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2023 (6) TMI 691 - AT - Central ExciseLevy of Differential Duty - price variation clause - Determination of assessable value of stock transferred parts to their sister concern by the Appellant - adjustment of excess paid duty with the duty short paid - period involved in all the Appeals is 2005-06 to 2009-10 - applicability of Rule 8 of the Central Excise Valuation Rules - Revenue Neutrality - HELD THAT - Similar issue came up before this Tribunal in the case of M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-II 2023 (5) TMI 720 - CESTAT KOLKATA , wherein this Tribunal has observed 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. In this case also the Appellant has paid excess duty which was required to be adjusted against the short-payment. Moreover, it is a situation of revenue neutral as whatever duty they pay their sister unit get CENVAT Credit of the same. Therefore, it is the revenue neutral situation. The demand of duty is not sustainable against the Appellant. Accordingly, the impugned order is set aside and the appeals are allowed.
Issues Involved:
1. Determination of assessable value for stock-transferred goods. 2. Adjustment of excess duty paid against short payment. 3. Revenue neutrality of the duty payment. Summary: Determination of Assessable Value for Stock-Transferred Goods: The Appellants, engaged in manufacturing semi-finished excavator parts, cleared these parts to their sister concern on payment of duty for further manufacture. The period involved is 2005-06 to 2009-10. The Appellant determined the assessable value under Rule 8 of the Central Excise Valuation Rules by adopting 110% of the cost of production using the CAS-4 method. However, a CERA audit re-determined the value, leading to a demand for differential duty. The Additional Director (Cost) later determined the assessable value, which was higher for some years but lower for others compared to the Appellant's valuation. Adjustment of Excess Duty Paid Against Short Payment: The Appellant argued that they paid duty as per Rule 8 of the Central Excise Valuation Rules and CAS-4 method, and any differential duty determined later should not be payable. They cited the Tribunal's decision in Hindalco Industries Ltd., where it was held that excess duty paid in some months should be adjusted against short payments in other months. The Tribunal in Hindalco Industries Ltd. observed that the duty liability should be determined on an annual basis, and any excess duty paid should be adjusted against short payments. Revenue Neutrality of the Duty Payment: The Appellant contended that the entire exercise was revenue neutral since the duty paid would be available as credit to their sister unit. The Tribunal agreed, citing decisions in cases like Coca-Cola India Pvt. Ltd. and Indeos ABS Limited, which held that if the duty payment is revenue neutral, there is no loss to the exchequer. Conclusion: The Tribunal found that the Appellant had paid excess duty which should be adjusted against the short payment. Moreover, the situation was revenue neutral as the sister unit could avail CENVAT Credit. Therefore, the demand for differential duty was not sustainable. The impugned order was set aside, and the appeals were allowed with consequential relief. (Operative part of the order was pronounced in the open Court.)
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