2023 (9) TMI 805 - AT - Central Excise

Revenue neutrality - clearance of goods without payment of duty - period involved in the year 2010- 2011 to 2014-2015 and the show-cause notice has been issued on 23.03.2016 - time limitation - HELD THAT - It is fact on record that the appellant has cleared the goods from their unit without payment of duty to their sister unit and the said sister unit cleared the said coals on payment of duty. Although it is a situation of revenue neutrality, but the appellant was monthly required to pay duty at the time of clearance from the transferor unit, otherwise, the Central Excise Act will become redundant - thus, at the time of clearance of goods, the appellants were liable to pay duty. Time Limitation - HELD THAT - In the facts and circumstances of the case that when the fact of clearance of coals from the transferor unit without payment of duty was in the knowledge of the respondent as various correspondences were made during the impugned period and the show-cause notices have been issued to the appellant by invoking extended period of limitation, in that circumstances, it is held that whole of the demand is barred by limitation. Accordingly, on limitation, the appellants succeed. Thus, on merit appellants are liable to duty, but on limitation, the show-cause notice fails - appeal allowed.

Summary

Issues involved:
The judgment involves the issue of non-payment of Central Excise Duty and Clean Energy Cess by a PSU engaged in mining and selling coal from its various units, leading to a dispute regarding the duty liability and the applicability of the limitation period.

Summary of Judgment:

Issue 1: Liability for non-payment of duty
The appellant, a PSU engaged in mining and selling coal, faced a dispute regarding the non-payment of Central Excise Duty and Clean Energy Cess during the period from March 2011 to March 2015. The Area Offices of the appellant, before obtaining Centralized Excise Registration, transferred coal to other offices without depositing the required duties. However, the transferee offices paid the duties and issued excise invoices to buyers. The Central Excise Authorities were aware of this practice. Despite the situation being one of revenue neutrality, the appellant was held liable to pay duty at the time of clearance from the transferor unit to ensure compliance with the Central Excise Act.

Issue 2: Limitation period for demand
The show-cause notices for demanding Central Excise Duty and Clean Energy Cess were issued beyond the limitation period, which was a key argument raised by the appellant. The notices were received in May 2016, while the period in question was from 2011 to 2015. The extended period of limitation was invoked by the authorities for issuing the demand notices. The Tribunal held that the entire demand was barred by limitation due to the delayed issuance of the show-cause notices.

Conclusion:
The Tribunal ruled that while the appellant was liable to pay duty on the goods cleared, the demand raised in the show-cause notices was time-barred. Therefore, the appeals were allowed on the grounds of limitation, providing consequential relief to the appellant. The judgment highlighted the importance of timely compliance with duty payment obligations and the significance of adhering to statutory limitation periods in such cases.