Bought-out items or spares on which no Cenvat credit has been availed should not be included in the assessable value for the purpose of calculating central excise duty.

PER : R. BHAGYA DEVI

The appellant M/s. Power Build Batteries Pvt. Ltd. Bangalore are manufacturers of lead acid batteries and parts thereof and were discharging central excise duty on the same. However, during the audit, it was noticed that the value of bought out items i.e., certain accessories like flot plug, dummy plug, battery stand etc. were not included in the assessable value while discharging the central excise duty on the batteries. The Commissioner (Appeals) upheld the demand of differential duty that was confirmed by the original authority by including the value of the accessories in the assessable value of the batteries. Aggrieved by this order, the appellant is in appeal before us.

The Learned Counsel submits that the appellant had included the value of items such as flot plugs, dummy plugs in the assessable value while discharging central excise duty. However, the audit has observed that to include the value of the spares which were bought out items and these spares were exclusively cleared to Tata BP Solar India Ltd. who are engaged in the manufacture of solar energy equipment. Since, the spares were bought out items on which no cenvat credit was availed, the question of adding their value into the assessable value does not arise. Relied on the following decisions:

• Sur Iron & Steel Co. (P) Ltd. Vs. Commissioner of C.Ex, Kolkata: 2018 (363) ELT 373 (Tri. - Kolkata)

• Neycer India Ltd. Vs. Commissioner of Central Excise : 2005 (192) ELT 620 (Tri. - Chennai) affirmed by the Hon’ble Supreme Court 2015 (320) ELT 28 (S.C.).

Further, he submits that the show-cause notice dated 28.03.2011 was issued for the period from April 2008 to July 2009 and the entire demand is beyond the normal period of limitation. There is no suppression by the appellant since the entire demand was based on their own records which were placed before the audit officers and also the issue involves question of interpretation.

The learned Authorised Representative (AR) has reiterated the findings of the Commissioner (Appeals) in the impugned order.

Heard both sides. The Commissioner (Appeals) in the impugned order while confirming the demand had directed the original authority to reexamine the issue of determination of value of acid which was discussed at para 7 of the impugned order. The learned counsel has admitted that the differential duty on account of inclusion of acid value has already been discharged and hence, the same is not disputed. He also has submitted that duty has been paid on various items whose value was included in the assessable value but disputes only those spares and accessories that were cleared to their clients which were in the nature of bought out items on which credit was not availed. In view of the above, we confirm the demand only to the extent of items that form part of the batteries which form part of the value on which duty had already been discharged and the demand on bought out items are set aside and penalty is also set aside.

Appeal is partially allowed

(Operative portion of the order was pronounced in Open Court on conclusion of hearing.)