2018 (8) TMI 1096 - AT - Central Excise

Short payment of duty - payment made on provisional basis - applicability of Rule 8 of Central Excise Valuation Rules, 2000 - appellants has contended that the Department has only looked a short payment of duty whereas the excess payment of ₹ 23,00,126/- was ignored - Held that - The issue is covered by the decision in the case of Anglo French Textiles Vs. CCE 2017 (9) TMI 1178 - CESTAT CHENNAI , where it was held that the goods are cleared to the sister unit and the appellant is eligible for credit on the duty paid, the entire exercise is a revenue neutral situation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty payment under Rule 8 of Central Excise Valuation Rules, 2000.
2. Calculation of duty liability and revenue neutrality.
3. Barred by limitation.
4. Penalty imposition.
5. Case laws and precedents cited for support.

Analysis:
1. The case involved M/s. Bombay Rayon Fashions Ltd., where duty payment under Rule 8 of Central Excise Valuation Rules, 2000 was in question. The appellants had paid duty on a notional basis resulting in excess payment in some cases and short payment in others. The Department alleged a short payment of duty amounting to ?58,09,469 based on a CAS-4 certificate. The appellants contested this, highlighting their excess payments and the revenue-neutral nature of their duty payment process.

2. Regarding the calculation of duty liability and revenue neutrality, the appellants argued that their Doddaballapur unit's duty payments were utilized by their sister units, maintaining revenue neutrality. They emphasized the lack of separate accounts at Doddaballapur units and sister units, making it challenging to calculate duty liability accurately. The appellants cited various case laws supporting their valuation method and the concept of revenue neutrality.

3. The issue of being barred by limitation was raised by the appellants, stating that the demand for the period November 2006 to March 2007, issued in August 2008, was time-barred as they were in the process of filing returns. They contended that the demand was beyond the limitation period.

4. The imposition of a penalty was contested by the appellants, referring to the Supreme Court's decision in UOI Vs. Dharmendra Textiles Processors, arguing against the penalty based on the concept of revenue neutrality. The Department argued that the appellants had undervalued goods, leading to the correct assessment in the impugned order.

5. After hearing both sides and considering the case laws presented, the tribunal found merit in the appellants' arguments, particularly citing the case of Anglo French Textiles with similar facts upheld by the Supreme Court. Consequently, the tribunal allowed the appeal with any consequential relief.

This judgment showcases the importance of accurate duty payment, considerations of revenue neutrality, and the impact of relevant case laws in determining the outcome of excise duty disputes.