TMI Blog2013 (9) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Adjudicating Authority in accordance with law . However, the demand beyond the period of limitation is set aside along with setting aside of penalties imposed upon all the appellants. - E /1500-1503/2006 - - - Dated:- 20-3-2013 - Archana Wadhwa And B S V Murthy, JJ. For the Appellant : Shri Anand Nainawati , Adv. For the Respondent : Shri Avinash Thete , SDR PER : Archana Wadhwa The appellant is engaged in the manufacture of dispensing pump sets for petroleum products in their factory located at Narol-Vatva Road, Ahmedabad. They were also clearing metering unit and suction unit to their Bombay factory to be used by them as inputs for their final product, dispensing pump sets. The dispute in the present appeal relates to the assessable value of the said metering units and suction units cleared by the appellant to their Bombay unit and the consequent demand of Rs.85 ,83,356 /-. 2. As per facts on record, the show cause notice issued on 30.09.91 was adjudicated by the Commissioner vide his order dated 27.3.92 dropping the demand of duty as barred by limitation. It was observed in that order by the adjudicating authority that appellant has been filing classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at Nadiar would have taken credit of the same. It is not a case where the goods are being sold by one assessee to another. It is basically taking out money from one pocket and putting the same in other pocket of same trouser. The other unit at Nadiar was appellant's own unit and it was only for the procedural and technical purposes that the duty was required to be paid at the time of clearance from the assessee's unit. Tribunal, in number of cases, has held that where the duty paid in one unit is available as credit to other unit of the same assessee , the entire issue is Revenue neutral and the demand should not be confirmed on the said count. Reference in this regard is made to Tribunal's decision in case of M/s. P.T.C . Industries V. CCE , Jaipur-2003 (159) E.L.T . 1046 (Tri.-Del.) as also in case of M/s. MRF Limited V. CCE-2004 (170) ELT 69 (Tri.-Bang.) and in case of CCE , Daman V. M/s. Rishi Packers, 2007 (80) RLT 181 ( CESTAT-Ahbad .). Even Hon'ble Supreme Court in case of CCE Vs. M/s. Coca-Cola India Pvt. Ltd. 2007 (213) ELT 490 (S.C.) has held that Excise duty payable on the beverage bases/concentrates and Modvat credit available to the assessee being identical, consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y telephone bills just like any other customer. This would mean the government was paying for the telephone services to itself. Secondly if we take the example of postal service even today every Government Department of Central Government is required to affix stamps on envelops and pay for other services just like any other customer. Government of India prints stamps specially for this purpose, postal department collects money for the stamps and releases the same to government departments who affix such stamps and send envelopes. Elaborate accounts of expenditure incurred on stamps and other postal expenses are maintained by all government departments . Even though this results in putting money from one pocket of the same person to another pocket of the same person, government continues to do this. A government which does not exempt its own department for payment for the services rendered on the ground of revenue neutrality and on the ground that there cannot be payment by the person who is receiving the service to the same person who is providing the service only because they happened to be two parts of the same person, question arises whether we can justify revenue neutrality whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. However for invoking extended period under Section 11A of Central Excise Act, suppression of facts, misdeclaration , fraud and collusion etc with intent to evade duty is required to be proved. Therefore unless the department is able to establish that there was an intention to evade duty on the part of the assessee and there was suppression of fact/ misdeclaration /fraud etc. extended period cannot be invoked. The normal assumption when goods are cleared to the own unit of the appellant and the unit receiving the goods is taking the credit and pay more duty on the final product is that there was no intention to evade duty by under declaring the value because by under-declaration, the assessee does not gain any benefit. In such a situation naturally the department may have to show that there was an intention to evade duty which could probably be done by showing that the goods are diverted. Of course there could be other modus of operandi adopted which can show intention to evade payment of duty. Therefore unless intention is shown by evidence, the benefit would go to the assessee as regards revenue neutrality. Therefore in a revenue neutral situation unless department is able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the court can, and in many cases must, take cautious cognizance of events and developments (subsequent to the institution of the proceedings provided the rules of fair-ness to both sides are scrupulously obeyed.)" 19. These observations have been cited in support of the submission that in view of the fact that even if the demand succeeds, whatever duty is paid by the appellants consequent to the confirmation of demand would be available as credit thereby bringing no relief to the department, there is no point in confirming the demand. While the courts can apply the principle "equity justifies bending the rules/procedure, where no specific provision or fairplay is violated, with a view to promote substantial justice", Tribunal which is a creation of a statute cannot ignore the rule of law and go by equity. In fact even the observations of the Supreme Court wherein it has been stated "where no specific provision or fairplay is violated", shows that there should be no violation of any specific provision. In this case when the goods were underva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere that penalty under Section 11AC equal to duty demanded had been imposed by Commissioner (Appeals ) which would show that extended period had been invoked. Therefore this is also not applicable. Similarly in the case of Crystal Quinone Pvt. Ltd. reported in 2009 (233) ELT 499 (Tri .-Ahmd .) show cause notice was issued on 10.03.2000 for the period involved from 01.04.97 to 31.07.99 and the demand was set aside on the ground of limitation. In the case of Atul Ltd reported in 2009 (237) ELT 287 (Tri .-Ahmd .) the demand was set aside on the ground that a show cause notice on the same ground had been issued in 1996 and therefore another show cause notice invoking suppression could not have been issued. In the case of Essel Propack Ltd. reported in 2009 (237) ELT 497 (Tri .-Ahmd .) the appellants had submitted that proceedings for denial of credit on the basis of supplementary invoices issued by the sister unit had been initiated and set aside subsequently by the departmental officers on the ground that there was no suppression at the end of manufacturing unit. This shows that in that case also demand was set aside on the ground of limitation. In the case of Mafatlal Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to arrive at production cost afresh after considering costing principles laid down in Cadbury's case and adding notional profit. The Hon'ble Court also observed that assessee has to satisfy Commissioner that actual profit was less than 10% on cost of production and in case of failure notional profit has to be added. This was also a case of captive consumption in a sister unit. Even then Hon'ble Supreme Court decided that cost of production has to be decided afresh. Obviously that was also a case of revenue neutrality. 24. The discussion of all the cases cited by the learned advocate above and the decisions by Hon'ble Supreme Court show that none of the decisions support the contention that demand which is within the limitation period cannot be confirmed and it need not be paid only because the credit is available at the order end. 25. In view of the above, the impugned order has to be set aside and the matter remanded to the original adjudicating authority to recalculate the demand which is within the normal period of limitation. It is made clear that no penalty would be leviable on any of the appellants in view of the fact that extended period has been held to be inapplica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability, if any, for the extended period of limitation, has been set aside by both the Members, holding that the unit in Mumbai is the appellant's own unit. It is his submission that the narrow question is only regarding duty liability within the period of limitation. It is his submission that the law of Revenue neutrality will apply also to the demand of duty within the limitation. He would rely upon the following decision :- a) Tenneco RC India Pvt. Ltd. Vs CCE Chennai 2009 (235) ELT 105 (Tri) b) Essel Propack Ltd. Vs. CCE Daman 2009 (237) ELT 497 (Tri.) c) Pasupuleti Venkateswarlu Vs The Motor General Traders AIR 1975 S.C. 1409 d) Gopal Zarda Udyog Ltd. Vs. CCE 2001 (128) ELT 409 (Tri.) e) Hindustan Zinc Ltd. Vs. CCE 2008 (232) ELT 687 (Tri.) f) CIT Vs. Ramanand Sachdeva (1982) 136 ITR 440 (Del.) g) Commissioner Vs. Indian Iron Steel Co. Ltd. 2013 (287) ELT 89 (Tri-Bang) h) Piom Industries Vs. CCE Ahmedabad 1995 (77) ELT 424 (Tri) 4. It is also his submission that since the Mumbai unit is now closed down, the relief needs to be moulded in such a way that the appellant is not put to any hardship. It is his submission that the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel. As it stands today, the provisions of Section 11A (1) of Central Excise Act, 1944, empowers the Revenue authorities of demand any duty within the period of limitation, if said duty was not levied or paid or has been short levied or short paid based upon any approval, acceptance or assessment relating to the rate of duty or valuation of excisable goods. In the case in hand, the Revenue authorities had allowed the clearances of the assessee , based upon the certificates produced by them in pursuance granting the benefit of Notification No.108 /1995. The said certificates are admittedly cancelled by the project implementing authority. If that be so, then the provisions of Section 11A (1) will apply in full force in this case. 14. As regards the various judgments relied upon by the ld. Counsel to submit that in this case, there cannot be any duty liability. I find that in those cases, the issue and the facts were totally different. In the case in hand, it is undisputed that the provisions of Section 11A (1) would be applicable for the clearances made from the factory premises. In those cases, the issue was regarding cancellation/ licences which were produced before the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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