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M/s Aksh Optifibre Ltd. Versus CCE, Jaipur

Valuation - includability - additional consideration - debit notes raised to various buyers of excisable goods to compel them to return the durable packing - amount raised in debit note have not been received by the appellant - Demand - Held that:- any debit note issued with reference to sale transaction of excisable goods will necessarily be form part of the transaction value. The Central Excise duty is not levied only on the quantum of consideration actually received by the appellant. The invo .....

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itional consideration - cost of raw material supplied free by the buyer of finished goods - Demand - Held that:- the raw material received free of cost has to be additional consideration over and above the amount received by the appellant towards sale of the finished goods. Admittedly the free raw material would have resulted in the lesser invoice value which does not duly reflect the normal transactional value for excise duty purposes. - Demand - lesser payment of duty paid on the cables wh .....

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ved does not amount to manufacture the manufacturer shall pay an amount equal to the Cenvat credit taken under sub-Rule (1). In the present case, the appellant is liable to pay the Cenvat credit already availed on return of the said finished goods. Hence, we find no merit in the plea of the appellant against such demand. - Demand - capital goods cleared to the other unit of the appellant - denial of credit was on technical ground and the machine was sent to their own unit for further mainten .....

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the appellant - denial of such credit is on the ground of alleged motive of appellant to avail the credit and to keep the goods without clearance in the unit - Held that:- the duty paid goods when returned back with a purported intend of re-conditioning or for any other reason the appellant is rightly eligible for credit of duty already paid. The presumed motive or the retention of returned goods inside the premises for long time are not reasons for denial of credit under the said Rules. In fac .....

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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 ₹ 63,32,710/- in terms of Cenvat Credit Rules, 2004 was held unsustainable the penalty also required to be suitably reduced. Accordingly, we reduce the .....

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cate for the appellant Shri R.K. Manjhi, Authorized Representative (DR) for the respondent ORDER Per. B. Ravichandran The appeal is against order dated 30/10/2006 of Commissioner of Central Excise, Jaipur I. The appellant are engaged in the manufacture of Telecommunication Grade FRP Rod and Optical Fibre Cables liable to Central Excise Duty. Based on certain verification made by the officers in October 2005, proceedings were initiated against the appellant to recover an amount of ₹ 40,60,9 .....

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ned Counsel for the appellant raised various arguments against the order. A summary of his submissions is as follow :- (a) Duty of ₹ 3,63,446/- and ₹ 73,070/- demanded on account of debit notes raised to various buyers of excisable goods is not tenable as the amount raised in debit note have not been received by the appellant. Further, such debit notes were issued mainly to compel the buyers to return the durable packing. In many cases the packing material was returned by the buyers .....

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and hence the duty payment for the second clearance has been correctly made ; (d) the denial of Cenvat credit of ₹ 63,32,710/- was not correct. It was submitted that the defective goods returned back have been accounted for by the appellant and the credit of duty paid on the same has been correctly taken by them ; (e) the demand of ₹ 1,41,332/- on the capital goods cleared to the other unit of the appellant was contested on the ground that the denial of credit was on technical ground .....

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led. 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 submitted that the raw material cost has to be added in the final product and hence th .....

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g of the returned goods as they were lying without any further process in their unit. Regarding transfer of capital goods, it was submitted that the same have been removed from the above premises and have not returned back. Hence, the recovery of credit on such goods is justified. 6. We have heard both the sides and examined the appeal records. On the first issue regarding loading of additional consideration with reference to the debit notes issued by the appellant, we note that the appellants p .....

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e 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 .....

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about 150 k.m. of OFC on 31/3/05 they have availed the credit of duty already paid in terms of Rule 16. The said goods were cleared on 12/5/05 paying much lesser duty we find that the appellants claim that these goods were re-manufactured by using additional inputs as untenable. As per the facts recorded by the Original Authority which has not been disputed, the appellants received back the finished goods, did some processing to obtain similar finished goods and cleared to another customer. The .....

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of the appellant against such demand. 9. A demand of ₹ 1,41,332/- is on account of clearance of capital goods on which credit has been availed. The 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 t .....

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er, the credit taken in terms of Rule 16 (1) was also equated suo-moto refund under Section 11B and held as not permissible. We find the reasoning recorded in para 21 of the original order is without backing of the law. The appellants have cleared the finished excisable products on payment of duty. The goods have been returned to the unit. The appellants claimed that the same are for re-processing and the credit has been availed by them on the duty paid earlier in terms of Rule 16 (1). We have p .....

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