2018 (4) TMI 901 - AT - Central Excise

Valuation - enhancement of value - case of Revenue is that respondent cleared the aforesaid goods at lower rate than those mentioned in their pricing circular and thus not followed the principles of transaction value in terms of Section 4 of the Central Excise Act read with Central Excise Valuation Rules, 2000 - Held that - the Commissioner (Appeals) had allowed the appeal filed by the Respondent on the ground on revenue neutrality holding that if duty had been paid by the appellants at the time of clearances, the same would have been available as cenvat credit in the hands of the buyer. Even of the appellants pay the differential duty, the same will be available as credit to the buyer. On this count also the issue is revenue neutral. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Alleged violation of transaction value principles under Central Excise Act
- Time-barred demand
- Revenue neutrality

Analysis:

1. Alleged violation of transaction value principles under Central Excise Act:
The case involved the Respondents clearing goods at a rate lower than what was charged from other customers against Advance Intermediate Licences. The department alleged that this action violated the transaction value principles under Section 4 of the Central Excise Act. The adjudicating authority confirmed the demand, leading to an appeal by the appellants. The revenue contended that the Respondent did not follow the transactional value principles and withheld information from the Department. The Respondent's pricing was influenced by the surrender of Advance Licences by customers, resulting in clearances at lower prices to those customers. The revenue argued that the case was similar to the IFGL Refractories Ltd. case, emphasizing the need to examine revenue neutrality properly.

2. Time-barred demand:
The Commissioner (Appeals) allowed the appeal on the grounds that the demand was time-barred and revenue neutral. The Respondent's advocates reiterated these findings, citing previous tribunal orders to support their argument. The Tribunal, in the case of Reliance Industries Ltd. vs. Commissioner, had set aside a demand based on revenue neutrality. The Tribunal in this case found that the issue was indeed revenue neutral, aligning with the Commissioner (Appeals) decision. Consequently, the demand was dismissed based on the time-barred nature and revenue neutrality aspect.

3. Revenue neutrality:
The Commissioner (Appeals) had based the decision on revenue neutrality, stating that if duty had been paid at the time of clearances, it would have been available as cenvat credit to the buyer. The Tribunal's precedent in the Reliance Industries Ltd. case further supported the concept of revenue neutrality. The Tribunal upheld the impugned order, dismissing the appeal filed by the revenue based on the grounds of revenue neutrality and alignment with previous tribunal judgments.

In conclusion, the judgment upheld the decision based on the principles of revenue neutrality and the time-barred nature of the demand, dismissing the appeal filed by the revenue.