2017 (1) TMI 76 - AT - Central Excise

Whether the appellant is required to pay duty as confirmed with interest and penalties on the clearances of the bought-out spares for the period 2001-2002 to 31.07.2005? - Held that - the question of discharging Central Excise duty on the bought-out items supplied as spares does not arise at all. It is now a settled law that Central Excise duty is to be discharged on the goods manufactured and cleared by an assessee. It is nobody s case that bought-out items supplied as spares is manufactured by the appellant. It is also on record that subsequent show-cause notices for the same issue were dropped, and nothing was brought to our notice that revenue is in appeal before Tribunal. If in an assessee s case on the same issue subsequent show-cause notice s are dropped, there cannot be any demands for the earlier period, more so when there is nothing on record to indicate that revenue is contesting the issue before higher judicial forums. We direct the adjudicating authority to verify the claim of appellant that for the period from January 2005 to August 2005, in this appeal, they had not availed any CENVAT credit on bought out items supplied as spares. If any CENVAT credit is availed as such clearances the same will be reversed with appropriate interest. Appeal allowed in favor of assessee - matter on remand for limited purpose.

Summary

Issues Involved:
Whether the appellant is required to pay duty on the clearances of bought-out spares for the period 2001-2002 to 31.07.2005.

Analysis:
The appeal addressed the issue of duty liability on bought-out spare parts and accessories supplied with or without final products. The Revenue claimed duty liability arises on the value of bought-out spare parts. The appellant discharged duty liability on switches manufactured by them but supplied insurance spares along with switches. The appellant argued that subsequent show-cause notices were dropped, and they did not avail CENVAT credit on bought-out items supplied as spares. The Revenue alleged contravention if CENVAT credit was availed on such items.

The Tribunal considered the submissions and clarified that Central Excise duty is to be discharged on goods manufactured and cleared by the assessee. The issue of discharging duty on bought-out items supplied as spares does not arise since those items are not manufactured by the appellant. It was noted that subsequent show-cause notices on the same issue were dropped, with no indication of Revenue contesting the issue in higher forums. The appellant's counsel confirmed no CENVAT credit was availed on inputs until January 2005, but agreed to reverse any CENVAT credit on bought-out items from January 2005 to August 2005 with interest.

The Tribunal allowed the appeal, setting aside the impugned order and directing the adjudicating authority to verify if any CENVAT credit was availed on bought-out items supplied as spares from January 2005 to August 2005. Any such credit would need to be reversed with appropriate interest. The appeal was disposed of accordingly.