2023 (4) TMI 824 - AT - Central Excise

Valuation of waste/bye-product - Fatty Acid - applicability of cum-duty price for the goods cleared - Applicability of N/N. 89/95-CE dated 18/05/1995 - HELD THAT - There is no dispute regarding liability of Central Excise duty. The Appellant has initially cleared the goods without payment of duty by availing the benefit of Notification No. 89/1995 dated 18.05.1995. Subsequently on the advice of the Department, they agreed and paid the duty by treating the value as cum-duty price. When duty is not collected separately, the price actually realized is deemed to be cum-duty price. In the present case also, initially the appellant cleared the goods without payment of duty by availing the Exemption under Notification 89/95 dated 18/05/95 - From the Circular No.749/65/2003-CX dated 26.09.2003 and the Explanation to Section 4, it is clear that when the duty is not charged separately, the price collected is deemed to be cum-duty price. The Appellant has already adopted the value realized as cum-duty price and paid the duty accordingly. Thus, the duty paid by the Appellant is in order. The demand raised on the Appellant is not sustainable and the impugned order confirming the demand is liable to be set aside - Appeal allowed.

Summary

Issues: Valuation of waste/bye-product and the applicability of cum-duty price for goods cleared.

Valuation of waste/bye-product:
The case involved the manufacture of Refined Palm Oil where Fatty Acid emerged as a waste/bye-product, initially cleared without duty payment under a specific Notification. Subsequently, the Department reclassified the Fatty Acid under a different sub-heading, attracting Central Excise duty. The Appellant then paid duty based on the cum-duty price. The Department disputed this and demanded differential duty.

Applicability of cum-duty price:
The Appellant argued that the price realized should be deemed inclusive of duty as per an Explanation to Section 4, inserted in 2003. They also referred to a Circular clarifying that sale price includes excise duty. The Tribunal's decision in another case supported the principle that sale price should be treated as inclusive of duty component when duty cannot be separately recovered from customers.

Judgment:
The Tribunal found that the duty paid by the Appellant based on the cum-duty price was in order, considering the Explanation to Section 4 and the Circular. Citing a previous Tribunal decision, the Tribunal held that the demand raised on the Appellant was not sustainable. Consequently, the impugned order confirming the demand was set aside, and the Appeal filed by the Appellant was allowed.