2017 (3) TMI 998 - AT - Central Excise

Waste - coated film waste - Transaction value of Waste - valuation of waste for the purpose of payment of duty - Held that - The value of ₹ 15 per kg, of waste x-ray films was taken from the sage invoice no, 21/23.09.1994, therefore if the value of the identical goods is available the same is acceptable as value under Section 4(1)(a) of the CEA, 1944- Therefore we do not find any reason why the value of ₹ 15 per kg. should not be accepted as a transaction value of the waste x-ray films - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of waste x-ray films for excise duty calculation.
2. Denial of cenvat credit on inputs contained in waste x-ray films.
3. Sustainability of excise duty demand based on transaction value.

Issue 1: Valuation of waste x-ray films for excise duty calculation:
The case involved the appellants engaged in manufacturing x-ray films and photographic paper facing show-cause notices for clearing coated film waste without paying central excise duty. The Order-in-Original set the assessable value at ?15 per kg, resulting in a duty of ?26,409 for all notices. The Commissioner (Appeals) increased the duty to ?280/kg, leading to an appeal. The appellant argued that the duty was correctly calculated at ?15/kg as per Section 4(1)(a) of the Central Excise Act, citing relevant case laws. The Tribunal found the original authority's valuation appropriate, as the price of ?15/kg was supported by an invoice, setting aside the impugned order and allowing the appeal.

Issue 2: Denial of cenvat credit on inputs in waste x-ray films:
For three show-cause notices, the demand of excise duty at ?280/kg was upheld as these notices proposed denying cenvat credit on inputs in the waste x-ray films. However, the demand over ?15/kg was deemed unsustainable as it was beyond the scope of the show-cause notice. Moreover, Rule 57D of Central Excise Rules did not allow denying cenvat credit for inputs in waste, making the demand unsustainable for these notices.

Issue 3: Sustainability of excise duty demand based on transaction value:
Regarding two other show-cause notices, the duty demand was confirmed at ?15/kg, the transaction value of the waste x-ray films. The Tribunal found this value acceptable under Section 4(1)(a) of the Central Excise Act, emphasizing that excise duty is payable on the price paid or payable for the goods. The revenue's arbitrary adoption of ?280/kg without evidence was deemed unsupported. The Tribunal concluded that the original authority's order was correct and should not have been disturbed, setting aside the impugned order and allowing the appeal.