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2018 (10) TMI 1473 - AT - Central ExciseDemand of differential Duty - Rule 14(ii) of the CENVAT Credit Rules 2004 - allegations of suppression of facts with intent to evade payment of duty on inputs cleared as such to the appellant s ancillary manufacturer for the manufacture of components that were finally used by the appellant in the manufacture of final products on which excise duty was paid by adopting incorrect value - extended period of limitation. Held that - The period involved is from 01.09.2010 to 30.11.2014 for which a Show Cause Notice dated 07.10.2015 is issued, admittedly, after invoking the larger period of limitation. On examination of facts, it is found that the allegation is short payment of duty whereas the lacuna appears to be only the adoption of transaction value by which SAD of 4% which have been missed out, but the fact remains that on being pointed out even before the issuance of Show Cause Notice, the appellant made good even the differential CENVAT Credit. There is no dispute by the authorities below on the issue of revenue neutrality nor have they disputed crucial facts like the inputs cleared as such to one of the appellant s ancillary manufacturers who in turn is eligible for CENVAT Credit of the duty paid by the appellant; the removal of inputs to its ancillary manufacturer was duly reflected in the periodical ER-1 returns filed regularly and that the Revenue was aware of removal of inputs as such - Revenue has only wasted its energy when there is no revenue loss and therefore, unjustifiably extended the larger period of limitation, for nothing. Appeal allowed - decided in favor of appellant.
Issues: Allegations of suppression of facts to evade duty payment; Differential duty demand under CENVAT Credit Rules; Revenue neutrality; Larger period of limitation invoked.
The judgment pertains to a case where a manufacturer of Window Regulator for Motor Vehicles was issued a Show Cause Notice for allegedly suppressing facts to evade duty payment on inputs cleared to an ancillary manufacturer. The Notice proposed demanding differential duty under Rule 14(ii) of the CENVAT Credit Rules, along with interest and penalty. The appellant contended that the duty paid was availed as CENVAT Credit by the ancillary manufacturer, ensuring revenue neutrality. The appellant also argued that there was no intention to evade duty. The Advocate for the appellant cited relevant judgments to support the case. The Advocate for the appellant relied on judgments by the Hon'ble Apex Court to strengthen the case. On the other hand, the Revenue contended that the duty payment obligation was on the appellant, emphasizing the seriousness of any delay in declaration and payment of duty. The lower authorities supported the Revenue's position, stressing the need to sustain the demand, including penalty and interest. The Member (Judicial) analyzed the contentions, documents, and referenced judgments. The period under consideration was from 01.09.2010 to 30.11.2014, with a Show Cause Notice issued on 07.10.2015 within the larger period of limitation. It was noted that the alleged short payment of duty was due to the omission of the Special Additional Duty (SAD) of 4% in the transaction value, which was rectified by the appellant before the Notice was issued. Upon reviewing the lower authorities' orders, it was observed that there was no dispute regarding revenue neutrality. The removal of inputs to the ancillary manufacturer was duly recorded in the filed returns, and the Revenue was aware of this transaction. Considering the facts, revenue neutrality, and the cited Apex Court judgments, it was concluded that the Revenue needlessly extended the limitation period as there was no revenue loss. Consequently, the impugned Order and demand were deemed unsustainable, leading to the appeal being allowed with consequential benefits. The judgment was pronounced in open court on 29.10.2018.
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