2018 (10) TMI 818 - AT - Central Excise

Valuation - inclusion of bought out items which were directly used at the site in assessable value - SSI Exemption availed - Held that - The Appellants are entitled to deduction of the bought out items and accordingly liable to pay duty on the reduced turnover of ₹ 73,69,638/- on which they have paid duty of ₹ 7,59,073/-. Accordingly, there is no duty implication on this score. Penalty u/s 11AC - Held that - The Appellants have regularly informed the Department about its transaction and their intention to avail the exemption. For the transaction, it appears that if the Revenue was not clear about availability or non-availability of the exemption and the fact that Appellants were running from pillar to post for clarification, we hold that there is no malafide on the part of the Appellants - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Eligibility for SSI exemption under Notification No. 08/2003-CE.
2. Claiming benefit under Notification No. 06/2006-CE for duty-free removal.
3. Disallowance of Cenvat Credit availed by the Appellants.
4. Payment of duty on bought out items.
5. Imposition of penalty under Section 11-AC.
6. Refund of tax collected from buyers.

Analysis:

Eligibility for SSI exemption under Notification No. 08/2003-CE:
The Appellants were engaged in the manufacture of certain goods and availed SSI exemption under Notification No. 08/2003-CE. However, it was found that they were not entitled to this exemption as the project they supplied to was not notified as an international organization under the relevant Act. The Commissioner of Central Excise held the Appellants liable to pay duty on a reduced value, which was upheld on appeal. The Tribunal found that the Appellants were entitled to deduction of bought out items and were liable to pay duty on the reduced turnover, leading to no duty implication.

Claiming benefit under Notification No. 06/2006-CE for duty-free removal:
The Appellants claimed benefit under Notification No. 06/2006-CE for duty-free removal of goods supplied under International Competitive Bidding. The Revenue contended that the Appellants were not eligible for this exemption as the buyer was not registered with the Customs Department. The Tribunal considered the confusion surrounding the exemption claim and the Appellants' efforts to seek clarification from the authorities. It held that there was no malafide on the Appellants' part and set aside the penalty imposed under Section 11-AC.

Disallowance of Cenvat Credit availed by the Appellants:
The Appellants had availed Cenvat Credit during a period when they were not entitled to it due to claiming SSI exemption. The Tribunal noted the Appellants' belief in the exemption notifications and their subsequent payment of duty when the benefit was denied. It held that subsequent benefits should accrue to the assessee when duty liability arises, and thus, no penalty was imposed under Section 11-AC.

Payment of duty on bought out items:
The Appellants contended that they used bought out items directly at the site and should not be liable to pay duty on such items. The Tribunal agreed, allowing deduction for bought out items and determining the duty liability on the reduced turnover.

Imposition of penalty under Section 11-AC:
The Tribunal found no malafide on the Appellants' part regarding the confusion surrounding the exemption claims and their efforts to seek clarification. Therefore, it set aside the penalty imposed under Section 11-AC.

Refund of tax collected from buyers:
The Tribunal held that as the tax was collected by the Appellants from the buyers, they were not entitled to any refund. The appeal was allowed in part based on the above considerations, with no duty implication, penalty set aside, and no refund granted.

This detailed analysis of the judgment highlights the key issues involved and the Tribunal's findings on each issue, providing a comprehensive understanding of the legal aspects and reasoning behind the decision.