TMI Blog2009 (6) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... (Unit I) sold 100% cotton yarn manufactured by them to one M/s. Bansali Tradelink (P) Ltd., ( Bansali for short) who in turn had sold the same consignment to the unit of the company located at Narol (Unit II) within Ahmedabad District. The department s contention is that when the clearance was in the nature of clearance for captive consumption since the cotton yarn cleared by the unit I was directly consigned to Unit II and role of the purchaser was only preparation of invoices as a middleman. Accordingly, the department has taken a stand that such clearances have to be treated as clearance for captive consumption and therefore the valuation has to be on the basis of 115% of the cost of production. On this basis, after due adjudication pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment was already aware of all the facts in 2002 itself, the show cause notices are clearly time barred. (f) He also submits that the whole exercise is Revenue neutral since if the appellants were to pay higher duty in Unit I, credit of the same was available in Unit II during the relevant period. Therefore there could not be any intention to evade payment of duty in Unit I when the credit was available for duty paid by Unit I in Unit II. (g) He also submits that the department has not made out any case to show that there was no sale to M/s Bansali by the appellant and M/s Bansali was related to them etc. The payments were made by cheque by M/s Bansali when the yarn was purchased and Unit II also made payment to M/s Bansali by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spicion about the nature of transactions would not be sufficient. When the Unit II was entitled to the credit of duty paid by Unit I, prima facie, the intention to evade duty would not appear to exist to any ordinary prudent person. Therefore, burden of proving that the whole activity was with an intention to evade duty besides not intimating to the department, is on the department and department has failed to discharge its burden. Therefore, without going into the merits of the case and other issued raised, we find that on the ground of limitation alone, the impugned order has to be set aside. Accordingly, we set aside the demand for duty and interest. Once it is established that duty demand does not survive, penalty on the appellant has t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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