2023 (11) TMI 55 - AT - Central Excise

Levy of Excise Duty - packaging charges being part of the value but no duty was paid claiming it as freight charges - recovery of CENVAT Credit on rejected/returned goods - demand of differential duty availed on inputs used in the manufacture of Aluminium Foils. Demand of Rs. 24,586/- on packaging charges being part of the value but no duty was paid claiming it as freight charges - HELD THAT - Analyzing the evidences, the adjudicating authority after scrutiny of the relevant invoices placed on record, recorded the findings that even though the appellant have claimed that these are transport charges and not handling charges, however, supporting transport receipt has not been produced. Since no evidence has been produced by the appellant before the lower authorities nor before this Tribunal, thus, duty of Rs. 24,586/- payable on packaging charges is confirmed. Regarding the CENVAT Credit of Rs. 44,469/- on rejected/returned goods - appellant failed to produce the evidences ie. proper account of receipt and disposal of the same - HELD THAT - The appellant had not enclosed any evidences in this regard, thus it is clear that they had not maintained proper records of receipt goods, processes carried out and disposal of the said goods under Rule 16 of CER,2002 on which credit availed; hence, the said demand is also confirmed. Recovery of differential duty as equivalent to CENVAT Credit involved on the inputs on the ground that the processes undertaken by the appellant do not result in to manufacture - HELD THAT - The processes carried out by the Appellant on the Aluminum Foils received in the factory are described as foil wash and thereafter subjected to nitro cellulose and then slit into different sizes as per requirements of customers. It is not a simple process of merely cutting the foils into different sizes but other processes are involved which would definitely satisfy the definition of manufacture pertaining Section 2(f) of Central Excise Act, 1944. Besides, the appellant have been discharging duty on finished goods treating the said process as manufacture - Hon ble Bombay High Court in the case of Commissioner of Central Excise, Pune-III Vs. Ajinkya Enterprises 2012 (7) TMI 141 - BOMBAY HIGH COURT held that in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. The demands of Rs.24,586/- and Rs.44,469/- with interest are confirmed and the demand of Rs.2,30,887/- is set aside. The impugned order is modified to that extent and the appeal is partly allowed to that extent.

Summary

Issues involved: The issues involved in the present appeal are: (i) demand of duty on packaging charges, (ii) recovery of CENVAT Credit on rejected/returned goods, and (iii) differential duty availed on inputs used in the manufacture of Aluminum Foils.

Demand of Duty on Packaging Charges: The appellant, engaged in the manufacture of Aluminum Foils, failed to pay duty on packaging charges amounting to Rs. 24,586, claiming it as freight charges. The authorities confirmed the demand after finding no evidence to support the appellant's claim that these were transport charges. As the appellant did not produce any evidence before the lower authorities or the Tribunal, the duty on packaging charges was upheld.

Recovery of CENVAT Credit on Rejected/Returned Goods: The demand for CENVAT Credit of Rs. 44,469 on rejected/returned goods was confirmed as the appellant could not provide proper accounts of receipt and disposal of the goods. The appellant's failure to maintain records as per Rule 16 of Central Excise Rules, 2002 led to the confirmation of this demand.

Differential Duty on Inputs: The demand for a differential duty of Rs. 2,30,887 was contested by the appellant, arguing that the processes undertaken on Aluminum Foils amounted to manufacture. The Tribunal found that the processes involved in manufacturing Aluminum Foils satisfied the definition of manufacture under Section 2(f) of the Central Excise Act, 1944. Citing legal precedents, including a judgment from the Hon'ble Bombay High Court, the Tribunal held that denying CENVAT Credit on the inputs was against established legal principles. Consequently, the demand for differential duty was set aside, and the appeal was partly allowed in this regard.