2023 (6) TMI 410 - AT - Central Excise

Valuation - interconnected units - duty demand was quantified based on the value charged by two units to the other parties minus the value adopted by Amara Raja Batteries to these units - bills raised at higher amounts - HELD THAT - As per the facts on record, it is clear that two entities were purchasing batteries from the Appellant and these batteries were directly delivered to the third parties who were identified by these two entities. The Appellant company was billing at a lower rate to the two entities on which Excise Duty was being paid by the Appellant but no cenvat credit was taken by the two entities. These two entities charged higher price on the third parties on which no excise duty was paid. Therefore this is not a case where Revenue neutrality will arise. It is a clear case that Appellant was avoiding Excise Duty payment by charging higher price for the supplies made by their interconnected units. The Adjudicating Authority has gone into totally different direction by going into the percentage of sales effected, which has no legal basis when the facts are very clear that there is a difference between the value charged by Appellant to these two entities and value adopted by these entities for third parties. Therefore on merits, there are no case in favour of the Appellant. The Appeal is dismissed on merits.

Summary

Issues involved:
Interconnected units determination, Excise Duty payment avoidance, Time bar invocation for extended period.

Interconnected units determination:
The Department alleged that the Appellant and two other entities were interconnected units due to common directors. The Appellant argued against this presumption, stating that the fact of being interconnected was not established. The Adjudicating Authority found that only 0.23% of sales were to these entities, justifying the findings. However, the Tribunal disagreed, noting that the Appellant billed at a lower rate to the entities, which then charged higher prices to third parties, leading to Excise Duty avoidance. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the appeal on merits.

Excise Duty payment avoidance:
The Appellant was accused of avoiding Excise Duty payment by charging higher prices for supplies made by their interconnected units. The Department established that the Appellant billed at a lower rate to the entities, resulting in higher realization through the interconnected units. The Tribunal found that this practice led to Excise Duty evasion and rejected the Appellant's arguments regarding revenue neutrality. The appeal was dismissed based on these findings.

Time bar invocation for extended period:
The Appellant argued that the extended period for the Show Cause Notice should be set aside due to the availability of their details in public records, thus refuting any allegation of suppression. However, the Tribunal agreed with the Department that detailed investigation was necessary to establish the relationship between the entities and the pricing discrepancies. As suppression was established through investigation, the plea on limitation failed, and the appeal was ultimately dismissed.