2006 (9) TMI 432 - AT - Central Excise

Summary

Issues involved: Appeal against Order of Commissioner of Central Excise confirming duty demand, penalty, and interest u/s 11AC and 11AB of the Central Excise Act, 1944.

Summary:
The appellants, manufacturers of Alloy Steel Rolled products, appealed against the Commissioner of Central Excise's order confirming a duty demand of Rs. 30,03,576.00 and imposing penalties and interest. The dispute arose from the transfer of goods from the Dankuni factory to the Howrah Unit between May 1995 and May 1998, with duty paid based on a cost construction method.

The appellants argued that the duty paid at the Dankuni factory was eligible for MODVAT Credit during the relevant period. They believed duty was payable on cost of production plus profit margin, and the sales from Dankuni to Howrah should not be considered comparable goods for valuation purposes. They contended that any procedural mistakes should not lead to penalties, citing relevant case law.

The Department claimed non-compliance with Section 173C and argued against applying the concept of class of buyers, stating it was a transfer between the appellants' units.

The Tribunal found the transfer to be revenue-neutral, with no intention to evade duty. They set aside the Commissioner's order, ruling in favor of the appellants and granting consequential reliefs.

In conclusion, the Tribunal allowed the appeal, finding the demand unsustainable for the period in question and determining that penal action was unwarranted due to the revenue-neutrality of the transfer.