2019 (4) TMI 1066 - AT - Central Excise

Valuation - inclusion of Handling charges in assessable value - MRP based assessment u/s 4A of CEA - HELD THAT - In respect of goods notified under this section, duty is required to be paid only on the basis of MRP affixed by the manufacturer less allowed abatement. In respect of such goods, the actual amount recovered from the customers is relevant - there is no basis for the Revenue to demand differential duty by adding the handling charges to the amount recovered through trade invoices - demand of differential duty on handling charges set aside. Valuation of empty metal containers - Stock Transfer - Revenue neutrality - HELD THAT - The duty paid by the appellant is availed entirely as Cenvat Credit by the receiving unit. Under these circumstances, it cannot be said that the appellant indulged in conscious under-valuation with a view to evade Central Excise Duty. The demand raised in the impugned order on empty containers is not maintainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of Central Excise Duty on handling charges collected from wholesale customers.
2. Valuation of metal containers stock transferred to another unit.
3. Demand of differential duty on the above two issues.

Analysis:
1. Handling Charges Issue:
The appellant collected 'handling charges' from wholesale customers, leading to a dispute with the Revenue regarding the payment of Central Excise Duty. The appellant argued that for goods under MRP assessment, duty is to be paid based on MRP less abatement, not on the actual amount collected. The Tribunal agreed, stating that for goods specified under MRP assessment, duty is solely based on MRP, making the collection of handling charges irrelevant for duty calculation. Consequently, the demand for differential duty on handling charges was set aside.

2. Valuation of Metal Containers Issue:
Regarding the valuation of metal containers stock transferred to another unit, the Revenue disputed the valuation adopted by the appellant, leading to a demand for differential duty. The appellant argued that the duty paid on these containers was availed as Cenvat Credit by the receiving unit, making it a revenue-neutral exercise. The Tribunal found merit in this argument, citing a similar case where the duty paid was upheld as Cenvat Credit by the receiving unit. Referring to the decision in the case of Anglo French Textiles, the Tribunal concluded that the demand on empty containers was not justifiable. Therefore, the impugned order was set aside, and the appeal was allowed.

3. Overall Decision:
After considering the arguments from both sides and examining the issues in detail, the Tribunal ruled in favor of the appellant on both issues. The demand for differential duty on handling charges and the valuation of metal containers stock transferred to another unit were found to be unjustified. Citing precedents and legal principles, the Tribunal set aside the impugned order and allowed the appeal, providing relief to the appellant in the disputed matters.