TMI Blog2023 (7) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the audit party had informed them to pay the differential duty which was calculated on the basis of cost of production of the company as a whole including Unit I II. Further a letter dated 21.1.2008 was issued to the department. Appellant has also furnished all the details as and when requested by department. However, the show cause notice has been issued only on 2.5.2012 invoking the extended period of limitation alleging that the appellant has suppressed facts with intention to evade payment of duty. It has to be noted that appellant has paid excess duty for certain periods. This being so, it cannot be alleged that there is any deliberate act on the part of the appellant to suppress facts with intent to evade payment of duty. Further, the entire situation is revenue-neutral as Unit I would be able to take credit of the duty paid by Unit II. The Hon ble Supreme Court in the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT] had occasion to consider a similar issue and it was held that The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that appellant (Unit II) transferred their products to Unit I on stock transfer basis by paying duty adopting the value based on their declared cost of production. The value so adopted by the appellant was found to vary with actual cost of production of the castings as per CAS 4 statement prepared on the basis of the audited accounts of the appellant as certified by Chartered Accountant. From letter dt. 12.08.2008 addressed by the appellant to the Deputy Commissioner of Central Excise (Audit), Coimbatore, it appeared that there is no sale involved on the clearance of castings from Unit II to Unit I and also that they have determined the assessable value based on the cost of production. When the goods are not sold by the manufacturer-assessee but are used captively by them on their behalf in the manufacture of other articles, the valuation of goods for the purpose of Central Excise duty, has to be done a per Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The said Rule 8 states that where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the manufacture of other articles, the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further details on the method of determining the value of the goods manufactured and stock transferred from Unit II to Unit I. The appellant furnished all the details and books of accounts as sought by the department. However, show cause notice dated 02.05.2012 was issued invoking the extended period alleging that the appellant has suppressed facts with intention to evade payment of duty. It is alleged in the SCN that the value adopted for the stock transfer of goods by Unit II to Unit I varies with actual cost of production as per CAS 4 statements prepared on the basis of audited accounts. It is alleged in the SCN that the appellant had not adopted correct assessable value of 110% of the cost of production arrived at on the basis of CAS-4. Thus it is alleged in the SCN that non adoption of the correct assessable value has resulted in short payment of duty for certain periods and excess payment of duty for other periods. It was further alleged that the excess payment of duty has resulted in transfer of excess cenvat credit to Unit I. SCN has proposed to demand differential duty of Rs.61,81,244/- along with interest from Unit II for the period 2007-08, 1.4.2008 to 31.1.2009 and 1.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppressed any facts and all the details were known to the department. In fact, the demand has been raised from the figures available in the accounts of the appellant. It is also pointed out by the Ld. counsel that for some period, there is excess payment of duty. This itself would establish that the appellant had no intention to evade payment of duty and the short payment, if any, has arisen only due to the fact that the cost of production was not available for computation of the assessable value of rough castings at the time of clearance of such goods. 11. Ld. Counsel vehemently argued that the issue being revenue-neutral, the invocation of extended period cannot sustain. The duty if any paid by Unit II would be eligible for availing credit by Unit I. Therefore, there cannot be any malafide intention to evade payment of duty. To support this argument, Ld. Counsel relied upon the judgement in the case of Nirlon Ltd. Vs CCE Mumbai - 2015 (320) ELT 22 (SC); CCE Chennai Vs Tenneco RC India Pvt. Ltd. 2015 (323) ELT 299 (Mad.). and final order of the Tribunal in the case of Deepak Cables (India) Ltd. Vs CCE Pondicherry - 2018 TIOL-17-CESTAT MAD. The decision in the case of Precot Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to furnish CAS-4 certificate of the financial years ending 31st March by 31st December of the next financial yar. The short payment of duty has occurred because they did not adopt the value as per CAS 4. It is violation of provisions of law and therefore the demand of duty and denial of credit are legal and proper. Ld. A.R prayed that the appeals may be dismissed. 16. Heard both sides. 17. The Ld. Counsel has put forward arguments mainly on the ground of limitation. The demand of differential duty is for the period from April 2007 to January 2009 and April 2011 to September 2011. The allegation is that the assessable value adopted for payment of duty on rough castings is not based on 110% of the cost of production arrived at based on CAS-4 statement as certified by Chartered Accountant. It is an undisputed fact that for the same reason of not adopting assessable value as per CAS-4 there is indeed excess payment of duty. The details of the value adopted, short and excess payment of duty paid for the years 2007-08 to 2012-2013 is furnished by appellant as under : Financial Year Value adopted based on estimated cost of production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise records and in discharging the statutory obligations under the Central Excise Act and Rules. However, the internal audit party after the completion of the internal audit of our accounts has come out with the demand of differential duty of excise on the inter unit transfer of rough castings manufactured / cleared. We wish to submit the facts of the case as under : - .. 2. (a) Given the back ground of the manufacturing set up and considering the fact that the orders for the supply of machine castings placed by the Automobile Industries are on our Parent Unit at Sidco Industrial Estate, Coimbatore Unit No.1, the rough castings manufactured at our Unit No.II at Malumichampatty are cleared to our main unit No. I at Industrial Estate, Sidco, Coimbatore, on payment of duty of excise. Since there is no sale involved on the clearance o castings from Unit No.II to Unit No.I, we have determined the assessable value based on the cost of production. The applicable duty of excise was paid on the basis of the cost of production including profit margin since the commence of the operations in July 2005. (b) (i) The rough castings so cleared by Unit No.II were duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid goods TCY and TCB are manufactured by the appellant at its Goregaon factory. The products so manufactured are sold by the appellant at the factory gate as well as removed for captive consumption to its another factory at Tarapur. At Tarapur factory, the said yarn are utilised for manufacturing final products. 2. The dispute has arisen in respect of the valuation of the TCY which are removed for captive consumption and to be used at Tarapur factory of the respondent. 3. The appellant has been filing the price list proforma under Section 4(1) of the Central Excise Act, 1944, (hereinafter referred to as Act ) declaring the wholesale price of TCY for such goods by showing the same price at which the goods are sold by the appellant at the factory gate to the third parties. Such price list in Proforma Part I under Section 4 of the Act was filed on 1-3-1994 and 28-3-1994. It was again filed on 1-3-1998. The price declaration so made was looked into by the Superintendent of Central Excise and he was not satisfied with this declaration as according to him, the price could not be declared at the same rate at which the goods are sold by the appellant at the factory gate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel on either side that the ratio laid down by the Supreme Court in Nirlon Ltd. case cited supra, is applicable to the case on hand, the substantial question of law is answered in favour of the assessee/respondent and against the Revenue/appellant. 6. Accordingly, the civil miscellaneous appeal fails and the same is dismissed. However, in the circumstances of the case, there shall be no order as to costs. 22. The Tribunal in the case of Deepak Cables (India) Ltd. (supra) while considering similar issue observed as under : 2. The brief facts of the case are that assessee are engaged in manufacture of E.C. Grade Aluminium Wire Rod and are having two more units at Tumkur and Kunigal, Karnataka. Officers visited the premises of the assessee's unit on 24.08.2004. On scrutiny of records, it was noticed that assessee's Chennai unit and Pondicherry units were clearing E.C. Grade Aluminium Wire Rod to their sister units at Tumkur on stock transfer basis. The assessable value in respect of the goods stock transferred should be determined in terms of Section 4 (1) (b) of Central Excise Act, 1944 read with Rule 8 of the Central Excise Valuation (Determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is correct and the impugned orders holding otherwise are unsustainable. 7. Before we part with the cases, we note that the duty paid on such processed yarn cleared by appellant is being taken as Cenvat credit, by their own sister concern. This fact is not disputed by the revenue. If that be so, then the question of revenue neutrality arises, as it is an admitted fact that the transaction is mostly between the sister units. If that be so, the demand of duty on the appellant would be of no consequence as it would be revenue neutral. We find that all the case laws cited by the learned counsel support this proposition. Following the above dictums, we find that confirmation of demand, interest and the imposition of penalty is unsustainable and the impugned order is set aside. Consequently, appeal filed by the department is dismissed. Appeal filed by assessee is allowed with consequential relief, if any, as per law. 23. From the ratio laid down by the above judgements, we have no hesitation to conclude that the facts present is a revenue-neutral situation and therefore the demand invoking extended period cannot sustain and requires to be set aside which we hereby do. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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