2015 (10) TMI 1361 - AT - Central Excise

Valuation - related person - mutuality of interest - Invocation of extended period of limitation - Held that - So far as the appeal filed by the Revenue regarding extended period invocable is concerned, it is observed from the order passed by the First Appellate Authority that the demand for the extended period was not only confirmed on the basis of Apex Court s judgment in the case of M/s Nizam Sugar Factory Ltd (2006 (4) TMI 127 - SUPREME COURT OF INDIA) but also by giving detailed finding in Para 10 and 11 of the OIA dt.13.02.2007 as to why there is no intention to evade duty. - Mahalaxmi Fabrics Mills Ltd was clearing the goods on provisional basis as the exact amount of costing could be arrived at only at the end of the financial year. As the entire facts of the valuation and clearances were within the knowledge of the Department, the First Appellate Authority has correctly held that the extended period under proviso to Section 11A cannot be invoked and also that no penalty under Section 11AC of the Central Excise Act, 1944 are imposable upon the assessee. - The concept of revenue neutrality for not confirming the demand cannot be raised for the period within the limitation. If the duty is payable by the Appellant is paid by the Appelalnt, the credit of the same can be taken by M/s Mahalaxmi Exports Ltd. - Decided against assessee.

Summary

Issues:
1. Time-barred demand and penalty appeal by Revenue.
2. Related party status and demand sustainability by M/s Mahalaxmi Fabrics Mills Ltd.

Analysis:
1. Time-barred demand and penalty appeal by Revenue:
The Revenue appealed against the First Appellate Authority's decision deeming the demand as time-barred and setting aside the penalty imposed on M/s Mahalaxmi Fabrics Mills Ltd. The Revenue argued that the extended period of demand should apply, citing the issuance of the first Show Cause Notice without invoking the extended period. The Revenue contended that the judgment in the case of M/s Nizam Sugar Factory is not applicable to the present case and invoked Sections 11A and 11AC of the Central Excise Act, 1944, for the demand and penalties. However, the First Appellate Authority had detailed findings justifying the demand for the extended period and confirmed demands not time-barred due to provisional costing practices by the appellant.

2. Related party status and demand sustainability by M/s Mahalaxmi Fabrics Mills Ltd:
M/s Mahalaxmi Fabrics Mills Ltd argued that they and M/s Mahalaxmi Exports Ltd should not be considered related parties under Section 4 of the Central Excise Act, 1944, due to the lack of mutual interest. They contended that any excess duty paid would benefit M/s Mahalaxmi Exports Ltd through CENVAT credit and rebate facilities, indicating no intent to evade duty. The First Appellate Authority found the mutuality of interest established and upheld the demands of &8377;20,528.00 and &8377;919.00. The concept of revenue neutrality was rejected for demands within the limitation period, emphasizing the payment of duty by the Appellant and the subsequent credit for M/s Mahalaxmi Exports Ltd.

In conclusion, both appeals by the Revenue and M/s Mahalaxmi Fabrics Mills Ltd were dismissed based on the findings regarding the time-barred demands, penalty imposition, related party status, and demand sustainability, as per the detailed analysis and reasoning provided in the judgment delivered by the Appellate Tribunal CESTAT AHMEDABAD.