2016 (8) TMI 980 - AT - Central Excise

Recovery of duty short paid - Job-work - expenditure incurred on behalf of loan licensor towards inspection fees, approval of additional products at FDA etc. - debit notes raised on loan licensor against these expenditures - being loan licensee, discharged excise duty on selling price declared by their loan licensor - Held that - even though the appellant had argued that once duty is discharged on the basis of selling price declared by the principal manufacturer, that is the Loan Licensors, raising debit notes for expenditures incurred on behalf of their Loan Licensors becomes irrelevant, however, the Appellant could not place sufficient evidences to substantiate the said claim. We also find that this issue has not been properly raised by the appellant before the Ld Commissioner (Appeals) and accordingly not examined by him. In our view, the appellant be allowed a fair chance to raise the issue before the Ld. Commissioner (Appeals) by adducing sufficient evidences. - Appeal allowed by way of remand

Summary

Issues:
- Discharge of excise duty by the appellant on the selling price declared by their principal manufacturers.
- Expenditures incurred by the appellant on behalf of the principal manufacturer and their impact on assessable value.
- Relevance of raising debit notes for expenditures incurred on behalf of the principal manufacturer.
- Consideration of evidence and arguments regarding the discharge of duty by the appellant.
- Examination of the issue by the adjudicating authority and the Commissioner (Appeals).
- Necessity of remanding the case for further verification and examination of facts.

Analysis:

The appeal before the Appellate Tribunal CESTAT Ahmedabad was filed against the Order-in-Original passed by the Commissioner of Central Excise (Appeals). The case involved the appellant, engaged in the manufacture of Medicaments falling under CH 30 of CETA 1985 on a loan license basis, incurring certain expenditures on behalf of the principal manufacturer, the loan licensor. The appellant raised debit notes on the loan licensor for these expenditures, seeking to add the recovered amount to the assessable value of the finished goods, leading to a show cause notice proposing recovery of duty short paid, which was confirmed along with a penalty.

The appellant argued that as a loan licensee, they had discharged excise duty on the selling price declared by their principal manufacturers, making the expenditures incurred on behalf of the loan licensors irrelevant. However, the tribunal noted that the appellant failed to provide sufficient evidence to substantiate this claim. The issue was not properly raised before the Commissioner (Appeals) and was not examined by him. Consequently, the tribunal decided to remand the case to the Commissioner (Appeals) for a fresh examination of the issues, allowing the appellant a fair chance to present evidence. Both sides agreed that the matter needed further verification, leading to the setting aside of the impugned order for reconsideration.

In conclusion, the tribunal allowed the appeal by way of remand, emphasizing the need for a reasonable opportunity of hearing for the appellant and keeping all issues open for further consideration. The case highlighted the importance of providing adequate evidence to support legal arguments and ensuring that all relevant issues are properly raised and examined during the adjudication process.