2008 (7) TMI 214 - AT - Central Excise

Zinc concentrate cleared to own unit for captive consumption - zinc concentrate transferred to the appellant s own unit - Whatever duty was being paid by the appellant was available as credit to them and nothing would go into the Revenue s pocket. The entire excise is revenue neutral as neither the assessee stands to loose anything by paying higher duty nor the Revenue stands to gain anything by the appellant s adoption of lower assessable value - demand is unwarranted and unsustainable

Summary

Issues:
1. Determination of duty on zinc concentrate for captive consumption.
2. Compliance with Tribunal's direction on assessable value determination.
3. Revenue neutrality in the context of duty payment and Modvat credit utilization.

Analysis:
Issue 1: The appellant, engaged in manufacturing zinc concentrate for captive consumption, contested the duty determination based on Rule 6(b)(ii) of Central Excise Valuation Rules and Section 4(b) of the Central Excise Act, 1944. The Commissioner initially confirmed duty demand using monthly cost structure, which was challenged by the appellant.

Issue 2: The Tribunal had remanded the matter with specific direction to determine assessable value based on audited data for a particular financial year. However, the Commissioner failed to comply with this direction and instead determined the assessable value based on monthly cost structure, contrary to the Tribunal's order.

Issue 3: The appellant argued for revenue neutrality due to the transfer of zinc concentrate to their own units, where Modvat credit of duty paid was being utilized. Citing precedents, the appellant contended that the duty liability on the final product was higher than on the zinc concentrate, making the exercise revenue neutral. The Tribunal, in line with previous decisions, found that the duty paid by the appellant was available as credit and no revenue would be gained, leading to the demand being deemed unwarranted and unsustainable.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. The judgment emphasized the concept of revenue neutrality in the context of duty payment and Modvat credit utilization, highlighting that the duty paid by the appellant, being available as credit, did not result in any financial loss for the assessee or gain for the Revenue.