2024 (2) TMI 251 - AT - Central Excise

Valuation - Corrugated Boxes received free of cost by Appellant from buyers for packaging glassware will be included in the calculation of Assessable Value under Section 4 of the Central Excise Act, 1944 or not - CENVAT Credit on scrap of capital goods - rule 3(5A) of Cenvat Credit Rules 2004 - HELD THAT - In the present case, the cost of corrugated boxes supplied by the buyers to the appellant is includible in the transaction value of the glassware manufactured and supplied by the appellant as per the provision of Section 4 of the Central Excise Act 1944 and the rules made thereunder. Reliance placed on this tribunal s order in M/S. KAIRA CAN COMPANY LTD VERSUS C.C.E S. T- AHMEDABAD-III 2019 (12) TMI 114 - CESTAT AHMEDABAD where it was held that in the present case apart from the transaction value the packing material supplied Free of Cost by the customer was also used by the appellant. The value of such packing material was not included. When any Excisable product is manufactured and cleared the value of such goods shall be the total value of goods in the form it is cleared from the factory of the Assessee. It is immaterial that whether a part of the material contained in the final product to borne the cost. Demand raised on the Appellant for the scrap of Capital Goods - HELD THAT - As the show cause notice was badly issued by the Department without proper investigation into whether the Appellant has availed Cenvat Credit in respect to the scrap which was apparently cleared without payment of duty on such capital goods scrap. In the absence of any such investigation and the Department unable to adduce any evidence the allegation made in the Show cause notice is bad. In this position the submission of the appellant must be taken correct as there is no material produced by the revenue that states otherwise. Therefore, it is clear that the Appellant have cleared the scrap which is neither generated from cenvatable capital goods or cenvatable input nor from manufacturing. Therefore, the same is clearly not liable for any duty - The identical issue was raised in the appellant s own case only for a different period wherein this tribunal has taken a consistent view that such scrap other than manufacturing and non-cenvatable is not liable to duty. Appeal allowed in part.

Summary

Issues Involved:
The judgment involves two main issues:
(I) Whether the value of Corrugated Boxes received free of cost by Appellant from buyers for packaging glassware will be included in the calculation of Assessable Value under Section 4 of the Central Excise Act, 1944.
(II) Whether the Appellant is liable to pay duty on Scrap of Capital Goods as per Rule 3(5A) of the Cenvat Credit Rules, 2004 when no credit has been availed by the Appellant.

Issue I: Value of Corrugated Boxes in Assessable Value:
The Appellant challenged the inclusion of the value of corrugated boxes supplied by buyers in the Assessable Value of the final product under Section 4 of the Central Excise Act, 1944. The Appellant argued that the boxes were returnable, reusable, and in line with statutory provisions. Citing the case of Grasim Industries vs. CCE 2004 (164) ELT 257, it was contended that the transaction value should include all value additions made to the article before clearance. The Tribunal held that the cost of corrugated boxes supplied by buyers is includible in the transaction value of the glassware manufactured, as per Section 4 of the Central Excise Act, 1944.

Issue II: Duty on Scrap of Capital Goods:
Regarding the demand for duty on scrap of capital goods, the Appellant clarified not availing Cenvat credit on capital goods at receipt. The Tribunal noted that the demand was raised on scraps from used packing material of inputs, which the Appellant clarified as not being liable for duty as it was not manufactured or cenvatable. The Tribunal found the show cause notice inadequately investigated and lacking evidence, thus ruling in favor of the Appellant. Consistent with previous decisions, the Tribunal held that such scrap, not related to manufacturing or cenvatable inputs, is not liable for duty.

Conclusion:
The Tribunal upheld the inclusion of the value of corrugated boxes in the Assessable Value under Section 4 of the Central Excise Act, 1944. However, it ruled in favor of the Appellant regarding the duty on scrap of capital goods, finding the demand unsustainable. The appeal was partly allowed based on these findings.