2019 (5) TMI 1338 - AT - Central Excise

Time Limitation - Valuation - supply of goods by HVTL to TML - HVTL became the subsidiary of TML - Section 4 of the Act read with the Central Excise Valuation Rules, 1975 - HELD THAT - It is seen from the extract of the SCN above that the department has made a bland allegation that the assessee has resorted to short payment of duty with intent to evade payment of duty. Nowhere the SCN records any specific act on the part of HVTL for such allegation. In fact perusal of the SCN reveals that the investigation was started by the department only after receipt of intimation by HVTL regarding the payment of differential duty amounting to ₹ 55 lakhs as per their own computation. There is no justification for issue of SCN by alleging suppression on the part of HVTL. Since no demand for differential duty survives within the normal period of limitation, the entire differential duty demand raised is liable to be set aside. CENVAT Credit - duty paying documents - credit availed on the basis of supplementary invoices issued by HVTL at the time of payment of differential duty - Rule 7(1)(b) of CCR 2001 - HELD THAT - There is no dispute that the differential duty has been paid by HVTL and the supplementary invoices issued. The reason cited by the Adjudicating Authority for denying the credit to TML is that the relevant Central Excise Rules did not provide for availment of Cenvat credit on such supplementary invoices. There is no justification for invoking extended period of limitation under Section 11A since there is nothing on record to allege suppression of facts. The Tribunal has also been consistently taking the view that credit is permissible on the basis of supplementary invoice even prior to 29.08.2000 when notification No. 51/2000 was issued - credit rightly availed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of goods for captive consumption, Disallowance of trade discount, Denial of Cenvat credit to TML

Valuation of goods for captive consumption:
The case involved M/s. Tata Motors Limited (TML) and its subsidiary H.V. Transmission Ltd. (HVTL) regarding the valuation of goods supplied by HVTL to TML for captive consumption. The dispute arose due to the differential duty demanded by the department based on the addition of notional profit and disallowance of trade discounts. The appellants argued that the valuation should be done under the unamended provisions of Section 4 of the Central Excise Act, 1944, along with the Central Excise Valuation Rules, 1975. They contended that the addition of notional profit and disallowance of trade discounts were not justified as HVTL was incurring losses during the relevant period. The department justified the addition of notional profit and disallowance of discounts based on the applicable rules. The Tribunal considered the arguments and ruled in favor of the appellants, setting aside the differential duty demand.

Disallowance of trade discount:
The dispute also involved the disallowance of trade discounts claimed by HVTL on the spare parts supplied to TML. The appellants argued that the discounts were allowable deductions as per Section 4 before 1.07.2000. The department, however, contended that HVTL failed to provide documentary evidence of the discounts granted. The Tribunal considered the arguments and found that HVTL was entitled to claim the discounts as deductions, ruling in favor of the appellants on this issue.

Denial of Cenvat credit to TML:
Another issue in the case was the denial of Cenvat credit to TML based on the duty paid by HVTL through supplementary invoices. The department denied the credit citing the absence of provisions for credit on supplementary invoices during the relevant period. The appellants argued that the denial was unjustified and that credit should be allowed as per the Central Credit Rules, 2001. The Tribunal agreed with the appellants, stating that there was no suppression of facts warranting the denial of credit. The Tribunal also cited previous decisions supporting credit on supplementary invoices even before the issuance of a specific notification. Consequently, the impugned order was set aside, and both appeals were allowed in favor of the appellants.

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