2019 (1) TMI 965 - AT - Central Excise

Valuation - price variation clause - clearance of transformer goods - clearance of the finished products at the lower rate of duty but subsequently, cleared the goods at the higher rate of duty - short payment of duty alongwith cess - penalties - Held that - It is not found from the records that the assessement has been opted/made provisionally under the provisions of Rule 9(B). In that circumstance, once the clearance is without PVC, the price cannot be revised retrospectively, even after the issue of the circular at the lower rate. In such a situation, had the assessee having been the intention of opting for the lower rate as per E-I Return, they would have taken advantage of reduced rate of duty - the clearance of the impugned goods has rightly been done at the prevalent rate at the time of clearance of the goods. Penalties - Held that - Once the ER-I Return has specifically been filed, there is a mention in the PVC, which is evident in the show cause notice itself - there is no suppression of material facts by the appellant with the Department and it is not fit for imposition of penalty, therefore, the penalty is required to be set aside in this case. CENVAT Credit - input services - insurance premium of cars, which were registered in the name of partners of the appellant firm - Held that - Since it is being used in furtherance of the purpose of the manufacture of the goods and other related work by the Director of the Company, there is no bar to avail cenvat credit on the service tax paid - credit allowed. Appeal allowed in part.

Summary

Issues:
1. Duty payment on price variation invoices for finished goods.
2. Availment of input service credit on insurance premium for cars.

Analysis:

Issue 1: Duty Payment on Price Variation Invoices for Finished Goods
The appellant, engaged in manufacturing transformer goods, cleared finished products under a Price Variation Clause (PVC) agreement with the State Electricity Board. The appellant raised price variation invoices for goods cleared during specific periods and paid differential duty according to the revised prices. The Department alleged a duty shortfall of ?1,05,380, including education cess. The appellant contended that clearances were made at higher duty rates initially and later revised to lower rates, but the duty was paid at the higher rates. The Tribunal held that duty payment is required at the time of clearance as per Section 4 of the Customs Act. Since no provisional assessment was opted, the clearance was rightly done at prevalent rates during clearance, and retrospective revision was not allowed even after a circular issued lower rates. The Tribunal noted that the appellant did not suppress facts and set aside the penalty imposed.

Issue 2: Availment of Input Service Credit on Insurance Premium for Cars
The second issue involved availing input service credit of ?3,690 on insurance premiums for cars registered in the partners' names but used by the appellant's partners for business purposes. The appellant argued that since the cars were utilized for business activities related to manufacturing excisable goods, they were entitled to claim cenvat credit on the service tax paid. The Tribunal agreed with the appellant, stating that as the vehicles were used for furthering the manufacturing process and other related work by the company's Director, there was no restriction on availing cenvat credit on the service tax paid. Consequently, the Tribunal partially allowed the appeal on this issue.

In conclusion, the Tribunal upheld the duty payment on finished goods at prevalent rates during clearance and set aside the penalty due to no suppression of facts. Additionally, the Tribunal allowed the input service credit on insurance premiums for cars used for business purposes, emphasizing the eligibility for cenvat credit in such cases.