2019 (2) TMI 1869 - AT - Central Excise

Refund of CENVAT Credit - refund sought on the grounds that the duty was paid by them on various imported impugned components and indigenously procured goods without excluding the CVD and SAD portion of the duty and also the transportations cost paid on the imported consignments. Whether the Cenvat Credit availed by the appellant can be considered as the part of assessable value in terms of section 4 (1) (a) of the Central Excise Act read with the Central Excise Valuation Rules? HELD THAT - The issue stands decided in favor of appellant in case of COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT , and SURYA CONDUCTORS P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI 1999 (5) TMI 576 - CEGAT, MUMBAI . In the case of Surya Conductor has been Affirmed by the Hon ble Supreme Court in COMMISSIONER VERSUS SURYA CONDUCTORS (P) LTD. 1999 (10) TMI 750 - SC ORDER It is held that the duty paid on input which is file as a Cenvat Credit is not to be considered while arriving at a cost of such inputs. Therefore, the appeal is legally wrong on this count. Also, in this case the appellant has proved beyond the doubt at the strength of Chartered Accounting certificate and certificate from the Indian Railway that no incidence of duty has been passed on to buyers in the case (Indian Railway). In these circumstances, the impugned order is not sustainable and is being set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether Cenvat Credit availed by the appellant can be considered as part of assessable value in terms of the Central Excise Act and Valuation Rules.

Analysis:
The appellant, engaged in manufacturing Railway Track Maintenance Machines (RTMM), filed a refund claim for duty paid on imported components and indigenously procured goods. The claim was rejected by the adjudicating authority and upheld by the Commissioner (Appeal). The appellant contended that post the withdrawal of exemption on RTMMs, they were entitled to Cenvat Credit on duty paid on inputs. The Indian Railway amended the contract to reimburse the excise duty legally leviable and payable by the appellant. The appellant argued that the assessable value for excise duty should exclude the Cenvat Credit availed on inputs, citing legal provisions and precedents such as Dai Ichi Karkaria Ltd. and Surya Conductors P. Ltd.

The appellant further argued that the duty burden was not passed on to the Indian Railway, supported by a certificate from a Chartered Accountant. They relied on decisions like Eveready Industries India vs. CCE, Lucknow and Commissioner of C. Ex. & Cus. vs. Manisha Pharmoplast Pvt. Ltd. to rebut the presumption of passing on the duty burden. The Tribunal noted that the issue revolved around whether Cenvat Credit could be part of the assessable value under the Central Excise Act. Citing the decisions in Dai Ichi Karkaria Ltd. and Surya Conductors P. Ltd., affirmed by the Supreme Court, the Tribunal held that duty paid on inputs availed as Cenvat Credit should not be included in the cost of such inputs.

The Tribunal found that the appellant had proven, through certificates and documents, that no duty incidence was passed on to the Indian Railway. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The judgment emphasized the legal position regarding Cenvat Credit and the burden of proof in cases of duty incidence passing.