended that the appellants were liable to pay the central excise duty on the gross value mentioned in the list price of the goods and discount claimed by them should not be available for the purpose of payment of lesser amount of duty.
On the basis of the allegations levelled on both the above issues, by the department against the appellants, the matter was adjudicated by the impugned order, wherein the Adjudicating Authority has confirmed the adjudged demands, as proposed for recovery in the show-cause notice issued by the department.
Insofar as the inputs written off/written down in their books of account is concerned, the appellants had reversed the credit in terms of Rule 3(5B) of the Rules of 2004 and such facts have also been acknowledged by the department, by way of appropriating the said amount of Rs.27,29,074/- towards the duty demand.
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The Tribunal found that the adjudicating authority had not confirmed any interest demand or did not impose any penalty on the appellants. Thus, the issue concerning reversal of CENVAT Credit on written off/written down of inputs/raw materials, stands settled.
As regards payment of the differential amount of the additional central excise duty confirmed in the impugned order. The department had issued the show-cause notices to the other units of the appellants, seeking for confirmation of the differential duty demand. The adjudication orders passed by the original authority in different cases were disposed of by the Commissioner (Appeals) in favour of the appellants.
A two member bench of S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member (Technical) observed that the impugned order is nort valid insofar as it has confirmed the adjudged demands on the appellants on the ground that they should be liable to pay additional central excise duty on the gross amount of the value of the goods mentioned in the price list. While allowing the appeal, the bench set aside the impugned order.
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