2008 (11) TMI 155 - AT - Central Excise

Related person - Impugned order confirming demand, interest and penalty on ground that appellants had cleared excisable goods to another unit of their company at a lower price - situation is revenue neutral and whatever duty they paid in one unit they would have got the same as credit in their other unit - no wilful intent to evade payment of duty - very strong case on limitation in view of the fact that SCN had been issued by the Revenue on the same ground invoking suppression thereafter on the same issue impugned order is set aside

Summary

Issues: Duty demand, interest, and penalties challenged based on selling goods at a lower price to another unit of the company.

In this case, the Appellate Tribunal CESTAT AHMEDABAD considered the challenge against duty demand, interest, and penalties imposed on the appellants for clearing excisable goods to another unit of their company at a lower price compared to independent buyers. The appellants argued that the other unit should not be considered a related person, justifying their pricing procedure based on the price fixed by their marketing department. They also emphasized a strong case on limitation due to a previous show cause notice issued in 1996. The Tribunal noted that suppression of facts to evade duty could not be alleged as a show cause notice had been issued earlier on the same issue. The Commissioner (Appeals) had concluded that the appellants intentionally avoided paying duty at a higher price, but the Tribunal disagreed, stating that the matter had not attained finality earlier. The Tribunal highlighted that the revenue-neutral situation and the duty paid in one unit being available as credit in the other unit supported setting aside the Commissioner (Appeals) order. Therefore, the Tribunal ruled in favor of the appellants, setting aside the duty demand, interest, and penalties imposed.

The judgment focused on the interpretation of related persons in pricing excisable goods within a company and the implications on duty demand, interest, and penalties. It also delved into the significance of a previous show cause notice in determining intentional evasion of duty and the impact of duty payment in one unit being credited to another unit. The Tribunal's decision highlighted the importance of considering all relevant factors in duty disputes and ensuring fairness in adjudication processes.