2009 (12) TMI 846 - AT - Central Excise

Summary

Issues Involved:
1. Demand on CPS-DFA sold to HLL.
2. Demand on DFA transferred to HLL.
3. Demand on by-products of the oil, other than CPS.
4. Demand barred by limitation.
5. Revenue neutrality.

Issue-wise Detailed Analysis:

1. Demand on CPS-DFA sold to HLL:
The Revenue contended that there is no difference between DFA and CPS-DFA and invoked the cost price of non-CPS-DFA for CPS-DFA sold to HLL, alleging under-valuation. The assessee argued that CPS-DFA is used in the manufacture of soaps, and duty paid on CPS-DFA was taken as credit, making it a revenue-neutral exercise. They cited several judgments to support their claim of revenue neutrality and the availability of captive consumption exemption under Notification No. 67/95-C.E. The Tribunal found that the whole exercise is revenue neutral and the exemption for captive consumption was available, thus holding the demand of Rs. 1,73,89,261/- as unsustainable.

2. Demand on DFA transferred to HLL:
The demand of Rs. 34,82,867/- was made by loading the sale value of by-products to the sale price of other DFA. The assessee argued that this would lead to duplication of demand and that the differential duty paid on finalization of provisional assessment should be considered. The Tribunal found that the transaction value was not acceptable due to discrepancies in the generation of by-products. However, they noted the need to reconsider all issues and arrive at a correct transaction value, thus remanding the matter to the original authority for fresh consideration.

3. Demand on by-products of the oil, other than CPS:
The demand of Rs. 24,50,516/- was made on the ground that non-CPS by-products were transferred at a lower price than CPS by-products. The assessee contended that CPS by-products mean CPS content in each by-product, and non-CPS by-products are the true by-products. The Tribunal upheld the Revenue's contention that CPS by-products mean CPS by-products, not just the CPS content. However, they found the need to reconsider the quantification of duty, especially regarding the aggregation of sale values and the different characteristics of each by-product. The matter was remanded to the Commissioner for fresh consideration, with no penalty under Sec. 11AC and extended period not being invoked.

4. Demand barred by limitation:
The assessee argued that major portions of the demand were barred by limitation as extended periods were not invokable due to no suppression or mis-statement. They cited several judgments to support their claim. The Tribunal did not explicitly address this issue in their final decision but considered the arguments in their overall assessment.

5. Revenue neutrality:
The assessee consistently argued that the entire exercise was revenue-neutral since whatever duty was paid was available as credit to the recipient units. They cited several judgments to support this contention. The Tribunal acknowledged the revenue-neutral nature of the transactions, especially in the case of CPS-DFA, and used this as a ground to hold the demand unsustainable.

Conclusion:
The Tribunal set aside the demand of Rs. 1,73,89,261/- on CPS-DFA sold to HLL due to revenue neutrality and the availability of captive consumption exemption. The demands on DFA transferred to HLL and by-products of the oil, other than CPS, were remanded to the Commissioner for fresh consideration, with instructions to reconsider all issues and quantifications. The appeal was partly allowed by way of remand.