2023 (8) TMI 937 - AT - Central Excise

Valuation - non-inclusion of transportation charges in the value of final products - wrong availment of Cenvat Credit - inputs removed as such in terms of Rule 3(5) of CENVAT Credit Rules, 2004 - suppression of facts or not - extended period of limitation - HELD THAT - The issue is no longer res integra inasmuch as the same stands settled in favour of the Appellant by this Tribunal in the case of M/S. ADITYA BIRLA CHEMICALS (INDIA) LIMITED (EARLIER KNOWN AS M/S. BIHAR CAUSTIC CHEMICALS LIMITED) VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, RANCHI 2021 (1) TMI 709 - CESTAT KOLKATA where it was held that the contention of the Department to include the freight amount in the assessable value does not meet the test of law and hence not legally sustainable. Thus, the transportation charges are not includable in the assessable value. Accordingly, the demand of central excise duty of Rs.15,22,175/- confirmed in the impugned order on the ground of non-inclusion of transportation charges is not sustainable. Denial of Cenvat credit of Rs.56,84,435/- taken by the Appellant on the CPC received from UHCL, on the ground that it was not an input, we observe that the department has not questioned the duty payment by UHCL on the CPC - HELD THAT - In the present case, the Appellant has paid much more central excise duty than the CENVAT Credit availed by them on the CPC received from UHCL. Therefore, CENVAT credit availed cannot be denied on the ground that they were not inputs. Even if they were considered as inputs , Rule 3(5) of CENVAT Credit Rules, 2004 provides that when inputs on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs. In the present case, the Appellant has paid much more central excise duty than the CENVAT Credit availed by them on CPC received from UHCL which would be clear from the statement annexed to the compilation. In that event, the Appellant cannot be asked to reverse the CENVAT Credit once again - The credit availed by the Appellant cannot be denied on the ground that it has been entered as finished goods in their RG-1 and hence it is not an input. The demands confirmed in the impugned order are liable to be set aside - Since the demand itself is not sustainable, the question of charging interest or imposing penalty does not arise - Appeal allowed.

Summary

Issues:
The judgment involves two main issues:
1. Non-inclusion of transportation charges in the assessable value.
2. Denial of Cenvat credit on CPC received from UHCL.

Issue 1: Non-inclusion of transportation charges:
The Appellant, engaged in manufacturing dutiable final products, was alleged to have not included transportation charges in the assessable value of the final products. The Audit Report claimed that transportation charges collected by the Appellant attracted central excise duty. However, the Tribunal referred to a previous decision in the case of Aditya Birla Chemicals (India) Ltd. Vs Commissioner of Central Excise, where it was held that transportation charges are not includable in the assessable value. Therefore, the demand of central excise duty based on non-inclusion of transportation charges was deemed unsustainable.

Issue 2: Denial of Cenvat credit on CPC:
The second issue revolved around the denial of Cenvat credit amounting to Rs. 56,84,435/- on the CPC received from UHCL, on the grounds that it was not considered an input. The Appellant argued that once duty was paid and materials were received into the factory, Cenvat credit could not be denied. They also cited Rule 16 of the Central Excise Rules, 2002, which allows for Cenvat credit even if the process does not amount to manufacture. The Tribunal agreed with the Appellant, emphasizing that the duty payment by UHCL on the CPC was not questioned, and the Appellant had paid more central excise duty than the Cenvat credit availed. Additionally, Rule 3(5) of CENVAT Credit Rules, 2004 was invoked to support the Appellant's position. The Tribunal referenced a judgment of the Hon'ble Gujarat High Court in Commissioner of Central Excise Vs Delta Corporation, which further supported the Appellant's claim. Consequently, the Tribunal held that the denial of Cenvat credit on the CPC received from UHCL was not justified.

In conclusion, the demands confirmed in the impugned order were set aside, and the appeal filed by the Appellant was allowed with consequential relief as per law.