2017 (3) TMI 1622 - AT - Central Excise

Whether the appellant cleared manufactured goods in the guise of bought out items during the period from 1995-96 to 1999-2000? - Held that - Suspicion, however grave may be, shall not be substitute of proof and the authority when failed to bring evidence to show that appellant manufactured the traded goods, adjudication fails to sustain - In absence of evidence to support the allegation of Revenue, appellant succeeds. Whether packing charges is includible in the assessable value of the goods cleared? - Held that - there is no material to repel the reasoning given by the adjudicating authority which was concurred by the appellate authority to hold that those packing were primary for removal of goods - there is no scope for appellant to succeed on this point. Whether appellant had removed Modvat availed inputs in the guise of bought out items without reversing the credit availed thereon? - Held that - when the Modvatable inputs were cleared as such and those were not traded goods, such clearance calls for levy. Therefore on this point, appellant fails to succeed. Penalties - Held that - There was no deliberate intention of appellant to cause prejudice to revenue nor such intention has been discovered by Revenue. Therefore there shall be no penalty on the aforesaid three counts. Appeal allowed in part.

Summary

Issues:
1. Whether the appellant cleared manufactured goods as bought out items.
2. Inclusion of packing charges in the assessable value of goods.
3. Removal of Modvat availed inputs in the guise of bought out items.

Analysis:
1. The appellant argued that there was no evidence to prove they manufactured traded goods. The authority allowed relief where traded goods matched sale invoices, but piecemeal duty imposition is impermissible. Lack of evidence supporting Revenue's claim led to the appellant's success in this issue.

2. Regarding packing charges, the adjudicating authority did not provide a valid reason for their inclusion in the assessable value of goods. The appellate authority upheld this decision, stating that the packing was essential for goods removal. Consequently, the appellant did not succeed on this point.

3. The Revenue alleged that Modvat inputs were cleared as bought out items, but the appellant contended that necessary reversals were made when required. As the Modvat inputs were not traded goods, their clearance warranted duty levy. Therefore, the appellant did not succeed on this issue.

4. Penalties were discussed, with the appellant denying any contumacious conduct or deliberate intention to evade. Since there was no evidence of intent to prejudice the revenue, penalties were not imposed on the appellant. As a result, the appeal was partly allowed only on specific grounds indicated in the judgment.