TMI Blog2017 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. - E/1127/07, E/2222/06 - A/86741-86742/17/EB - Dated:- 11-4-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri Rajesh Ostwal, Advocate for the appellant Shri Ajay Kumar, Jt. Commissioner (AR) for the respondent ORDER Per Ramesh Nair The facts of the case are that the appellants are engaged in the manufacture of tractors falling under Chapter sub-heading no. 8701 9090, IC engines falling under Chapter sub-heading 84082020 and parts falling under sub-heading 87081010, 84835090 of the First Schedule to the Central Excise Tariff Act 1985. The appellants were paying the duty on the value arriving on cost construction basis which is based on cost certificate issued by cost accountant. It was observed that the appellant had been taking the material cost of the inputs based on the cost standards as on 31st march of the previous accounting year instead of the weighted average cost or the moving average cost of the current period with reference to the clearance date. Similarly the freight and octroi cost factor R D expenses cost factor both have been taken based on accounting period of the previous year but not on the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved revenue neutrality. For this reason, the demand is not sustainable. 4. In this regard, the ld. counsel has submitted an affidavit in respect of both the appeals sworn by the appellant wherein it was stated that the IC engine and parts cleared by the appellant to the Nagpur and Rudrapur and Nashik unit was consumed in the manufacture of motor vehicle (tractor). During the period in dispute the tractors manufactured in Nagpur and Rudrapur factory was cleared on payment of excise duty. In the said affidavit it was also stated that at the respondent's factory of Nagpur and Rudrapur, no benefit of any exemption notification in relation to manufacture of tractors was availed. Accordingly, entire duty paid in respect of IC engine and parts from the appellant's Kandivli factory was available as credit to the Nagpur and Rudrapur factory. He further submitted that the demand was raised for the extended period invoking the proviso to Section 11A of Central Excise Act, 1944. As per the facts of the case, the appellant have been submitting the cost data regularly. The facts of valuation of goods were in the knowledge of the department. Therefore, there is no suppression of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 2015-TIOL-836-CESTAT-MUM Tribunal order no. A/93590-93591/16/SMB dated 21.10.2016. 8. We have carefully considered the submission made by both sides. 9. As per the facts of the present case, the appellant manufacturing and clearing IC engine and parts of tractors to their own unit located at Nagpur and Rudrapur. Nagpur and Rudrapur units are manufacturing tractors by using the IC engine parts supplied by the appellant. They are clearing the goods on payment of duty. Nagpur and Rudrapur are availing cenvat credit and as per the submission of the appellant during the relevant period the Nagpur and Rudrapur have paid excise duty from PLA to the tune of ₹ 6,88,53,792/- and ₹ 113,53,15,851/-. Therefore even if the duty as demanded in the show-cause notice would have paid by the appellant the same was available as a cenvat credit to their Nagpur and Rudrapur therefore, there was neither gain nor loss either to revenue or to the assessee. We have considered the affidavit submitted by the appellant in this regard. On identical facts for the appellant own case this Tribunal has considered the issue in hand and the appeal was allowed vide order dated 16.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be included in the assessable value. He also submits that as per CAS-4, R D expenses incurred for development improvement of the process of the existing product alone is includible in the cost of production. Therefore the R D expenses relating to the other units would not be includible in the cost of the production. As regard royalty expenses, he submits that as per CAS-4 royalty is includible in the assessable value only when the royalty is based on production. In the present case the royalty is not related to goods manufactured and cleared to their sister units, therefore the same is not includible in the assessable value. 2.1 Shri Ostwal, Learned Counsel without prejudice to the above submissions, further submits that all the duty paid or payable by the appellant is available as MODVAT/CENVAT credit to their Rudrapur and Nagpur unit where the goods were cleared. These units are paying duty in PLA. During the relevant period 1997 to 2002 these units had paid ₹ 75.49 crores from PLA. Similarly the motor vehicle parts manufactured at their Kandivli unit and cleared to their other units located at Igatpuri, Nashik and Zaheerabad where during the relevant period recipien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the procedure adopted was not in consonance with the formalities prescribed by law, however, even the examination of private books and the entries therein having been corroborated by the transporters, resulted in no revenue loss, then, the Tribunal's conclusion cannot be said to be perverse. The Tribunal has found that the jurisdictional Gujarat High Court considered a similar controversy and questions. The Tribunal found that once the inputs have been delivered only at the factories of the assessees from the associate companies, then no loss occurs to revenue. The assessees would derive no benefit by not reversing Cenvat credit on the inputs, when sister concerns are also eligible to take Cenvat credit. Therefore, in the absence of cogent and reliable evidence particularly on the diversion of these inputs, the Tribunal applied the doctrine or principle of revenue neutrality. We do not see how the same was inapplicable in the admitted facts and circumstances. 5. Even the order-in-original and the paragraph which was relied upon by Mr. Oak does not indicate that any other material or evidence was placed. The Tribunal has taken this factual position from order-in-original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of this case will not detract from the revenue neutral situation. Whatever duty paid by the assessee must be available as Cenvat credit to their sister units. The appellant neither stands to gain nor stands to loose. In this view of the matter, we dispose of this appeal without expressing any view on the questions of fact/law involved in this case. CCE C Vs Indeos ABS Ltd - [2010 (254) ELT 628 (Guj.)] 4. The aforesaid findings of facts? are not disputed. The grievance was that the aspect of undervaluation has not been considered by the Tribunal at all. Grievance would have merited acceptance if the ultimate exercise would have benefited the Revenue by collection of duty in the coffers of the exchequer. In the facts of the present case, admittedly no such benefit accrues to the exchequer. In the circumstances, if the Tribunal has chosen not to determine an academic issue, it is not possible to state that any legal infirmity exists in the impugned order of the Tribunal. STI Industries Vs CCE - [2015 (327) ELT 514 (T)] 11. As regard CVD we find from the annexure to the show cause notice that in show cause notice and the impugned order no allegation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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