The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai Bench has ruled in favor of the appellant by allowing CENVAT credit on ‘catch covers’ used in physician samples. The tribunal set aside the order of the Commissioner of Central Excise ( Appeals ), Mumbai-III, which had earlier upheld the denial of CENVAT credit.
Softsule Pvt. Ltd., appellant-assessee engaged in the manufacturing of pharmaceutical products, had availed CENVAT credit on ‘catch covers’ used for physician samples. However, the revenue authorities denied the credit, arguing that these covers were not used as inputs in the manufacture of final products. They further contended that the cost of catch covers was not included in the assessable value of the final product. The Commissioner (Appeals) upheld this view, leading the assessee to file an appeal before CESTAT.
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The tribunal examined Rule 3 of the CENVAT Credit Rules, 2004, which allows manufacturers to claim credit on inputs used in the manufacturing process. The tribunal noted that the revenue had not alleged that the catch covers were not received by the assessee or that duty was not paid by the supplier. Since the materials were received in the factory for their intended purpose, the tribunal ruled that the department’s argument was invalid. The tribunal clarified that the law does not require the cost of packing material to be included in the final product’s value to claim credit.
The tribunal also observed that the same issue had been previously decided in favor of the assessee for different periods. In Final Order No. A/88078/17/SMB dated 16.06.2017, the tribunal had ruled that there was no legal requirement to include packing material costs in the final product’s value for availing CENVAT credit. Similarly, in Final Order the tribunal reaffirmed this view. Since the current dispute pertains to January 2012 to September 2012, the tribunal maintained consistency with its previous rulings.
The bench, comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), concluded that the order of the Commissioner (Appeals) had no merit.
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In Conclusion, the tribunal set aside the impugned order and allowed the appeal in favor of the appellant.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench has ruled in favor of the appellant by allowing CENVAT credit on ‘catch covers’ used in physician samples. The tribunal set aside the order of the Commissioner of Central Excise (Appeals), Mumbai-III, which had earlier upheld the denial of CENVAT credit.
Softsule Pvt. Ltd., appellant-assessee engaged in the manufacturing of pharmaceutical products, had availed CENVAT credit on ‘catch covers’ used for physician samples. However, the revenue authorities denied the credit, arguing that these covers were not used as inputs in the manufacture of final products. They further contended that the cost of catch covers was not included in the assessable value of the final product. The Commissioner (Appeals) upheld this view, leading the assessee to file an appeal before CESTAT.
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Read More: CESTAT Sets Aside Order for Failure to Examine Unjust Enrichment Aspect in LNG Import Duty Dispute
The tribunal examined Rule 3 of the CENVAT Credit Rules, 2004, which allows manufacturers to claim credit on inputs used in the manufacturing process. The tribunal noted that the revenue had not alleged that the catch covers were not received by the assessee or that duty was not paid by the supplier. Since the materials were received in the factory for their intended purpose, the tribunal ruled that the department’s argument was invalid. The tribunal clarified that the law does not require the cost of packing material to be included in the final product’s value to claim credit.
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The tribunal also observed that the same issue had been previously decided in favor of the assessee for different periods. In Final Order No. A/88078/17/SMB dated 16.06.2017, the tribunal had ruled that there was no legal requirement to include packing material costs in the final product’s value for availing CENVAT credit. Similarly, in Final Order the tribunal reaffirmed this view. Since the current dispute pertains to January 2012 to September 2012, the tribunal maintained consistency with its previous rulings.
The bench, comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), concluded that the order of the Commissioner (Appeals) had no merit.
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In Conclusion, the tribunal set aside the impugned order and allowed the appeal in favor of the appellant.
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