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2023 (5) TMI 720 - AT - Central ExciseLevy of differential liability - price variation clause - clearance of aluminium ingots and coils to the said sister units upon payment of excise duty, on the basis of 110% of the estimated cost of production - when the final cost of production was worked out for the FY 2009-10, it emerged that the Appellant had on an overall basis, paid excise duty on the value which is much more than 110% of the cost of production - Revenue Neutrality - Extended period of Limitation. HELD THAT - When excess paid duty is adjusted against the short payment that net result is that there is no short payment by the Appellant. The Adjudicating Authority failed to do this adjustment. Demanding duty onlu on the short payment, ignoring the excess payment is bad in law. Accordingly we hold that the demand confirmed in the impugned order is not sustainable. Revenue Neutrality - HELD THAT - The entire exercise is revenue neutral as the duty paid by them will be available as credit for their sister unit - As the entire exercise would be revenue neutral, there is no loss of revenue to the exchequer. The demand confirmed in the impugned order is not sustainable. Since the demand itself is not sustainable, the interest demanded and the penalty imposed against the Appellant in the impugned order is also not sustainable - Appeal allowed.
Issues Involved:
1. Short payment of duty and adjustment of excess duty. 2. Revenue neutrality. 3. Invocation of extended period of limitation. 4. Imposition of penalty and interest. Summary: 1. Short Payment of Duty and Adjustment of Excess Duty: The Appellant, M/s. Hindalco Industries Ltd., Hirakud Complex, engaged in the manufacturing and clearance of aluminium ingots and coils, cleared goods to their sister units on payment of excise duty based on 110% of the estimated cost of production. The Department noticed short payment of duty in specific months and issued a show cause notice demanding Rs.62,63,509/-. The Appellant argued that they had paid excess duty in other months and cited various judicial decisions supporting the adjustment of excess duty against short payments. The Tribunal found that the Appellant had indeed paid excess duty in certain months and held that the demand confirmed in the impugned order was not sustainable as the adjustment of excess paid duty against short payment should be allowed. 2. Revenue Neutrality: The Appellant contended that the entire exercise was revenue neutral since the duty paid by them would be available as credit to their sister units. The Tribunal agreed with this view, citing decisions such as *Commissioner of C.Ex., Pune v. Coca-Cola India Pvt.Ltd.* and *Commr. of C.Ex. & Cus., Vadodara-II v. Indeos ABS Limited*, which supported the argument that the exercise was revenue neutral and there was no loss of revenue to the exchequer. 3. Invocation of Extended Period of Limitation: The Appellant argued that the show cause notice issued on 05.09.2011 for the period December 2009 to March 2010 was beyond the normal limitation period of one year and hence time-barred. They stated that extended period of limitation could only be invoked in cases of suppression, misstatement, fraud, collusion, etc., with the intent to evade payment of duty. The Tribunal found that the Department had not furnished any evidence of suppression of facts by the Appellant and held that the demand could not be sustained on the allegation of non-submission of information. 4. Imposition of Penalty and Interest: The Appellant argued that since the demand itself was not sustainable, the penalty imposed and the interest demanded were also not sustainable. The Tribunal agreed and set aside the impugned order, allowing the appeal filed by the Appellant. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the demand confirmed was not sustainable, the entire exercise was revenue neutral, and the invocation of the extended period of limitation was not justified. Consequently, the penalty imposed and the interest demanded were also set aside.
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