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2018 (11) TMI 151 - AT - Central ExciseValuation - parts cleared from the Unit-I to Unit-2 - For the period prior to 01/02/2000, case of Revenue is that the goods be valued on the basis of cost of production by adding the element of profit - For the period w.e.f.01/07/2000, Revenue was of the view that the valuation was required to be done in terms of Rule 8 of the Central Excise Valuation Goods, 2000, which provides for determination of value @ 115% of the cost of production. Held that - The Large Benches of Tribunal in the case of Jay Yushin Ltd. vs. Commissioner of Central Excise, New Delhi 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI has held that when the goods are cleared from one unit to another belonging the same manufacturer, the situation is one of revenue neutrality, inasmuchas any differential duty paid by the first Unit will be available to the second Unit as credit. It has been held that the demand itself is unjustified under such circumstances. Revenue has raised serious objection for allowing the benefit of Revenue neutrality - Revenue neutrality can be considered for only those cases where the clearance is made from one unit to another both belonging to the same manufacturer - the present appeal may be allowed on the argument of Revenue neutrality. Appeal allowed - decided in favor of appellant.
Issues:
Valuation of goods for Central Excise Duty payment from Unit-I to Unit-II, Revenue's demand for differential duty, Application of Revenue neutrality principle. Analysis: 1. Valuation of Goods: The dispute revolves around the valuation of goods cleared from Unit-I to Unit-II for Central Excise Duty payment. The appellant paid duty based on cost of production without adding profit due to incurring losses. The Revenue sought to add notional profit for the period pre-01/02/2000. For the period post-01/07/2000, Revenue proposed valuation @ 115% of cost of production under Rule 8 of Central Excise Valuation Goods, 2000. 2. Differential Duty Demand: Show Cause Notices were issued for the disputed periods. The Original Authority finalized the issue, leading to an appeal. The Ld. Commissioner remanded the value determination for the pre-01/07/2000 period and upheld the demand for the post-01/07/2000 period. The appellant challenged this in the present appeal. 3. Revenue Neutrality Principle: The appellant argued for revenue neutrality, stating that any differential duty paid by Unit-1 would be available as Modvat Credit for Unit-2, creating a revenue-neutral situation. They cited the decision of Jay Yushin Ltd. case supporting this principle. The Tribunal held that under such circumstances, the demand itself is unjustified. 4. Legal Arguments: The Ld. Senior Counsel argued against the proposed addition of notional profit and emphasized the revenue-neutral nature of the situation. The Ld. DR, however, contended that Revenue neutrality cannot be a ground for non-payment of duty, citing relevant case laws to support this position. 5. Judgment: After hearing both sides, the Tribunal analyzed the situation. It noted that the goods were cleared between units of the same manufacturer, making it a revenue-neutral scenario. Citing precedents, including the Jay Yushin Ltd. case, the Tribunal set aside the demand based on revenue neutrality. The decision was supported by the Hon'ble Supreme Court's approval, leading to the impugned order being set aside, and the appeal being allowed. In conclusion, the Tribunal's judgment focused on the valuation of goods for Central Excise Duty payment, the applicability of the revenue neutrality principle, and the legal arguments presented by both parties. The decision highlighted the importance of considering revenue neutrality in cases where goods are transferred between units of the same manufacturer, ultimately leading to the appeal being allowed in favor of the appellant.
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