2018 (12) TMI 715 - AT - Central Excise

Valuation - related party transaction - removal to sister units - Rule 8 of the Valuation Rules - time limitation - Held that - The facts of the present case are covered by the decision of the coordinate bench of the Tribunal in the case of Jay Yushin Ltd. vs. Commr. Of Central Excise, New Delhi 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI , where it was held that there is no dispute that clearance of excisable goods on short payment of duty had taken place. The fact that the differential duty was subsequently debited (albeit voluntarily) by the assessee before the issue of SCN will not debar the issuance of SCN in relation to the short payment occurring on the relevant date. The appeal filed by the appellant is allowed on limitation.

Summary

Issues:
Alleged short payment of central excise duty, contravention of Rule 8(1)(b), demand of duty, interest, and penalty, appeal against demand of duty and interest, revenue neutrality, suppression of facts, filing of RT-12 Returns, show cause notice issued beyond normal period, applicability of case laws.

Detailed Analysis:
The judgment involves a case where the appellant, a small scale manufacturer of Alluminium Ingot, Sheet, and Coil, faced a Show Cause Notice for alleged short payment of central excise duty amounting to ?75,32,648 during 2003-04 to 2006-07. The notice accused the appellant of clearing goods to sister units without including 10% of the cost of production as per Rule 8(1)(b), resulting in the duty shortfall. The Adjudicating Authority dropped a major portion of the demand but confirmed a reduced demand of ?52,295 along with interest and imposed a penalty. On appeal, the lower authority upheld the demand and interest but waived the penalty. The appellant contested the demand of ?52,295 along with interest before the Tribunal.

The appellant's consultant argued that the dispute stemmed from the valuation under Rule 8 of the Valuation Rules due to the goods' transfer to sister units, emphasizing that the sale was not to an unrelated buyer, making the situation revenue neutral. The consultant highlighted the regular filing of RT-12 Returns and criticized the delayed issuance of the show cause notice beyond the normal period, citing a Tribunal decision in the case of Sundram Fasteners Ltd. The Departmental Representative supported the lower authorities' orders, emphasizing that demand and interest could not be waived based on past decisions regarding revenue neutrality.

Upon hearing both sides and examining the records, the Tribunal Member observed that the case was akin to previous decisions like Jay Yushin Ltd. and Sundram Fasteners Ltd., where the Tribunal had ruled in favor of the appellants due to regular filing of returns and lack of evidence of suppression of facts. The Tribunal particularly highlighted the revenue neutrality in inter-unit transfers, dismissing the allegation of duty evasion. Consequently, the Tribunal allowed the appeal on the grounds of limitation, setting aside the demand and providing consequential relief to the appellant.

In conclusion, the judgment delves into the complexities of central excise duty payment, valuation rules, revenue neutrality in inter-unit transfers, timely issuance of show cause notices, and the significance of regular return filings in determining duty liabilities. The Tribunal's reliance on precedent and careful consideration of the facts led to a favorable outcome for the appellant, emphasizing the importance of procedural adherence and substantive legal principles in excise duty disputes.