2016 (2) TMI 1360 - AT - Central Excise

Levy of Central Excise duty - Shortage of inputs on which cenvat credit has been availed (no manufacture of such inputs) - demand of duty on insurance charge, handling charge, storage, packing and forwarding charges - HELD THAT - There are force in the arguments of the Ld. Counsel that no Central Excise duty can be levied on clearance of inputs on the ground that there is shortage. Central Excise duty is leviable on manufacture, and there is no manufacture of inputs in the instance case. Hence levy of Central Excise duty on the value on such inputs has no sanction of law and therefore cannot be sustained. As regards the demand of duty on insurance charge, handling charge, storage, packing and forwarding charges, it is observed that these activities pertain to post manufacturing and post clearance of the goods. Such amounts are not includable in the assessable value for determining Central Excise duty. Therefore, the demand in such respects are also not sustainable. The impugned orders of lower authorities are found to be non-sustainable and hence set aside - Appeal allowed.

Summary

Issues:
1. Confirmation of Central Excise duty on inputs with Cenvat Credit.
2. Charging duty on insurance charges, handling charges, storage, packing, and forwarding charges.

Analysis:
1. The appeal dealt with the confirmation of Central Excise duty on inputs where Cenvat Credit was availed. The appellant argued that charging duty on inputs cleared would only amount to trading and cannot be sustained. The tribunal agreed, stating that Central Excise duty is leviable on manufacture, and since there was no manufacture of inputs, the levy of duty on such inputs lacked legal sanction. Therefore, the duty charged on inputs with alleged shortages was deemed unsustainable and set aside.

2. Regarding the duty charged on insurance charges, handling charges, storage, packing, and forwarding charges, the appellant contended that these amounts related to post-manufacturing and post-clearance activities and should not be included in the assessable value for Central Excise duty. The tribunal concurred, noting that such activities were not part of manufacturing and hence not subject to duty. Consequently, the demand for duty on these charges was deemed unsustainable, leading to the setting aside of the impugned orders of the lower authorities.

In conclusion, the tribunal allowed the appeal, finding the lower authorities' orders non-sustainable and setting them aside. The judgment clarified that Central Excise duty cannot be levied on inputs without manufacturing, and post-manufacturing charges are not includable in the assessable value for determining Central Excise duty.