Assessable value and Cenvat credit principles applied to exclude hundi charges and allow disputed input-service credit.

Hundi commission and related banking charges were treated as not forming part of the assessable value for central excise, so the duty demand, interest and penalty on that component were set aside. Cenvat credit was held admissible on the disputed input services under settled precedent, except for vehicle repair and maintenance and internet charges, which were not contested. The penalty was also removed in view of the overall finding, leaving only the limited credit disallowance undisturbed.

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Issues: (i) Whether hundi charges collected from customers were includible in the assessable value for central excise duty. (ii) Whether Cenvat credit was admissible on the disputed input services, and the extent of penalty sustainable.

Issue (i): Whether hundi charges collected from customers were includible in the assessable value for central excise duty.

Analysis: The disputed charges represented hundi commission and related banking charges, and the applicable legal position treated such amounts as not forming part of assessable value. The accepted position of the Revenue in light of the binding precedent led to rejection of the demand on this component.

Conclusion: The demand, interest, and penalty relating to hundi charges were held unsustainable and were set aside in favour of the assessee.

Issue (ii): Whether Cenvat credit was admissible on the disputed input services, and the extent of penalty sustainable.

Analysis: The disputed services were found to be covered by the settled line of decisions on admissibility of input services for Cenvat credit. Credit was denied only for vehicle repair and maintenance and internet charges, which were not contested. In view of the overall finding on admissibility, the penalty was also liable to be removed.

Conclusion: Cenvat credit was held admissible on the disputed services except vehicle repair and maintenance and internet charges, and the penalty was set aside.

Final Conclusion: The appeal succeeded substantially on the duty and credit issues, with only a limited portion of the credit dispute left undisturbed.

Ratio Decidendi: Charges not forming part of the sale price or assessable value cannot be added to assessable value, and eligible input services cannot be denied Cenvat credit when settled precedent supports admissibility.

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