2017 (4) TMI 1125 - AT - Central Excise

Removal of inputs as such to sister concern - appellants at the time of receipt of input reduced the credit of 0.4% towards transit loss and availed credit only in respect of 99.6% of the duty paid on the inputs - case of the department is that the respondent is liable to pay duty on the 100% input removed as such to their sister concern - Held that - whatever credit they have availed the same was paid at the time of removal of input as such. Therefore, the demand of duty on 0.4% is not tenable for the simple reason that the credit on the said quantity was also not availed at the time of receipt of input - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Duty payment on input removal to sister concern.
2. Short payment of duty - 0.4% quantity discrepancy.
3. Correctness of demand raised by the department.
4. Adjudication of demand and appeal process.

Analysis:
1. The case involved a dispute regarding duty payment on the removal of inputs to a sister concern. The appellants had reduced the credit by 0.4% for transit loss at the time of input receipt and paid duty on 99.6% of the input quantity during removal. The department contended that duty should be paid on the entire quantity removed, leading to a differential duty demand.

2. The revenue argued that the respondent had underpaid duty by 0.4% on the input quantity removed. The adjudicating authority upheld the demand, which was challenged by the respondent in an appeal before the Commissioner (Appeals). The revenue contended that the duty should be paid on the full quantity removed, highlighting the discrepancy in payment.

3. The respondent, represented by counsel, countered the demand by pointing out that they had corrected a quantification error by voluntarily paying a reduced amount before the show-cause notice was issued. They argued that the duty was correctly paid based on the credit availed at the time of input receipt, as per relevant rules. The Commissioner (Appeals) accepted this argument and allowed the appeal.

4. Upon careful consideration, the tribunal found that the appellants had paid duty in accordance with the credit availed at the time of input receipt. The quantification error was rectified by the respondent before the show-cause notice, indicating a proactive approach. The tribunal upheld the Commissioner's decision, dismissing the revenue's appeal and concluding the matter. The judgment was pronounced on 17/04/2017 by Shri Ramesh Nair, Member (Judicial).