No Excise Duty Payable On Amortization Cost Of The Cylinder: CESTAT

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no excise duty is payable on the amortization cost of the cylinder.

The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that for the purpose of valuation of the packaging material, the amortization cost of the cylinder needs to be included in a proportionate manner depending upon the number of products manufactured by using the cylinder; therefore, the demand made directly on the value of the cylinder is not sustainable.

The issue raised was whether the cost of a cylinder that is manufactured, sold to the buyer of packing material, but retained and used within the factory of the appellant for the manufacture of packaging material is liable for payment of duty on the cylinder as such or otherwise.

The appellant submitted that its amortization has already been included in the value of the packaging material sold to the customer; therefore, no separate demand on the cylinder as such will sustain. There is revenue neutrality in that as long as the duty, if at all, is required to be paid, the same is available as cenvat credit to their customer.

The tribunal has held that though the invoice was issued for the sale of a cylinder, the same was not cleared from the factory and was used within the factory since it was used for the manufacture of packaging material for the customer, so no duty can be demanded on the value of the cylinder as such.

Case Title: Pvn Fabrics Versus C.C.E. & S.T.-Daman

Case No.: Excise Appeal No.12928 of 2013

Date: 03.05.2023

Counsel For Appellant: S J Vyas

Counsel For Respondent: Rajesh Agarwal

Click Here To Read The Order