2020 (10) TMI 818 - AT - Central Excise

Levy of Penalty - disallowance of CENVAT Credit - supplementary invoice raised by job worker - suppression of facts or not - revenue neutrality - extended period of limitation - HELD THAT:- Admittedly the transaction between BALCO and VAL is duly documented and properly recorded in the books of accounts of both the companies. Further, the method of valuation adopted for clearance of calcined alumina from VAL to BALCO was under a business like formula based on the price of aluminium at LME. Further, from the facts on record, we find that there is no incentive for VAL to suppress the clearance value or pay lower tax. Whatever duty was payable as per the invoice, the same was to be paid by BALCO to VAL. Secondly, it has been demonstrated from the appeal paper book, being the extract of cenvat credit, that VAL alone had sufficient credit balance in their cenvat account exceeding ₹ 1 crore, whereas the duty payable was in few lakhs only and thus the cumulative credit balance in cenvat register of VAL was increasing from month to month. Further, it is evident from record that the parties suo motu changed the basis of valuation to the tender price of NALCO for calcined alumina (under International Competitive Bidding).

Revenue Neutrality - HELD THAT:- The situation is wholly revenue neutral as BALCO is clearing their finished product on payment of duty, and whatever duty is charged by VAL is available to BALCO as cenvat credit.

Suppression of facts or not - penalty - extended period of limitation - HELD THAT:- Upon enquiry and investigation by Revenue, disputing the method of valuation of calcined alumina by VAL, on being so advised agreed to the valuation as suggested by Revenue and suo motu deposited the differential duty alongwith interest much prior to issue of show cause notice. VAL also bonafide issued supplementary invoice to BALCO in December, 2009. Thus, we find that the issue is wholly interpretational in nature, and there is no element of fraud, suppression or intention to evade payment of duty. Reliance placed by Revenue on the show cause notice of VAL is erroneous and misconceived. We further find that the allegation by Revenue are bald and unsubstantiated. Only for the reason that VAL instead of contesting the show cause notice went for settlement before the Settlement Commission, no adverse inference can be drawn against the appellant BALCO - The benefit of N/N. 214/86-CE was available to BALCO i.e. they could have received calcined alumina from VAL without payment of duty, as prescribed. Further, the extended period of limitation is not warranted in the facts and circumstances, there being no suppression of facts or attempt to evade duty, etc.

Appeal allowed - decided in favor of appellant.