2004 (8) TMI 253 - AT - Central Excise

Determination of correct value for clearance of goods to own unit - Barium Carbonate - evasion for payment of duty - Limitation - HELD THAT - We find that the appellants were clearing Barium Carbonate to their own Granulation Unit on payment of duty by taking average value of Barium Carbonate of the various grades. The duty paid by them on the Barium Carbonate is being taken as credit in their Granulation Unit. Therefore there is Revenue neutrality in this case despite the fact that the appellants have not determined the correct value of the each grade of the Barium Carbonate. In this circumstance, where there is Revenue neutrality, then in view of the decisions relied upon by the appellants and the decision of Larger Bench in case of Jay Yuhshin Ltd. 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI-LB and the decision of Supreme Court in case of Amco Batteries Ltd. v. Collector of Central Excise, Bangalore 2003 (2) TMI 66 - SUPREME COURT , the intention to evade payment of duty cannot be alleged. Therefore extended period u/s 11A(i) cannot be made applicable in the present case. On this ground alone, the order of the Commissioner (Appeals) is set aside as the show cause notice has been issued after the period of 06 months. Accordingly, the appeal is allowed.

Summary

Issues involved: Determination of correct value for clearance of goods to own unit, Revenue neutrality, Allegation of intention to evade payment of duty, Applicability of extended period under Section 11A(i).

Summary:
The case involved the appellants manufacturing Barium Carbonate and clearing it to their own Granulation Unit. The appellants adopted an average value for the Barium Carbonate of different grades for clearance, claiming revenue neutrality as they were taking duty paid as credit in their Granulation Unit. The Central Excise Officers found the adopted values not in conformity with the rules, leading to a demand for differential duty, penalties, and interest. The Addl. Commissioner confirmed the demand, which was upheld by the Commissioner (Appeals). The appellants argued that there was no intention to evade duty as they were following prescribed procedures and ensuring revenue neutrality. They cited relevant case laws to support their stance.

The revenue contended that the appellants should have used the prices available for each grade of Barium Carbonate sold to independent buyers, rather than adopting an average value. They relied on a Tribunal decision emphasizing the need to establish revenue neutrality based on the actual situation, not just the availability of an alternate scheme. The revenue argued for upholding the Commissioner (Appeals) order.

After considering the arguments, the Tribunal found that despite the appellants not determining the correct value for each grade of Barium Carbonate, revenue neutrality existed due to the duty paid being credited in their Granulation Unit. Citing relevant case laws and the principle of revenue neutrality, the Tribunal concluded that there was no intention to evade duty. As the show cause notice was issued after the extended period, the order of the Commissioner (Appeals) was set aside, and the appeal was allowed.