2004 (2) TMI 596 - AT - Central Excise

Summary

Issues:
1. Stay petition for dispensing with the pre-deposit of duty amount and personal penalty.
2. Allegation of under valuation in supply of Ingots to a sister unit.
3. Claim of revenue neutral situation due to Modvat credit availability.
4. Assertion of limitation in part of the demand due to jurisdictional overlap.
5. Interpretation of Revenue neutral situation in relation to duty credit availability.

Analysis:
1. The case involved a stay petition seeking exemption from the pre-deposit of a duty amount and personal penalty totaling Rs. 23,45,218. The duty demand was confirmed against the appellant for supplying Ingots to a sister unit at an allegedly undervalued price.

2. The main contention of the appellant was that even if the units were related, the duty paid by the appellant would have been available as Modvat credit to the sister unit, resulting in a revenue neutral situation. It was argued that since the sister unit also paid duty from their PLA during the relevant period, there was no motive for under valuation. Additionally, the appellant claimed that part of the demand was time-barred due to both units falling under the same Range Superintendent's jurisdiction.

3. The Tribunal, after considering the arguments, found merit in the appellant's contentions. Citing a precedent, the Tribunal noted that a revenue neutral situation arises when the duty demanded would be available as credit to the assessee and not the buyer. In this case, as the sister concern was under the appellant's ownership, a revenue neutral situation was acknowledged. Consequently, the stay petition was allowed unconditionally, and the main appeal was scheduled for a specific date.

This judgment highlights the importance of establishing a revenue neutral situation in cases of duty demands and the availability of credits. The Tribunal's decision to grant the stay petition was based on the interpretation of the relationship between the appellant and the sister unit, emphasizing the concept of revenue neutrality in such scenarios. The jurisdictional aspect regarding the overlap of units under the same Range Superintendent also played a role in the analysis of the case and the decision-making process.