Malsters & Blenders (India) Pvt. Ltd. Vs Commissioner of Central Excise Respondent and CGST Commissionerate (CESTAT Delhi)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Delhi has dismissed an appeal filed by Malsters & Blenders (India) Pvt. Ltd., affirming a demand for short-paid central excise duty totaling ₹14,88,495, along with interest and penalties. The dispute centers on the valuation of “Malt” manufactured on a job-work basis for M/s. United Breweries Limited (UBL), specifically whether the value of “sprouts” generated during the manufacturing process and sold to third parties should be included in the assessable value of the “Malt.”
The issue arose during an audit, which revealed that Malsters & Blenders, while producing Malt for UBL (who captively consumed it in manufacturing exempted final products), calculated duty based on cost certificates that only included the cost of raw material (Barley) and conversion costs. However, an agreement between Malsters & Blenders and UBL stipulated that by-products like “thin & sprout” would accrue to the benefit of the manufacturer (Malsters & Blenders). Consequently, it appeared that the sale proceeds from these sprouts, retained by the appellant, should have been added to the cost of production of the Malt. A show cause notice was issued on May 2, 2018, alleging evasion of central excise duty. While the initial demand was for ₹73,35,698, the adjudicating authority confirmed a demand of ₹14,88,495, dropping the remaining amount. The subsequent appeal by Malsters & Blenders was rejected by the Commissioner (Appeals), leading to the present appeal before CESTAT.
