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2013 (8) TMI 153 - AT - Central ExciseExtended period of limitation - The appellant having their unit in Industrial Area, U.P., SIDCO, Sikandrabad, Distt. Bulandshahar manufacture MS tanks and radiators for transformers. They are a unit of Accurate Transformers Ltd. (ATL), Ghaziabad which manufactures transformers. The MS tanks and radiators manufactured by the appellant are transferred by them to Ghaziabad Unit of the ATL for its use in the manufacture of transformers - During the period of dispute i.e. during period from 2002-2003 to 2005-2006, in respect of clearances of MS tanks and radiators to their own unit in Ghaziabad for use in the manufacture of transformers, the duty was being paid on the price which was much less than 110%/115% of the cost of production, which was the value on which the duty was required to be paid in terms of Rule 8 of the Central Excise Valuation Rules Held that - As per circular No. 818/15/05-CX dated 15/5/05 issued by CBEC under Rule 12 (3) of Central Excise Rules, 2002 prescribing two stage scrutiny of ER-1 and ER-3 returns - Regarding scrutiny of ER-1 returns, it is clear that the returns filed by an assessee are required to be subjected to detailed scrutiny in course of which the concerned officer can call for the documents from the assessee wherever necessary for scrutiny. Therefore in this case, if the concerned Range officer/Assistant/Deputy Commissioner or concerned Additional Commissioner had checked the returns, the short payment would have been immediately detected as, as observed by the Commissioner in para 4.5 of the impugned order, even the registration certificate of the appellant mentioned them as a unit of Accurate Transformers Ltd., and in all the documents of the appellant, the transfer of goods from the appellant to Accurate Transformer Ltd. had been reflected as inter unit transfer. Neither there is any allegation nor evidence to prove that there was some collusion between the appellant and the Jurisdictional Central Excise officers - The assessee cannot be penalized by invoking extended period under proviso to Section 11 A (1) for demand of duty and penal provisions of Section 11AC for indolence on the part of the jurisdictional Central Excise officers Decided in favor of Assessee. Revenue Neutral Exercise - Held that - As per the decision in the case of Jay Yuhshin Ltd. vs. CCE, New Delhi 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI , when Revenue neutral situation comes about in relation to the credit available to an assessee himself in respect of the duty paid by him and not by the way of availability of the credit to the buyer of the assessee s manufactured goods, the assessee cannot be accused of having contravened the rules with intent to evade the payment of duty and extended period under proviso to Section 11A (1) would not be invokable - Entire duty paid by the appellant in respect of clearances of MS tanks and radiators to their transformer unit, was available to the transformer unit as Cenvat credit - Unit of the appellant in Bulandshahar Distt. and the transformer unit of M/s Accurate Transformers Ltd. at Ghaziabad are owned by the same person Therefore, extended limitation period is not invokable and, as such, the entire duty demand is time barred Decided in favor of Assessee.
Issues Involved:
1. Applicability of Rule 8 of the Central Excise Valuation Rules for duty payment. 2. Invocation of the extended period under proviso to Section 11A(1) of the Central Excise Act, 1944. 3. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Applicability of Rule 8 of the Central Excise Valuation Rules: The appellant, a unit of Accurate Transformers Ltd. (ATL), manufactured MS tanks and radiators for transformers, which were transferred to ATL's Ghaziabad unit. The dispute arose because the appellant paid duty on a price lower than 110%/115% of the cost of production, as required by Rule 8 of the Central Excise Valuation Rules. The Tribunal held that since the goods were cleared to a related person for captive use, duty should have been paid on 110%/115% of the cost of production. The Tribunal concluded that the appellant was liable to pay duty on the correct valuation as per Rule 8. 2. Invocation of the Extended Period under Proviso to Section 11A(1): The show cause notice was issued beyond the normal limitation period, invoking the extended period under proviso to Section 11A(1), alleging suppression of facts. The Tribunal noted that the appellant had filed ER-1 returns and the invoices clearly indicated the relationship between the appellant and ATL. The Tribunal emphasized that the returns were subject to detailed scrutiny by the jurisdictional Central Excise officers, who failed to detect the short payment earlier. Citing various Supreme Court judgments, the Tribunal held that mere omission or non-payment of duty does not constitute suppression unless it is deliberate with intent to evade duty. The Tribunal found no evidence of deliberate suppression or intent to evade duty, thus ruling that the extended period was not invokable. 3. Imposition of Penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944: Given that the duty demand was time-barred and there was no evidence of fraud or wilful misstatement, the Tribunal held that the penal provisions under Section 11AC were not applicable. The Tribunal referenced the Larger Bench decision in Jay Yuhshin Ltd. and other similar cases, which established that in a revenue-neutral situation where the duty paid by one unit is available as Cenvat credit to another unit of the same entity, there is no intent to evade duty. Consequently, the Tribunal ruled that the imposition of penalty was unwarranted. Conclusion: The Tribunal concluded that the duty demand was time-barred and set aside the impugned order, allowing the appeal. The Tribunal emphasized the lack of deliberate suppression or intent to evade duty and the revenue-neutral nature of the transactions, which negated the applicability of the extended period and penalty provisions. The order was pronounced in the open court on 16/07/2013.
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