The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the value of sprouts should be included in the assessable value of “malt” for determining excise duty.
The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that appellant has sold the sprouts outside to the third party and retained the sale proceeds, then the value is required to be added to that of the goods, the malt supplied to the principal manufacturer and it attracts excise duty.
The appellant/assessee is in the business of manufacturing of “Malt” on “job-work” basis for the principal manufacturer, M/s. United Breweries Limited (UBL) and after manufacturing, the “Malt” was returned to the principal manufacturer, who captively consumed it in manufacturing of non-excisable /exempted final products.
The appellants were paying duty on the basis of cost certificates given by the cost accountants, M/s. Gurvinder Chopra & Company of M/s. UBL. It is evident from the cost certificates that to arrive at the cost of production, cost of basic rawmaterial “Barley‟ and the conversion cost paid to the appellants had only been included.
As per the condition No.6 of the Agreement, which was renewed till dated 31.03.2017 vide letter dated April 12, 2016 and again renewed till 31.03.2019 vide letter dated 07.03.2017, entered into with UBL (Malt Division) by the appellants, thin & sprout etc. would accrue to the benefit of the manufacturer‟ i.e. the appellants.
Therefore, it appeared that in order to arrive at the cost of production of “Malt‟ in such a case, value of sprout sold by the appellants to third parties was also required to be added to the cost of production of “Malt”.
The Show cause notice was issued to the appellant for evading the payment of central excise duty during the period from April, 2016 to June, 2017 on “Malt” manufactured by them on job work in contravention of the provisions of Section 4(1)(b) read with Central Excise Valuation Rules, 2000.
On adjudication, the demand was confirmed to the extent of Rs.14,88,495 alongwith interest and penalty. The balance demand of Rs.58,47,203 was dropped.
The appeal filed by the appellant was rejected by the order and hence, the appellant filed the appeal .
The issue raised was whether the value of sprouts sold by the appellant is to be included in the assessable value of the “Malt” and the duty is payable while clearing the same to “UBL”?
The tribunal relied on the decision of the Supreme Court in the case of Ujagar Prints Ltd. by which a clarification was issued by the CBEC in Circular No.619/10/2002-CX dated 19.02.2002 and also the Final Order Tribunal in the case of the appellant themselves Order, where the Tribunal had rejected the appeal of the appellant on the issue of inclusion of the value of the sprouts, the Adjudicating Authority had confirmed the demands.
The tribunal dismissed the appeal.
Case Details
Case Title: M/s.Malsters & Blenders (India) Pvt. Ltd. Versus Commissioner of Central Excise and CGST Commissionerate
Case No.: Excise Appeal No.51108 of 2020
Date: 14.01.2025
Counsel For Appellant: None
Counsel For Respondent: Rakesh Agarwal
