2004 (9) TMI 534 - AT - Central Excise

Summary

Issues:
1. Determination of assessable value based on cost of production vs. comparable price.
2. Limitation period for issuance of show cause notice.
3. Revenue neutrality in inter-unit transfer for captively consumed goods.
4. Applicability of factory gate sale price for captively consumed goods.

Issue 1: Determination of assessable value based on cost of production vs. comparable price:
The appellant argued that the assessable value of Calcined Alumina transferred between its plants should be based on the cost of production due to the lack of comparable prices during the relevant period. They cited previous tribunal decisions and legal cases to support their contention. The appellant emphasized that the sales to casual buyers were minimal and rare, thus not representative of the assessable value for captively consumed goods. The appellant also highlighted that the Commissioner erred in rejecting their argument. The appellant requested unconditional stay based on legal precedents supporting their position.

Issue 2: Limitation period for issuance of show cause notice:
The appellant contended that the show cause notice issued after the limitation period of one year was barred by Section 11A(1) of the 1944 Act. They argued that all relevant facts regarding the inter-unit transfer were disclosed to the authorities without any fraud or suppression. The appellant emphasized the revenue-neutral situation arising from the transfer between their own plants, asserting that there was no intention to evade duty. Legal decisions were cited to support their argument for waiver of the disputed demand.

Issue 3: Revenue neutrality in inter-unit transfer for captively consumed goods:
The appellant reiterated that the inter-unit transfer of goods between their plants resulted in a revenue-neutral situation since they availed full CENVAT credit at the Angul plant. They emphasized that any higher duty payable at the Damanjodi plant would be offset by higher CENVAT credit at the Angul plant. Legal cases were cited to support their position on revenue neutrality and entitlement to duty credit.

Issue 4: Applicability of factory gate sale price for captively consumed goods:
The Respondent argued that the price charged to outside buyers should be considered as the assessable value for goods captively consumed by the appellant. Legal decisions were cited to support this argument. The Respondent highlighted the case of National Aluminium Co. Ltd. to support the view that the appellant could take credit for the duty payable.

In conclusion, the Tribunal granted exemption from pre-deposit and penalty, staying the recovery of the demand pending further hearing.