2024 (6) TMI 904 - AT - Central Excise

Valuation of goods - stock transfer - computation of differential duty - Revenue neutrality - penalty - extended period of limitation. HELD THAT - The Appellants cleared the goods on stock transfer to their sister units. The entire duty paid by the Appellants would be available to the recipient unit as Cenvat credit. Accordingly, the entire issue is of revenue neutral. The decision cited by the Appellant in the case of M/S. ANGLO FRENCH TEXTILES VERSUS CCE, PUDUCHERRY 2017 (9) TMI 1178 - CESTAT CHENNAI , is squarely applicable in this case. In this case the demand confirmed has been set aside on the ground of revenue neutrality. Extended period of Limitation - penalty - HELD THAT - The Appellants had not mis-declared or suppressed any information with an intent to evade payment of duty. Accordingly, the extended period of limitation not invokable in these cases. For the same reason, no penalty imposable on the Appellants . Accordingly, the penalties imposed on the Appellants is set aside. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
The judgment involves issues related to valuation of goods under Rule 4 of the Valuation Rules, 2000, computation of differential duty, consideration of revenue neutrality, and imposition of penalty.

Valuation of Goods and Computation of Differential Duty:
The Appellants, manufacturers of iron and steel products, faced demands for differential duty following a change in valuation rules. The department sought payment based on Rule 4 of the Valuation Rules instead of Rule 8 initially applied. The Appellants contested the computation of differential duty, arguing that the department used a uniform value for sales to independent buyers instead of considering the value at the nearest point of removal to sister units as per Rule 4. They also highlighted the lack of specific invoice details in the show cause notices, hindering their ability to respond effectively.

Revenue Neutrality:
The Appellants claimed revenue neutrality as the goods were cleared to sister units, making the duty paid available as Cenvat credit to the recipient unit. They referenced a precedent where demands were set aside on grounds of revenue neutrality, arguing that the confirmed demands were not sustainable based on this principle. The Tribunal agreed, setting aside the demands on the basis of revenue neutrality and citing relevant case law to support their decision.

Limitation and Penalty Imposition:
The Appellants raised the issue of limitation, contending that the notices invoking extended period were not sustainable as they had complied with earlier directives on duty payment. They argued against penalty imposition, asserting that there was no deliberate mis-declaration or suppression of information to evade duty. The Tribunal agreed, holding that the extended period of limitation was not applicable and setting aside the penalties imposed on the Appellants.

Conclusion:
The Tribunal, after considering the arguments and precedents cited, set aside the impugned orders and allowed the appeals filed by the Appellants. The demands for differential duty were deemed unsustainable due to revenue neutrality, and penalties were lifted based on the lack of intent to evade duty.