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2023 (4) TMI 1327 - AT - Central ExciseValuation of Excise Duty - inclusion of charges paid to RITES and finally reimbursed to the Appellant by the buyer is includable in the Assessable Value or not - Levy of Excise Duty on sale of metal scrap. Valuation of Excise Duty - inclusion of charges paid to RITES and finally reimbursed to the Appellant by the buyer is includable in the Assessable Value or not - HELD THAT - On going through the case law of HINDUSTAN DEVELOPMENT CORPORATION LTD. VERSUS CCE., CALCUTTA 1995 (3) TMI 276 - CEGAT, NEW DELHI cited by the Learned Counsel, it is seen that in that case the amount was being paid by Railways to Rail India directly, whereas in the present case, the amount was being paid to RITES by the Appellant which was subsequently being reimbursed by the buyers. Therefore the facts are not similar or identical. So far as the Supreme Court s decision in the case of COMMISSIONER OF CENTRAL EXCISE, MYSORE VERSUS M/S TVS MOTORS COMPANY LTD. 2015 (12) TMI 874 - SUPREME COURT , is concerned, it is seen that the issue before the Hon ble Supreme Court was on account of pre delivery inspection and in respect of after sale service charges, which are different from the mandatory inspection fee paid by the Appellant in the present case. It would be observed that the Hon ble Tribunal has also considered the earlier decision in the case of Hindustan Development Corporation Ltd., and has distinguished the case on the ground when the inspection is carried on account of mandatory requirement, the value of the same would be included whereas if the inspection carried out is optional, the value of the same is not required to be included in the Assessable Value. Levy of Excise Duty on sale of metal scrap - HELD THAT - It has been held in catena of decisions that marketability alone is not sufficient to levy the Excise Duty but proper manufacture in terms of Section 2(f) of the Central Excise Act, 1944 should have taken place. Further, it has been held that scrap is a necessary byproduct when the manufacture takes place and accordingly it has been held that Excise duty cannot be demanded on sale of such scrap. Even in this case, going by the facts presented, it is seen that what is sold is only a metal scrap arising in the course of manufacture of their finished goods. Accordingly, the Appeal is allowed in respect of confirmed demand of Rs. 4,318/-. Appeal allowed in part.
Issues involved: Excise duty on charges paid to RITES for inspection and reimbursement, excise duty on sale of metal scrap generated during manufacturing.
Excise Duty on Charges Paid to RITES for Inspection and Reimbursement: The Appellants, manufacturers of "Isolators," faced a Show Cause Notice for including charges paid to RITES in the Assessable Value for Excise Duty payment. The Appellants argued citing precedents like Hindustan Development Corporation Ltd. and TVS Motors Co. Ltd. to support their case. However, the Department contended that the charges for mandatory inspection by RITES should be included in the valuation. The Tribunal noted the distinction in payment methods between the cited cases and the present situation. It emphasized that charges necessary for the sale to occur must be included in the Assessable Value, as per legal principles. The Tribunal referred to a case involving Surya Pvt Ltd., where a similar issue was decided against the Appellant, leading to the rejection of the appeal regarding charges paid to RITES. Excise Duty on Sale of Metal Scrap: Regarding the sale of metal scrap generated during manufacturing, the Appellants argued against the Excise Duty demand, citing the necessity of proper manufacture as per Section 2(f) of the Central Excise Act, 1944. The Tribunal acknowledged that scrap is a byproduct of manufacturing and held that Excise duty cannot be levied on the sale of such scrap. Consequently, the Appeal was allowed in favor of the Appellants concerning the confirmed demand related to the sale of metal scrap. In conclusion, the Tribunal partially allowed the Appeal, rejecting the demand related to charges paid to RITES but allowing the Appeal concerning the sale of metal scrap.
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