2024 (10) TMI 811 - AT - Central Excise

Recovery of short paid central excise duty - non-inclusion in the assessable value by the appellant - recovery with interest and penalty - HELD THAT - Both the authorities below assumed in respect of some invoices of services that the same are attributed to the manufacturing of the excisable goods. Hence, included the same in the value and on which the duty was demanded. It is prima facie found that there are some of invoices which are even not connected with the supply of manufactured goods whereas those activities are independent service simpliciter. Therefore, at least in respect of those invoices no inclusion can be made in the assessable value of the goods manufactured and cleared on payment of duty. Similarly, there are certain invoices which relates to post-manufacturing and clearance of the goods i.e. related to overall assembly and installation of the plant at site which is not connected with the manufacturing of the appellant. Therefore, the same is also not includable in the assessable value. However, the adjudicating authority has not verified these vital facts before passing a de-novo order. The impugned order is set aside - matter remanded to the adjudicating authority for passing a fresh order, after compliance of principles of natural justice - appeal allowed by way of remand.

Summary

Issues:
1. Inclusion of additional charges in the assessable value of excisable goods.
2. Failure of the adjudicating authority to consider pre-manufacturing and post-manufacturing expenses.
3. Verification of invoices and determination of assessable value.
4. Remand of the matter for a fresh order.

Analysis:
1. The case involved a dispute regarding the inclusion of charges like Technical charges, Design and Engineering Charges, Knowhow & Engineering charges in the assessable value of excisable goods. The Audit team had identified these charges collected by the appellant from buyers and demanded central excise duty on them. The Additional Commissioner confirmed the demand, leading to appeals and remand by CESTAT.

2. The appellant argued that pre-manufacturing and post-manufacturing expenses should not be included in the assessable value based on court decisions distinguishing between such expenses. The appellant had paid service tax on these expenses and provided evidence to the adjudicating authority, which was not considered. The invoices submitted by the appellant were not thoroughly verified by the authorities.

3. The Tribunal observed that some invoices were not connected to the manufacturing of excisable goods and were independent services, while others related to post-manufacturing activities like assembly and installation at the buyer's site. These post-manufacturing expenses should not be included in the assessable value as per legal precedents. The adjudicating authority failed to verify these crucial facts before confirming the demand.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh order. The authority was directed to consider the actual nature of transactions, verify invoices properly, and pass a reasoned order in compliance with principles of natural justice to avoid repeated remands. The case highlighted the importance of correctly determining the assessable value of excisable goods to avoid unnecessary disputes and appeals.