2016 (6) TMI 539 - AT - Central Excise

Denial of cum-duty-price benefit in the computation of duty liability - non-payment of Central Excise duty by issuing invoices in the name of a fictitious firm - whether the Appellants are eligible to cum-duty price benefit in computation of demand for clearance made through their another Unit viz. M/s Tekni Enterprises? - Held that - The Appellant s case, in our view, fall within the Explanation-II to Section 4 of Central Excise Act, 1944 and covered by the aforesaid judgment of Meghdoot Gramudyog Sewa Sansthan 2010 (11) TMI 911 - CESTAT NEW DELHI Accordingly, the learned Commissioner (Appeals ) has erred in denying the cum-duty-price benefit in computation of demand to the Appellant. In the result, the impugned order is set aside and the Appeal is allowed in favour of assessee

Issues Involved:
- Denial of cum-duty price benefit in computation of demand for clearance made through another Unit
- Interpretation of Explanation-II to Section 4 of Central Excise Act, 1944
- Admissibility of cum-duty price benefit in cases involving removal of goods clandestinely without payment of duty

Analysis:

1. Denial of Cum-Duty Price Benefit:
The case involved the denial of cum-duty price benefit in the computation of demand for clearance made through another unit. The Appellant, engaged in manufacturing Cooling Towers, was alleged to have issued invoices in the name of a fictitious firm, resulting in a demand notice for non-payment of Central Excise duty. The Commissioner (Appeals) modified the order, denying the cum-duty price benefit in the duty liability computation. The Appellant contended that the denial was erroneous as the invoices issued by the dummy unit were listed in the Show Cause Notice, and even in cases of goods removal without duty payment, the cum-duty price benefit cannot be denied. Reference was made to Explanation-II of Section 4 of the Central Excise Act, 1944, and a Tribunal judgment supporting the admissibility of cum-duty price benefit.

2. Interpretation of Explanation-II to Section 4:
The Tribunal analyzed the provisions of old Section 4 pre-01.07.2000 and the amendment to new Section 4 from 14.05.2003. It highlighted the importance of the Explanation added to Section 4(1) by the Finance Act, 2003, which deemed the price charged by the assessee to include excise duty payable on the goods. As the dispute period was after 13-5-2003, the Explanation to Section 4(1) was deemed applicable. The Tribunal emphasized that the price realized by the assessee should be treated as including excise duty, and the assessable value should be determined after abating the duty element from the sale price. The Commissioner (Appeals) erred in not considering this Explanation, leading to the incorrect disallowance of abatement of Central Excise duty from the price charged.

3. Admissibility of Cum-Duty Price Benefit in Clandestine Removal Cases:
The Tribunal referred to a previous case where it held that the cum-duty price benefit is admissible even in cases involving clandestine removal of goods without duty payment. By applying the Explanation-II to Section 4 and the Tribunal's previous judgment, the Appellant's case was deemed to fall within the purview of the Explanation, warranting the allowance of the cum-duty price benefit in the computation of demand. Consequently, the impugned order denying the benefit was set aside, and the Appeal was allowed with any consequential relief as per law.

This detailed analysis of the judgment showcases the legal interpretation of the issues involved, the application of relevant provisions, and the ultimate decision rendered by the Tribunal in favor of the Appellant.

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