2018 (10) TMI 1061 - AT - Central Excise

Valuation - De-natured Rectified Spirit was being cleared to their other unit located at Kashipur which was further used in the manufacture of Ethylene Glycol - whether valuation to be done under Rule 8 of the Central Excise Valuation Rules, 2000? - time limitation. Held that - Admittedly in the present case the entire demand is beyond limitation and further the entire duty being paid by the appellant was being availed as credit by their Kashipur unit. The appellants have also taken a categorical stand before Commissioner that during the relevant period in question that Kashipur unit has paid duty out of their PLA Account to the extent of ₹ 35.00 Crores and as such, the duty now being confirmed against the assessee to the extent of ₹ 4.00 Crore, they were in a position to avail the same as credit and to utilize for discharge of duty at their end on their final product. The entire situation was revenue neutral - the demand on the point of limitation would not be sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Determination of value of goods under Rule 8 of Central Excise Valuation Rules, 2000.
2. Methodology for arriving at the cost of production in terms of CAS-IV.
3. Challenge of demand on the ground of limitation.

Analysis:

Issue 1: Determination of value of goods under Rule 8 of Central Excise Valuation Rules, 2000
The case involved the appellant engaged in the manufacture of De-natured Rectified Spirit, cleared to another unit for further processing. The Revenue contended that the value of goods should be determined under Rule 8, based on 110% of the cost of production. The appellant disputed this view, leading to the initiation of proceedings by the Revenue through a show cause notice. The adjudicating authority upheld the demand and imposed penalties under section 11AC of the Act. The appeal was made to the Tribunal challenging this determination of value.

Issue 2: Methodology for arriving at the cost of production in terms of CAS-IV
The appellant contested the method adopted by the Revenue for determining the cost of production under CAS-IV formula. However, the Tribunal decided to dispose of the appeal based on the point of limitation rather than delving into the methodology of cost determination. The Tribunal considered the appellant's argument that the demand was beyond the period of limitation and analyzed the revenue neutrality of the situation.

Issue 3: Challenge of demand on the ground of limitation
The appellant argued that the demand raised by the Revenue was beyond the period of limitation and should be considered revenue neutral. They cited a Tribunal decision in a similar case to support their contention. The Tribunal examined the facts and found that the entire duty paid by the appellant was availed as credit by their other unit, leading to a revenue-neutral situation. Consequently, the Tribunal set aside the impugned order on the grounds of limitation and allowed the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the revenue neutrality of the situation and the inapplicability of the demand beyond the period of limitation. The judgment highlights the importance of considering the specific circumstances of each case, especially regarding the determination of value and the application of limitations in excise matters.