2015 (12) TMI 1098 - AT - Central Excise

Valuation - Under valuation of goods - Clearance of goods to sister units - Invocation of extended period of limitation - Held that - it is a case of inter unit transfer of the goods. The Hon ble Gujarat High Court in the case of CCE Vadodara-II Vs Vs Indeos ABS Ltd - 2010 (3) TMI 656 - GUJARAT HIGH COURT dismissed the appeal filed by the Revenue - there is no dispute that the sister unit would avail the CENVAT Credit and cleared the final product on payment of duty. Hence, the decision of Hon ble Gujajrat High Court is squarely applicable in this case - there is no material available of suppression of fact with intent to evade payment of duty. It is a case of inter-unit transfer and the other unit cleared the goods on payment of duty. So, the Commissioner (Appeals) rightly set aside the demand, holding that the extended period of limitation cannot be invoked. Hence, there is no infirmity in the impugned order - Decided against Revenue.

Summary

Issues:
Under-valuation of goods in inter unit transfer, invocation of extended period of limitation.

Analysis:
The case involved a dispute regarding the under-valuation of goods in an inter unit transfer where the Appellants supplied raw material to their sister unit. The dispute arose when a demand of duty was proposed against the Appellants, leading to a Show Cause Notice being issued. The Adjudicating authority confirmed the duty demand, interest, and imposed a penalty, invoking the extended period of limitation. However, the Commissioner (Appeals) set aside the Adjudication order on the grounds that the extended period of limitation cannot be invoked.

The learned Authorised Representative for the Revenue argued that the extended period of limitation should apply based on a Supreme Court judgment in the case of CCE Vs Mahindra & Mahindra. On the contrary, the Respondent's Counsel relied on various decisions, including one from the Hon'ble Gujarat High Court, favoring the Assessee. The Tribunal noted that the Hon'ble Supreme Court's observation in the Mahindra & Mahindra case stated that revenue neutrality would depend on the facts of each case. The Tribunal referred to the decision of the Hon'ble Gujarat High Court in the case of CCE Vadodara-II Vs Indeos ABS Ltd, where it was held that the exercise was revenue neutral as the duty paid was available as credit to the sister unit.

In the present case, it was established that the sister unit availed CENVAT Credit and cleared the final product after paying duty. The Tribunal found no evidence of suppression of facts to evade duty payment. As it was a case of inter-unit transfer where duty was paid, the Commissioner (Appeals) correctly decided that the extended period of limitation could not be invoked. The Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue.

In conclusion, the judgment focused on the application of the extended period of limitation in cases of inter unit transfers and the concept of revenue neutrality. The decision was based on legal precedents and factual considerations specific to the case, ultimately leading to the rejection of the Revenue's appeal.