2026 (2) TMI 665 - AT - Central Excise

Post-manufacturing expense deductions on weighted average basis upheld, leading to set aside of demand and penalties.

The note addresses whether post-manufacturing expenses (octroi, additional sales tax, transportation) may be deducted on a weighted average basis for ... Demand of excise duty along with interest u/s 11AB - equal penalty under Rule 25 - manufacture of various products and are registered with the Central Excise department - deductions on account of post manufacturing expenses (“PME”) such as additional sales tax, octroi and cost of transportation on weighted average basis. - HELD THAT:- After considering the submissions made by both the parties and perusal of the material on record, we find that the issue involved in the present case is no more res integra and has been settled by the Tribunal in favour of the Appellant in their own case for the earlier period [2009 (4) TMI 739 - CESTAT, NEW DELHI], whereby the Tribunal held that deductions on account of PME like octroi, additional sales etc are admissible to the Appellant on weighted average basis. Further, we find that the present proceedings arise on account of subsequent SCNs for subsequent period. We also find that the department has not challenged the Final Order dated 30.04.2009 passed by the Tribunal which means that the department has accepted that order. Besides this, the issue has also been decided by various benches of the Tribunal in the cases cited supra, wherein it has been held that the assessee is entitled to deductions on account of octroi, sale tax, additional sales tax on weighted average. Thus, we are of the considered opinion that the impugned order is not sustainable in law, therefore, we set aside the same and allow the appeal of the Appellant with consequential relief, if any, as per law. Issues: Whether deductions on account of post-manufacturing expenses (octroi, additional sales tax, cost of transportation) claimed on a weighted average basis are admissible for the subsequent assessment period and whether the impugned order confirming duty, interest and penalty is sustainable in view of earlier Tribunal decisions in the assessee's own case and other decisions.Analysis: The question involves application of the Central Excise statutory and regulatory framework under Section 11A, Section 11AB and Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002, read with Board guidance including Circular No. 20/90-CX.1 dated 30.08.1990 and Circular No. 354/81/2000-TRU dated 30.06.2000 on valuation adjustments. The issue had been the subject-matter of earlier adjudication and allowance for an earlier period by a Final Order of the Tribunal dated 30.04.2009 in the assessee's own case which was not challenged by the Revenue. Multiple subsequent Tribunal decisions from different Benches have consistently allowed similar deductions on weighted average basis. The present proceedings relate to subsequent SCNs for a later period raising the same legal question. The impugned order confirming demand, interest and penalty was examined against this settled position and the cited precedents.Conclusion: The impugned order is set aside and the appeal is allowed; deductions on account of post-manufacturing expenses on weighted average basis are admissible for the relevant period and the demand, interest and penalty confirmed by the impugned order are not sustainable. Consequential relief, if any, to be given as per law.