2016 (4) TMI 725 - AT - Central Excise

Applicability - extended period of limitation - goods cleared to sister concern on payment of duty - on assessable value of goods determined taking into consideration the average rate of the goods sold - no suppression of facts - Held that - as per this Tribunal s order in their own case and on the very same issue reported in 2015 (12) TMI 1098 - CESTAT AHMEDABAD , there is not intent to evade payment of duty. Also there is no material available on record in justifying/supporting the allegation of intention to evade payment of duty when the goods were cleared on payment of duty by applying the formula for determination of value other than the one i.e CAS-4 method of costing. Accordingly, the impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues:
Undervaluation and short payment duty based on the CAS-4 method of costing, applicability of extended period of limitation, intention to evade payment of duty in case of inter-unit transfer.

Analysis:

1. The appeal was filed against an order passed by the Commissioner of Central Excise and Customs, Daman, alleging undervaluation and short payment duty of a significant amount. The appellant, a manufacturer of Chemicals, had cleared goods to their sister unit at an average rate, leading to the demand notices. The matter was remanded by the Tribunal to reconsider the issues using the CAS-4 method for determining the cost of production. As a result, the assessable value was recalculated, reducing the demand substantially. A penalty was imposed under Rule 25 of Central Excise Rules, 2002, along with the direction for interest recovery, leading to the present appeal.

2. The appellant contended that in a similar case for a subsequent period, the Tribunal observed no intent to evade payment of duty in a case of inter-unit transfer where goods were cleared on payment of duty. They argued that the same principle should apply in their case as well, as the goods were cleared on payment of duty based on an average value, not using the CAS-4 method. The appellant asserted that there was no suppression of facts, and therefore, the extended period of limitation should not be invoked against them.

3. The Revenue, through its Authorized Representative, supported the findings of the Commissioner, maintaining the position taken earlier.

4. Upon hearing both parties and examining the records, the Tribunal noted that the appellant had cleared goods to their sister concern by paying duty based on the assessable value calculated using the average rate of goods sold. When the CAS-4 method was applied during the remand proceedings, the demand was significantly reduced. The Tribunal referred to its previous observation in a similar case where it was held that there was no intent to evade payment of duty. It was concluded that there was no evidence supporting the allegation of intention to evade duty when goods were cleared on payment of duty using a different valuation method than CAS-4. Consequently, the impugned order was set aside, and the appeal was allowed, granting any consequential relief as per the law.