2011 (6) TMI 63 - AT - Central Excise

Demand - Assessable value - Rule 8 of Central Excise Valuation - Held that there is no allegation that the value adopted by the appellants for transfer of the goods to their sister unit is less than the value at which the goods were being sold by them to other independent buyers - If the appellants would have paid higher duty, their sister unit would have availed the higher credit, in which case, the entire exercise would be Revenue neutral - show cause notice issued in 2004 for the period 2000 to 2002 is also barred by limitation - Decided in the favour of assessee

Summary

Issues:
Assessable value determination for goods sold to sister unit under Central Excise Act, 1944 - Revenue neutrality in excise duty payment - Limitation period for show cause notice issuance.

Assessable Value Determination:
The case involved the appellants engaged in manufacturing M.G. Kraft Paper and Paper Board, selling goods to independent buyers and their sister unit. The Revenue contended that the assessable value for sales to the sister unit should be determined under Section 4(i) (b) of the Central Excise Act, 1944. The Revenue proposed to enhance the assessable value at 115% of the cost of production, leading to a demand of duty. However, the Tribunal referred to a previous decision stating that goods transferred to another unit of the same assessee should not be assessed under Rule 8 of the Valuation Rules if the value is not less than the sale price to independent buyers. As there was no allegation of undervaluation, the Tribunal applied the precedent, ruling in favor of the appellants.

Revenue Neutrality in Excise Duty Payment:
The Tribunal considered the concept of revenue neutrality in excise duty payment, emphasizing that the duty paid by the appellants was utilized as credit by their sister unit. The appellants argued that if they had paid higher duty, the sister unit would have availed a higher credit, resulting in a revenue-neutral situation. Citing various judgments and the Supreme Court decision in the case of CCE, Pune vs. Coca-cola India Pvt. Limited, the Tribunal held that excise duty payment being revenue neutral, the show cause notice issued in 2004 for the period 2000-2002 was barred by limitation. The Tribunal highlighted previous decisions affirming the principle of revenue neutrality, ultimately setting aside the impugned orders and allowing the appeal with consequential relief to the appellants.

Limitation Period for Show Cause Notice Issuance:
Regarding the limitation period for the show cause notice issued in 2004, the Tribunal concluded that it was barred by limitation based on the principle of revenue neutrality and settled judgments. Citing precedents and the Hon'ble Supreme Court decision, the Tribunal held that the notice was time-barred, ultimately setting aside the impugned orders and allowing the appeal in favor of the appellants.