The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that cum duty benefit is allowable when excise duty is not collected separately.
M/s.Budge Budge Refineries Limited, the appellants are engaged in the manufacture of Refined Palm Oil which was exempted from payment of duty. In the manufacture of refined palm oil Fatty Acid emerges as waste/bye-product, which was cleared by the appellant without payment of duty in terms of Notification No.89/95-CE dated 18/05/1995.
The Department observed that the said Fatty Acid should be classified under sub-heading no.3823 1900 attracting Central Excise duty. The Appellant accepted the contention of the Department and paid duty, taking the clearance value as the cumduty price. The Department questioned the adoption of cum-duty price and demanded differential duty by denying it. The demand was confirmed by the Adjudicating Authority and later by the Appellate Authority.
The Appellant has initially cleared the goods without payment of duty by availing the benefit of Notification No.89/1995 dated 18.05.1995. Subsequently, on the advice of the Department, they agreed and paid the duty by treating the value as cum-duty price.
It can be viewed that when duty is not collected separately,the price realized is deemed to be cum-duty price. The appellant cleared the goods without payment of duty by availing the Exemption under Notification 89/95 dated 18/05/95. Hence the price realized is deemed to be inclusive of duty.
Though vide section 136 of the Finance Act, 2003, Section 4 of the Central Excise Act has been amended by the insertion of an Explanation to Section 4(1) to the effect that the price-cum-duty shall be deemed to include the duty payable on the goods, Board has taken a view that the amended provision will apply only prospectively and the old cases will have to be pursued as per the provisions
In the case of Triveni Udyog v. Commissioner of Central Excise, it was held that for the goods already sold to the customer, it is an accepted principle that the assessee would be entitled to cum-duty benefit as the duty component now cannot be recovered separately from the customers. In other words, the sale price of the goods is to be treated as inclusive of the duty component.
After considering the Explanation of Section 4(1) of the Central Excise Act, the Tribunal found that the appellants are entitled to cum-duty benefit for the subject goods already sold.
A two-member Coram comprising Shri P K Choudhary,(Judicial) and Shri K Anpazhakan, (Technical) viewed that the demand raised on the Appellant is not sustainable and set aside the impugned order confirming the demand and allow the Appeal filed by the Appellant.
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