2017 (12) TMI 839 - AT - Central Excise

Valuation - appellant was clearing certain goods to their own sister concern situated elsewhere - The department was of the view that the valuation of clearances made by the appellant to their own sister concern are to be done in terms of Rule 8 of the Central Excise Valuation Rules, 2000 read with Section 4 of the CEA, 1944 - penalty - Held that - It stands admitted that such clearances are to be valued on the basis of the value adopted in terms of Rule 8 of the Central Excise Valuation Rules 2000 read with Section 4 of the Act - penalty set aside - the duty demand as well as interest are upheld as the same are not being challenged in the present proceedings - appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of goods cleared by the appellant to their sister concern under Rule 8 of the Central Excise Valuation Rules, 2000 read with Section 4 of the Central Excise Act, 1944. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The appeal was filed against the Order-in-Original regarding the valuation of goods cleared by the appellant to their sister concern. The department determined the duty payable based on the transaction value adopted for sales to unrelated parties. The appellant paid the differential duty along with interest based on CAS-4 certificate issued by the Cost Accountant. However, a show-cause notice was issued subsequently, upholding the duty paid but imposing a penalty under Section 11AC of the Central Excise Act, 1944. The appellant challenged the penalty, arguing that it was unjustified since the duty and interest were paid before the notice. The advocate cited relevant case laws supporting the argument of revenue neutrality in similar situations. The department defended the impugned order, leading to a detailed hearing before the Tribunal.

The Tribunal acknowledged that the dispute revolved around the valuation of goods cleared to the appellant's sister concern, to be done under Rule 8 of the Central Excise Valuation Rules 2000 and Section 4 of the Act. The differential duty was calculated based on the CAS-4 certificate, and the appellant did not dispute the duty paid with interest. The focus of the appeal was on challenging the penalty imposed in the impugned order. The Tribunal reviewed the case laws cited by the appellant, particularly referencing a case involving royalty payment for technology transfer between related units. Following the precedent set by previous decisions, the Tribunal concluded that the demand for differential duty was not justified in a revenue-neutral situation, setting aside the penalty but upholding the duty demand and interest, which were not contested in the appeal. Ultimately, the appeal was allowed, and the penalty was set aside, with the duty demand and interest upheld.

In summary, the Tribunal's decision addressed the valuation of goods cleared to a sister concern, the payment of differential duty based on CAS-4 certificate, and the challenge against the penalty imposed under Section 11AC of the Central Excise Act, 1944. The judgment highlighted the concept of revenue neutrality in similar cases and emphasized the applicability of relevant case laws in determining the outcome of the appeal.