Case Law Details
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.
Issue:
Whether the value of bought out items should be added to be assessable value of the goods for payment of excise duty by the Respondent?
Held:
The Hon’ble Supreme Court in Civil Appeal No. 5700 of 2019 held as under:
- Observed that, the Revenue Department has previously taken the stand that the bought-out items which did not entered in the Respondent premise, moreover no credit was claimed on such goods by the Respondent, there is no case for adding value of such goods in the assessable value of the goods and no excise duty was leviable.
- Held that, no proceeding need be initiated in the form of the SCN.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Having regard to the fact that for the subsequent period, the Department has taken a stand that the bought-out items are not entered in the factory and the Assessee has not claimed credit on them, there is no case for adding their value in the assessable value and hence no proceeding need be initiated in the form of a show cause notice, we find that for the previous period, in respect of which this appeal arises, the stand of the Department cannot be contrary to what has been stated above. Hence, we do not find any merit in the appeal. The Civil Appeal is dismissed.
Pending application(s) shall stand disposed of.
It is stated at the Bar that the appeals can no longer be considered on merits in view of the fact that the respondent herein has undergone the process of resolution under the provisions of the IBC and having regard to the dictum of this Court in Ghanashyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited, reported in (2021) 9 SCC 657 (paragraphs 102.1 and 102.3), the statutory dues owed by the respondent to the appellant (Department) shall no longer be the subject matter of adjudication, as it has stood extinguished.
In view of the aforesaid submission, the Civil Appeals are disposed of in the aforesaid terms.
Pending application(s) shall stand disposed of.
The Civil Appeal is dismissed in terms of the signed order.
Pending application(s) shall stand disposed of.
CIVIL APPEAL Nos.8189 AND 5701-5703 OF 2019
The Civil Appeals are disposed of in terms of the signed order.
Pending application(s) shall stand disposed of.
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