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TMI Blog2016 (9) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... in October 2005, proceedings were initiated against the appellant to recover an amount of Rs. 40,60,963/- towards Central Excise duty not paid and an amount of Rs. 63,32,710/- towards irregular availment of Cenvat credit on returned goods. The show cause notice dated 01/12/2005 issued in this regard was adjudicated and the Commissioner vide the impugned order held that the appellant is liable to pay Central Excise duty as demanded in the notice and imposed penalties under various provisions of Central Excise Act, 1944 and Central Excise Rules, 2002 and Cenvat Credit Rules, 2004. 2. The learned Counsel for the appellant raised various arguments against the order. A summary of his submissions is as follow :- (a) Duty of Rs. 3,63,446/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds have been maintained properly and there is no case for demand with the extended period. 4. The learned AR strongly contested the grounds raised by the appellant. He submitted that the additional consideration now sought to be taxed is actually based on the debit notes raised by the appellant. These debit notes have not been cancelled. The appellant s plea that the debit notes are only issued for compelling the buyers to return the durable packing is not legally sustainable. When the debit notes are relating to sale of excisable goods the consideration mentioned in the debit note has to be added to the sale value to arrive at the transaction value for excise purpose. Regarding additional consideration in the form of free raw material he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. The invoice as well as debit note indicate the sale value of excisable goods. Some amount has been defaulted by the buyer cannot result in reduction in duty incidence. In other words Central Excise duty is not on receipt basis. The levy is on manufacture and the collection is at the time of clearance. As such, we find no merit in the appellant s plea for non-inclusion of the additional consideration admittedly raised in the form of various debit notes to the buyers. 7. The cost of raw material supplied free by the buyer of finished goods has to necessarily form a part of the transactional value. We find that the raw material received free of cost has to be additional consideration over and above the amount received by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants claim that the capital goods were cleared to their own unit and from their it was sent to another unit for maintenance. We find the capital goods are no more available with the appellant for intended use and there is no record of their return after maintenance work. In such situation, the Original Authority is correct in demanding to recover the credit taken on such capital goods. 10. Cenvat credit of Rs. 63,32,710/- was sought to be demanded on the ground of misuse of the provisions of Rule 16 by the appellant. This amount is availed as a credit by the appellant upon return of duty paid final products back to the unit. We note that the denial of such credit is on the ground of alleged motive of the appellant to avail the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer and nobody will intend to keep such saleable goods only to avail credit on returned goods. The misuse of Rule 16 has not been demonstrated in the present case as per the original order. As such, we find the denial of credit by the Original Authority is not sustainable. 11. Regarding the appellant s plea on various penalties, we find that the penalty imposed under Section 11AC has been justified as the various additional consideration, as discussed above, have escaped duty and the appellant s act of non-payment due to not disclosure of material facts cannot be denied. As such, we uphold the penalty imposed under Section 11AC. Regarding penalty under Rule 15 of Cenvat Credit Rules, 2004, since the main demand of Rs. 63,32,710/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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