2015 (11) TMI 1593 - AT - Central Excise

Differential duty along with interest and for imposition of penalty - duty on the transaction value - Held that - It is the admitted fact that respondent is not a manufacturer of the inputs. Consequently, the respondent is not liable to pay duty on the transaction value. As per Cenvat Credit Rules, 2004 the respondent is required to reverse the Cenvat credit availed on the inputs at the time of clearance of such inputs as such. Admittedly, in this case, the respondent has cleared the inputs as such. Therefore, the only liability of the respondent is that whatever credit they have availed on these inputs, the respondent is required to reverse the same. The respondent has already reversed the said Cenvat credit. Therefore, the impugned proceedings against the respondent were not warranted. In these circumstances, we do not find any infirmity in the impugned order, the same is upheld. - Decided in favour of assessee

Summary

Issues:
- Appeal against demanding differential duty, interest, and penalty
- Liability to pay duty on transaction value of inputs
- Interpretation of Cenvat Credit Rules, 2004

Analysis:
1. The appeal was filed by the Revenue against an order demanding differential duty, interest, and penalty from the respondent. The appellant, a manufacturer of goods falling under specific categories, cleared inputs by reversing the Cenvat credit availed on them. The Revenue contended that since the inputs were sold at a higher value, duty should be paid on the transaction value. A show cause notice was issued, and the adjudicating authority confirmed the demand and imposed penalties. The respondent challenged this before the Commissioner (Appeals), who set aside the order, leading to the Revenue's appeal.

2. The Revenue argued that the respondent was liable to pay duty based on a circular, while the respondent's counsel contended that as the respondent was not the manufacturer of the inputs, duty could not be demanded on the transaction value. The counsel further cited Rule 3(5) of the Cenvat Credit Rules, stating that the respondent only needed to reverse the Cenvat credit availed.

3. The Tribunal noted that the respondent was not the manufacturer of the inputs, absolving them of the liability to pay duty on the transaction value. According to the Cenvat Credit Rules, 2004, the respondent was obligated to reverse the Cenvat credit when clearing the inputs as they did in this case. As the respondent had already complied with this requirement, the Tribunal found no justification for the proceedings against them. Consequently, the impugned order was upheld, and the appeal by the Revenue was dismissed.

4. In conclusion, the Tribunal's decision rested on the interpretation of the Cenvat Credit Rules and the specific circumstances of the case, emphasizing that the respondent's actions were in compliance with the relevant regulations. The judgment clarified the distinction between the liability to pay duty on transaction value and the obligation to reverse Cenvat credit, ultimately ruling in favor of the respondent based on the established legal framework.