2016 (2) TMI 559 - AT - Central Excise

Quantification of 8% under Rule 6(3)(b) of Cenvat Credit Rules when the Respondents are clearing the exempted final product - whether the demand is clearly hit by the time bar? - Held that - The clearance of exempted goods and the reversal of 8% of value of the sale on the collection of the 8% money from the buyers are all in the knowledge of the Department. Hence we agree with the Ld. Commissioner (Appeals) on the point of time bar. Regarding inclusion of freight for arriving at the value of exempted goods the Ld. Commissioner (Appeals) recorded that the payment of 8% made by the Respondent was with reference to sale value of the bare pipes and coating cost is as per the contract with the party. Hence he held that the question of payment of 8% amount on the transportation cost would not arise. The Ld. Commissioner (Appeals) also held that the demand is clearly time barred on the second issue also. He found that the bare pipes cleared from the factory of the Respondent to the Job worker s premises for coating is in terms of permission granted by the Commissioner of Central Excise Indore. The sale value (contract price) has been adopted by the Respondent for quantifying the 8% amount for reversal. Hence the Ld. Commissioner (Appeals) concluded that the demand is not sustainable on merit as well as on time bar. On careful consideration of the impugned order and the grounds of appeal we find no reason to interfere with the impugned order accordingly the appeal is dismissed.

Summary

Issues Involved:
1. Correct quantification of 8% under Rule 6(3)(b) of Cenvat Credit Rules for clearing exempted final products.
2. Inclusion of transportation charges in the value of exempted goods for the purpose of reversal.

Analysis:

Issue 1: Correct quantification of 8% under Rule 6(3)(b)
The appeal by Revenue was against the order of Commissioner (Appeals-I), Indore, regarding the quantification of 8% amount for reversal under Rule 6(3). The Revenue contended that the 8% collected by the Respondent from buyers should form part of the value. The Original Authority confirmed a demand and imposed penalties, but the Commissioner (Appeals) set aside the order. The Ld. AR argued that the reversed amount collected from buyers should be added to the value for reversal. However, the Ld. Commissioner (Appeals) found the demand to be time-barred and held that the 8% paid cannot be considered part of the sale price. The Commissioner concluded that there was no intention to evade duty, as the Department was aware of the clearance of exempted goods and the reversal of 8% value. The Tribunal agreed with the Commissioner, dismissing the appeal.

Issue 2: Inclusion of transportation charges in the value of exempted goods
The second issue involved the inclusion of transportation charges in the value of exempted goods for reversal purposes. The Ld. AR argued that transportation costs should be included in the value as per the contract with the buyer. However, the Ld. Commissioner (Appeals) held that the 8% payment was based on the sale value of bare pipes, and the coating cost was as per the contract, so including transportation costs was unnecessary. The Commissioner found the demand time-barred on this issue as well. The Tribunal concurred with the Commissioner's findings, stating that the demand was not sustainable on merit or time-bar considerations. Therefore, the appeal was dismissed.

This judgment provides a detailed analysis of the issues concerning the quantification of 8% under Rule 6(3)(b) and the inclusion of transportation charges in the value of exempted goods. The decision emphasizes the importance of following the correct procedures and valuations under the Cenvat Credit Rules, while also highlighting the significance of time-bar limitations in such cases.