2018 (10) TMI 15 - AT - Central Excise

Area based exemption - Calculation of value addition norms - N/N. 32/99-CE dated 08.07.1999 - applications for fixing of special value addition submitted by the applicant was rejected on the ground that the assessee have not deducted Indirect Taxes other than excise duty and also on the ground that the entire value of excise duty has not been deducted, but only the net excise duty. Held that - The Notification vide Explanation to para 4 specifies that to determine the actual value addition, the sales value of the goods excluding excise duty/vat/other indirect taxes, if any, paid on the goods, should be taken into account. This clearly tells us that the entire excise duty is required to be deducted which does not appear to have been done by the assessee at the time of projecting the value addition. Similar mistakes in calculation also appear to be happened in respect of Cleaning Preparation also - The other misgiving recorded by the Commissioner is that the finished goods stock, lying with the various C&F Agents across India has also not been taken into account. The matter value addition is required to be re-worked out by the Adjudicating Authority, after taking into account the certificate submitted by the appellant, subsequent to passing of the impugned orders - Appeal allowed by way of remand.

Summary

Issues:
Calculation of value addition norms under area-based exemption notification for financial years 2007-2008 and 2008-2009.

Analysis:
The appellant had two units availing area-based exemption under Notification No.32/99-CE for manufacturing Repellants for Insects and Cleaning Preparation. The dispute arose regarding the claim made by the appellant for fixation of special rate for the financial years 2007-2008 and 2008-2009, which was rejected by the Commissioner. The main contentions raised by the appellant included the exclusion of Sales Tax/VAT/other Indirect Taxes from the sale value, the treatment of Excise Duty in the Profit & Loss Account, and the consideration of stock with C&F Agents in the calculation of value addition.

The Commissioner rejected the appellant's claim primarily due to the failure to deduct Indirect Taxes other than excise duty and the incomplete deduction of excise duty. The Notification specified that the sales value should exclude excise duty/VAT/other indirect taxes, which the appellant did not adhere to. Additionally, the Commissioner noted discrepancies in the treatment of Excise Duty in the Profit & Loss Account and the failure to consider finished goods stock with C&F Agents.

Upon review, the Tribunal found that the value addition norms needed to be re-evaluated by the Adjudicating Authority. The Tribunal observed that the entire excise duty needed to be deducted, as per the Notification, which was not done correctly by the appellant. Furthermore, the Tribunal acknowledged the certificate provided by the appellant regarding the stock with C&F Agents, which was not considered by the Adjudicating Authority. Consequently, the Tribunal set aside the impugned orders and remanded the matter to the Adjudicating Authority for a fresh decision, with a directive to complete the proceedings within three months. Both parties were allowed to produce additional evidence, and the appellant was instructed to cooperate without seeking unnecessary adjournments.

In conclusion, the appeals were allowed by way of remand to the Adjudicating Authority for a re-evaluation of the value addition norms, considering the correct deductions and additional evidence submitted by the appellant.