2016 (9) TMI 177 - AT - Central Excise

Valuation - inclusion of unutilized credit in the cost / assessable value of grey fabrics - Whether the additional excise duty credit which the appellant has availed but has not been used by them in as much as their final product did not attract any AED, is required to be added in the assessable value of the final product or not - Held that - The issue is no more res integra and stands settled by the Hon ble Supreme Court decision in the case of Collector of Central Excise Pune Vs. Dai Ichi Karkaria Ltd. 1999 (8) TMI 920 - SUPREME COURT OF INDIA . It stands held that the excise duty paid on raw material if modvatted not to be included in determining the cost of production of excisable product. In the present case we note that it is not the appellant who is seeking deduction of AED from the cost of their final product but it is the revenue who seeks to add the same in the cost of the final product. Therefore, in view of the decision of the Supreme Court such credit is not required to be added back to the assessable value of the final product. Even otherwise also we find from perusal of the invoices produced before us that their final product was being sold by the assessee at the transactional value in which case the question of adding any credit element would not arise. - Decided in favour of assessee

Summary

Issues:
Whether the additional excise duty credit not utilized by the appellant should be added to the assessable value of the final product.

Analysis:
The appellant, engaged in manufacturing grey fabrics, availed Cenvat Credit on BED, SED, and AED (T&TA) paid on inputs. The issue arose when the revenue sought to include the unutilized AED credit in the cost/assessable value of the final product, leading to proceedings for demand of differential duty. The Tribunal reviewed the matter, considering the Supreme Court's decision in Collector of Central Excise Pune Vs. Dai Ichi Karkaria Ltd., which established that excise duty on raw material need not be included in determining the cost of production. The Tribunal noted that the appellant did not seek to deduct AED from the final product's cost, and as the final product was sold at transactional value, there was no basis for adding any credit element to the cost. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellant.

This judgment primarily dealt with the issue of whether unutilized additional excise duty credit should be added to the assessable value of the final product. The Tribunal relied on legal precedent to determine that such credit need not be included in the cost of production, especially when the final product is sold at transactional value. The decision highlighted the importance of legal principles in assessing tax liabilities and provided clarity on the treatment of excise duty credits in manufacturing processes.