2009 (8) TMI 1000 - AT - Central Excise

Partial success in appeal under Notification No. 30/2004-C.E. clarifies benefit availment & assessable value.

The Tribunal partially allowed the appeal, setting aside the duty demand and penalty under Notification No. 30/2004-C.E. while remanding the handling ... Benefit of N/N. 30/2004-C.E., dated 9-7-2004 - denial on the ground that condition of notification not fulfilled - Commissioner has observed that such initially availing of credit and subsequent reversal at the time of clearance of the final product does not satisfy the condition of the notification - Held that: - the above issue is no more res integra and stands settled by the Larger Bench decision of the Tribunal in the case of Nicholas Piramel (I). Ltd. v. CCE, Thane [2008 (8) TMI 97 - CESTAT MUMBAI]. Law stands declared by the Larger Bench that in case of common inputs used in dutiable and exempted goods, if the credit in respect of inputs used in exempted goods stand reversed before removal of such goods, it will amount as if no credit has ever been availed. Valuation - demand on the ground that they have recovered handling charges from their buyers for handling of the goods within the factory premises - Held that: - Where no such freight charges are being reflected in the invoices, it has to be taken as if the same are part of the handling charges, which might include unloading at the customers’ premises and transit insurance etc. The dispute has not been examined by the Commissioner from the above angle. Part matter on remand and part matter allowed. Issues: Dispute over availing benefits of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E., and imposition of duty and penalty. Dispute regarding recovery of handling charges and inclusion in assessable value.Analysis:1. Availment of Notification Benefits: The appellant, engaged in yarn manufacture, faced a dispute over availing benefits under Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E. The Commissioner denied the benefit of Notification No. 30/2004-C.E. to the appellant, leading to a duty confirmation of Rs. 1,44,87,970. The Commissioner's contention was based on the appellant initially availing Modvat credit without maintaining separate records, although the credit was reversed at the time of final product clearance. The Tribunal referred to the Nicholas Piramel (I). Ltd. case, where it was established that if credit for inputs used in exempted goods is reversed before removal, it is as if no credit was availed. Considering this, the Tribunal set aside the duty demand and penalty imposed under Notification No. 30/2004-C.E.2. Handling Charges Dispute: Another issue involved a duty demand of Rs. 4,71,759 and a penalty for recovering handling charges from buyers for goods handling within the factory premises. The appellant argued that these charges covered loading/unloading, transportation, and transit insurance, with certain charges not to be included in the assessable value. The Commissioner disagreed, stating lack of evidence supporting the appellant's claim. The Tribunal noted discrepancies in invoices and the appellant's explanation that handling charges varied based on distance and freight charges. The Tribunal found merit in the appellant's argument, indicating that where no separate freight was charged, it should be considered part of handling charges. The matter was remanded to the Commissioner for further examination in line with the Tribunal's decision in the Supreme Petrochem Ltd. case, allowing the appellant to present supporting evidence.3. Conclusion: The Tribunal partially allowed the appeal, setting aside the duty demand and penalty under Notification No. 30/2004-C.E. while remanding the handling charges issue for fresh consideration. The appellant was granted the opportunity to provide additional evidence. The judgment provided clarity on the availing of benefits under notifications and the inclusion of handling charges in the assessable value, ensuring a fair and thorough review of the disputes.