2015 (12) TMI 1311 - AT - Central Excise

Valuation - whether the assessable value as adopted by the appellant based upon cost of production for discharge of duty liability on the goods cleared from their own unit is correct or the said duty liability needs to be discharged on the value which has been adopted by the appellant for the independent buyers - Held that - Intermediate products cleared from the appellant factory are consumed by their own unit in Lote Parshuram for manufacturing of final product on which duty liability is discharged. Also undisputed is that the unit of the appellant at Lote Parshuram has availed the CENVAT Credit of the duty paid on the goods cleared from the factory - there was no reason to mis-declare the assessable value of the goods cleared to their own unit. The appellant was correct in stating that any duty liability discharged on the goods cleared to their own unit is eligible for CENVAT Credit by the unit at Lote Parshuram and there could not be any reason to mis-declare the price - impugned order to the extent it confirms the demand raised beyond the period of limitation is liable to be set aside and we do so. The demands raised within the period of limitation are liable to be confirmed with interest and we do so. Since the issue is of interpretation of law, penalty is not warranted on the appellant and accordingly, the penalty is set aside. - Decided in favour of assessee.

Summary

Issues Involved:
Assessable value determination based on cost of production for duty liability | Revenue neutrality in discharging duty liability for goods cleared to own unit | Applicability of CENVAT Credit | Penalty imposition based on intention to evade duty

Assessable Value Determination:
The appeal challenged an Order-in-Original regarding the clearance of finished goods at a value not in accordance with Central Excise Act provisions. The appellant cleared goods to their own unit and independent buyers at different prices, leading to a demand for differential duty. The Revenue contended that the price charged to independent buyers should be applied, not the value based on cost of production. The adjudicating authority upheld the demand and imposed penalties.

Revenue Neutrality and CENVAT Credit:
The appellant argued that they followed the law per a Larger Bench ruling and that any duty liability for goods cleared to their own unit was eligible for CENVAT Credit. They emphasized revenue neutrality and cited a Supreme Court judgment supporting their stance. The AR countered, stating the appellant should have applied legal provisions for clearances and cited a different Supreme Court judgment on revenue neutrality.

Interpretation of Law and Penalty Imposition:
The Tribunal analyzed whether the assessable value adopted by the appellant for goods cleared to their own unit was correct. Undisputedly, the goods were consumed by the appellant's unit, which availed CENVAT Credit. The Tribunal found no reason for misdeclaration of value and held that the duty liability discharged on goods cleared to their own unit was eligible for CENVAT Credit. They referenced a Supreme Court judgment to support their decision and set aside the penalty based on interpretation of law.

Conclusion:
The Tribunal set aside the demand raised beyond the limitation period but confirmed demands within the limitation period with interest. They held that the penalty was unwarranted based on interpretation of law. The appeal was disposed of accordingly, focusing on the question of revenue neutrality and not delving into other submissions.

---