2017 (7) TMI 983 - AT - Central Excise

Valuation - stock transfer to sister unit - Section 4 (1) (b) of Central Excise Act, 1944 read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Held that - the assessee is not contesting the liability and would like to submit only on the ground that entire transaction would give rise to a revenue-neutral situation. Thus SCN issued beyond the normal period is not sustainable - even if the duty has to be paid by appellant as alleged in the SCN, their sister concern would be able to take credit - confirmation of demand, interest and the imposition of penalty is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Determination of assessable value for stock transfer, undervaluation allegations, sustainability of duty demand, interest, and penalty imposition, applicability of revenue-neutrality principle, reliance on case laws for defense.

Analysis:
The case involved the determination of the assessable value for stock transfer of E.C. Grade Aluminium Wire Rod by the assessee's Chennai and Pondicherry units to their sister units at Tumkur. The authorities alleged undervaluation, leading to duty demand confirmation, interest imposition, and penalty. The assessee contested the liability, arguing for a revenue-neutral situation due to the ability of the sister concern to take credit for duty paid. The defense relied on legal precedents, including the judgment in Commissioner Vs Special Steel Ltd., emphasizing the revenue-neutrality principle. Additionally, the case cited the judgment in Precot Mills Ltd. Vs CCE Calicut to support the correct cost calculation based on CAS-4 certificate. The tribunal found the confirmation of demand, interest, and penalty unsustainable, setting aside the impugned order. Consequently, the department's appeal was dismissed, and the assessee's appeal was allowed with any consequential relief as per law.

This judgment highlights the significance of correctly determining assessable value for stock transfers to avoid undervaluation allegations. The defense strategy based on the revenue-neutrality principle and legal precedents proved successful in challenging the duty demand, interest, and penalty imposition. The tribunal's reliance on established case laws, such as Commissioner Vs Special Steel Ltd. and Precot Mills Ltd. Vs CCE Calicut, reinforced the argument for a revenue-neutral transaction between sister units. Ultimately, the tribunal's decision favored the assessee, emphasizing the importance of accurate valuation methods and adherence to legal principles in excise matters.