2019 (5) TMI 1016 - AT - Central Excise

Tribunal rules in favor of Bombay Engineering on cum-duty price issue, show-cause notice set aside

The Tribunal ruled in favor of M/s. Bombay Engineering Industries, holding that the 10% amount recovered from customers did not constitute a cum-duty ... Payment of 10% of the value of exempted goods - amount reversed under Rule 6(3)(b) of CENVAT Credit Rules, 2004 - Whether the amount reversed under Rule 6(3)(b) of CENVAT Credit Rules, 2004 and subsequently, recovered from their customers would form part of the total price of the exempted goods? - Time Limitation - HELD THAT:- What can only be inferred from the show-cause notice is that the appellants have recovered 10%, of the amount representing value of exempted goods, from their customers. The appellants are showing value of the exempted goods and 10% of the value separately - We do not find that in the instance case it is established that the appellants are treating this 10% as duty and are arriving that cum-duty price of the exempted goods. Applicability of decision of Larger Bench in the case of M/S KRITI INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE INDORE [2017 (5) TMI 603 - CESTAT NEW DELHI (LB)] - HELD THAT:- Larger Bench has concluded that payment of an amount at the rate of 8% or 10% under Rule 6(3)(b) of CENVAT Credit Rules, 2004 is not a duty, not a tax and hence, cannot be deducted from the price of the exempted goods cleared by consuming cenvated inputs. It follows from this decision that the said 8% or 10%, as the case may be, cannot be deducted from the price of exempted goods - As long as it is not proved that the amount recovered from the customers is not a cum-duty value that is arrived after deducting the said 10% from the total value, facts of the instance case are different from the one dealt by the Larger Bench - We do not find anything in the show-cause notice or the orders of the lower authorities that the issue being discussed in the instance case is about the arriving of cum-duty value or the applicability of provisions of Section 11D. Time Limitation - HELD THAT:- There are no reason that an intention on the part of the appellant can be adduced in view of the facts of the facts and also in view of the fact that the demanded amount is only ₹ 13,686/-. Therefore, without going into the merits of the case, the show-cause notice is held to be barred by limitation and thus, needs to be set aside. Appeal allowed - decided in favor of appellant. Issues: Dispute over payment of 10% value of exempted goods; Interpretation of Rule 6(3)(b) of CENVAT Credit Rules, 2004; Applicability of Section 11D; Barred by limitation.Analysis:1. Dispute over Payment of 10% Value of Exempted Goods:The case involved M/s. Bombay Engineering Industries disputing the requirement to pay 10% of the value of exempted goods cleared to M/s. Municipal Corporation of Mumbai. The department argued that the appellants had recovered this 10% amount from customers and should pay it. The original authority and Commissioner upheld this, leading to the current appeal.2. Interpretation of Rule 6(3)(b) of CENVAT Credit Rules, 2004:The appellants contended that the amount reversed under Rule 6(3)(b) should not be considered part of the total price of exempted goods as it is in the nature of tax, not price collection. They cited CBEC Circular and case laws to support their argument. They also raised concerns about the endless progression if such amounts were included in the value.3. Applicability of Section 11D:The Department argued that the reversal of 10% should be considered as 'any other taxes,' referencing a Larger Bench decision. However, the Tribunal found that this amount is not a duty or tax, and hence, cannot be deducted from the price of exempted goods.4. Barred by Limitation:The appellants argued that the show-cause notice issued beyond the normal period was barred by limitation, as the Department was aware of their practice. The Tribunal agreed that the extended period was not invokable, as the demand was only Rs. 13,686 and the appellants had been regularly filing returns.In conclusion, the Tribunal held that the 10% amount recovered from customers did not render the value shown in the invoices as a cum-duty price. The show-cause notice was set aside as barred by limitation. The judgment emphasized the distinction between tax and price collection, ultimately ruling in favor of the appellants due to procedural limitations and the nature of the disputed amount.