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CESTAT confirms Duty on Sprout Sale Proceeds Retained by Job Worker in Malt Manufacturing [Read Order]

CESTAT relied on a previous ruling involving the same appellant, where the tribunal had held that the sale proceeds of sprouts must be included in the assessable value of malt supplied to UBL.

CESTAT confirms Duty on Sprout Sale Proceeds Retained by Job Worker in Malt Manufacturing [Read Order]
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The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has upheld a ruling requiring the appellant, M/s. Maisters & Blenders (India) Pvt. Ltd., to include the value of sprouts sold to third parties in the assessable value of malt manufactured on a job-work basis for United Breweries Limited (UBL). The tribunal dismissed the appeal filed by the company...


The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has upheld a ruling requiring the appellant, M/s. Maisters & Blenders (India) Pvt. Ltd., to include the value of sprouts sold to third parties in the assessable value of malt manufactured on a job-work basis for United Breweries Limited (UBL). The tribunal dismissed the appeal filed by the company and confirmed the demand of Rs. 14,88,495 in unpaid excise duty, along with interest and penalties, for the period from April 2016 to June 2017.

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During the audit, it was observed that the appellant, engaged in manufacturing malt for UBL, had not included the proceeds from the sale of sprouts, which is a by-product of barley processing, in the assessable value of the malt. The agreement between the parties stipulated that the thin and sprout by-products would accrue to the benefit of the job worker, Maisters & Blenders. The authorities observed that the sale proceeds of these sprouts should have been added to the cost of production of malt, as per Section 4(1)(b) of the Central Excise Act, 1944, read with the Central Excise Valuation Rules, 2000.

A show-cause notice was issued in May 2018, which observed duty evasion of Rs. 73,35,698. The adjudicating authority later confirmed a reduced demand of Rs. 14,88,495, dropping the balance.

 The appellant challenged this order, but CESTAT noted their repeated failure to appear for hearings, leading the tribunal to decide the matter based on available records and submissions from the revenue department.

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Read More: CESTAT Overturns Service Tax Ruling, Remands Case for Re-evaluation of Employment Contracts and Tax Liability [Read Order]

The issue in this case was whether the value of sprouts sold by the appellant is to be included in the assessable value of the “Malt” and the duty is payable while clearing the same to 'UBL’.

CESTAT relied on a previous ruling involving the same appellant, where the tribunal had held that the sale proceeds of sprouts must be included in the assessable value of malt supplied to UBL. The bench, comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member), upheld the impugned order.

To Read the full text of the Order CLICK HERE

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