2009 (4) TMI 612 - AT - Central Excise

Summary

Issues Involved: Valuation of goods u/s Central Excise Valuation Rules, 2000; Plea of limitation on grounds of Revenue Neutrality.

Valuation of Goods u/s Central Excise Valuation Rules, 2000:
The appellant, engaged in manufacturing PVC insulated core twisted and armored wire, cleared goods to their Silvassa factory on payment of duty. The assessable value was determined based on cost structure with a 5% profit margin. However, post the introduction of Central Excise Valuation Rules in 2000, a 15% profit margin was required. The appellant continued clearing goods with the 5% margin, leading to a show cause notice for differential duty. The Tribunal remanded the matter for fresh decision, emphasizing the need to consider the issue of valuation of goods on merits and the plea of limitation due to Revenue Neutrality.

Plea of Limitation on Grounds of Revenue Neutrality:
In the remand proceedings, the Commissioner upheld the demand citing a longer period of limitation, stating that the appellant should have revised the assessable value to 115% of the cost post the law change in 2000. The appellant's monthly returns did not separately show assessable value, leading to uncertainty for the department. However, it was noted that the goods were cleared to the appellant's sister unit, benefiting from Modvat credit, making the exercise revenue neutral. The Tribunal held that the demand was barred by limitation, as the differential duty was available as credit and the department failed to question the assessable value earlier.

The Tribunal allowed the appeal on the limitation point, setting aside the penalty imposed on the appellant. The impugned order by the Commissioner was limited to reconsidering the limitation aspect, and thus the scope of the present appeal could not be expanded beyond that. The decision was pronounced in court on 24-4-09.