2024 (9) TMI 312 - AT - Central Excise

Valuation of goods cleared to sister concerned - alleged short payment of duty - HELD THAT - The Tribunal in the case of BAJAJ TEMPO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2004 (7) TMI 145 - CESTAT, MUMBAI has observed ' considering the fact that the net amount of differential duty payable by the appellants has been paid and the credit of the same has been taken at the recipient factory of the appellants only to the extent of such payment, we find no justification to sustain the demands confirmed against the appellants in the impugned orders passed by the lower authorities.' Reliance has also been placed on the Hon ble High Court of Gujarat in the case of COMMR. OF C. EX. CUS., VADODARA-II VERSUS INDEOS ABS LIMITED 2010 (3) TMI 656 - GUJARAT HIGH COURT where it was held that ' The grievance was that the aspect of undervaluation has not been considered by the Tribunal at all. Grievance would have merited acceptance if the ultimate exercise would have benefited the Revenue by collection of duty in the coffers of the exchequer. In the facts of the present case, admittedly no such benefit accrues to the exchequer. In the circumstances, if the Tribunal has chosen not to determine an academic issue, it is not possible to state that any legal infirmity exists in the impugned order of the Tribunal.' In the instant case also, the situation is identical. There are no merit in the impugned order - The same is set aside and appeal allowed.

Summary

Issues:
Valuation of goods cleared to sister concern, short payment of duty, excess payment of duty, revenue neutrality, reliance on previous decisions, correctness of assessable value for central excise duty, undervaluation of goods, revenue benefit to the exchequer.

Analysis:
The appeal involves M/s. Unique Chemicals contesting a demand raised due to the valuation of goods transferred to their sister concern. Out of 11 goods transferred, 7 had an alleged short payment of duty, while 4 had an excess payment, resulting in a net excess duty payment of Rs. 89,22,652. The appellant argued that the issue has been previously decided and cited relevant case laws to support their stance, emphasizing revenue neutrality as the duty paid was credited by the sister concern. The appellant contended that the demand should be dropped based on these grounds.

The learned Advocate for the appellant relied on various decisions, including Bajaj Tempo Ltd. and Suzlon Energy Limited, to support their argument. They highlighted that the sister concern had followed the decision in the Bajaj Tempo Limited case, resulting in the dropping of the demand, which was accepted by the revenue. The appellant emphasized that the entire issue was revenue neutral due to the duty credit taken by the sister concern, further supporting their claim for dropping the demand.

The Tribunal referred to the case of Bajaj Tempo Limited, where the valuation of goods cleared under new rules was adjusted by the appellants, leading to differential duty payments. The Tribunal allowed adjustments of excess and short payments of duty, setting aside demands confirmed against the appellants. The Tribunal's decision was based on the principle of revenue neutrality and the adjustment of duty payments made by the appellants.

Additionally, the Tribunal cited the case of Indeos ABS Limited, where the issue of revenue neutrality was crucial. The Tribunal dismissed the appeal by the Revenue, emphasizing that the exercise was revenue neutral as the duty paid was available as credit to the sister concern, resulting in no benefit to the exchequer. The Tribunal's decision was upheld as no legal infirmity was found in the impugned order.

In conclusion, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal by M/s. Unique Chemicals. The decision was pronounced in open court on 05.09.2024, highlighting the importance of revenue neutrality and the adjustment of duty payments in cases involving goods transferred to sister concerns.