Direct supplies by vendor to customer not to be included in assessable value

By Bimal Jain Excise Duty Judiciary July 15, 2023 1 comment

TaxGuru Citation: 2023 taxguru.in 1
Case Name: Commissioner of Central Excise Pune II VS SS Engineers (Supreme Court of India)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: Supreme Court of India

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Commissioner of Central Excise Pune II VS SS Engineers (Supreme Court of India)

The Hon’ble Supreme Court in Commissioner of Central Excise Pune II v. SS Engineers [Civil Appeal No. 5700 of 2019 dated July 07, 2023] dismissed the appeal of the Revenue and held that, value of items which were directly delivered to customer’s place and which never entered in the factory of the assessee should not be added to assessable value of goods supplied by the assessee.

Facts:

SS Engineers (“the Respondent”) is inter alia engaged in erection, installation and commissioning of sugar plant for which it uses own manufactured goods and procures goods from market which are directly delivered to customer’s place (erection site).

The Respondent availed ITC of own manufactured goods and paid the excise duty on such goods however, the Respondent has neither paid excise duty nor availed ITC on goods which are directly supplied from market to customer place as the excise duty on bought out items were paid by the manufacturer of such items.

The Revenue Department was of the view that the bought-out items (goods which are directly procured from market and delivered to customer’s place) should be added to assessable value of supplies made by Respondent.

Accordingly, a Show Cause Notice (“the SCN”) was issued to the Respondent for the period July, 2000 to September, 2007 demanding excise duty on bought out items.

The Adjudicating Authority vide order-in-original dated December 27, 2016 (“the OIO”) confirmed the demand and imposed the penalty on the Respondent and further noted that the Respondent has supressed the facts that the bought-out items were used in manufacturing of sugar plant and thus, excise duty was leviable.

Aggrieved by the OIO, the Responded filed an appeal before the CESTAT who vide an order (“the Impugned order”) held that the bought-out items are not liable to excise duty since, the Respondent have not manufactured the same in his factory. Thus, the demand of excise duty is not valid.

Aggrieved by the Impugned order, the Appellant filed an appeal before the Hon’ble Supreme court.