Pvn Fabrics Vs C.C.E. & S.T. (CESTAT Ahmedabad)
As regard the demand of duty on cylinder used for printing of packaging material, we find that though the invoice was issued for sale of cylinder but the same was not cleared from the factory and the same was used within the factory since it is used for manufacture of packaging material for the customer, no duty can be demanded on the value of the cylinder as such. However, for the purpose of valuation of the packaging material the amortization cost of the cylinder needs to be included in the proportionate manner depending upon the number of product manufactured by using the cylinder therefore, the demand made directly on the value of the cylinder is not sustainable. However, the adjudicating authority shall recompute the duty on the packaging material by taking amortization cost in the overall value of the packaging goods and if there is a short fall, there shall be recovery of the same, however, if it is found that the amortization cost of the cylinder is already included in the value of the packaging material or even paid separately, no further demand will sustain.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved is that whether the cost of cylinder which is manufactured, sold to the buyer of packing material but retained and used within the factory of the appellant for manufacture of packaging material is liable for payment of duty on the cylinder as such or otherwise. Whether the appellant is liable to pay excise duty on the freight collected by the appellant over and above the sale price from their customers.
Shri S J Vyas, learned counsel appearing on behalf of the appellant at the outset submits that as regard the issue regarding duty on the freight element in the present case there is a duplication of demand as on the same amount the separate show cause notice was already issued and the learned Commissioner (Appeals) has taken a note and in the impugned order it was stated that while re-computing the demand the aspect of issuance of other show cause notice on the freight may be considered.
2.1 As regard the demand on the duty on the cylinder, he submits that though the cylinder was sold by issuing sale invoice to the customer of packaging material but it was retained and used in the factory for manufacturing of packaging material therefore, there is no clearance of cylinder out of the factory hence, no duty can be charged on the value of cylinder.
2.2 He further submits that its amortization has already been included in the value of the packaging material sold to the customer therefore, no separate demand on the cylinder as such will sustain. He also submits that there is revenue neutrality in as much as the duty if at all, is required to be paid the same is available as cenvat credit to their customer. In support of his submission, he placed reliance on the following judgments:-
