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TMI BlogSC upholds plea of revenue neutrality in case of captive consumption to set aside invocation of extended periodX X X X Extracts X X X X X X X X Extracts X X X X ..... SC upholds plea of revenue neutrality in case of captive consumption to set aside invocation of extended period - By: - Bimal jain - Central Excise - Dated:- 15-6-2015 - - Dear Professional Colleague, SC upholds plea of revenue neutrality in case of captive consumption to set aside invocation of extended period We are sharing with you an important judgment of the Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, in the case of Nirlon Ltd. Vs. Commissioner of Central Excise, Mumbai [ 2015 (5) TMI 101 - SUPREME COURT ] on the following issue: Issue: Whether extended period can be invoked when entire exercise is revenue neutral i.e. credit of duty paid on captive consumption is available to assessee itself? Facts: Nirlon Ltd. ( the Appellant ) was engaged in the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Tyre Cord Yarn ( TCY ) and Tyre Cord Fabric ( TCB ) falling under Chapter 54 and Chapter 59 of the First Schedule to the Central Excise Tariff Act, 1985 respectively, at its Goregaon factory. The products so manufactured were sold by the Appellant at the factory gate as well as removed for captive consumption to its another factory at Tarapur for utilising in manufacturing of fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l products. The Appellant paid duty on captive consumption of TCY taking value as that of ex-factory sales and price declaration for the same were filed with the Department. After examination, it was found that there was a difference between the goods which were cleared at the factory gate to be sold to the third parties and the goods removed for captive consumption by the Appellant for its Tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apur factory. Accordingly, the Ld. Commissioner appointed a Cost Accountant for verification and in his Report, it is was submitted that the two goods are different from each other and therefore, price declaration which was filed by the Appellant in terms of Section 4(2) of the Central Excise Act, 1944 ( the Excise Act ) read with Rule 6(b)(i) of the erstwhile Central Excise Valuation Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1975 ( the Excise Rules ) was incorrect. Accordingly, the Department issued two Show Cause Notices to the Appellant demanding differential duty under Rule 6(b)(ii) of the Excise Rules along with penalties by invoking extended period of limitation. On appeal being filed to the Hon ble CESTAT, the matter was decided against the Appellant. Being aggrieved, the Appellant preferred an appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Hon ble Supreme Court. Held: The Hon ble Apex Court held that even though the goods were found to be different, payment of duty taking comparative value was done with bona fide belief. When entire exercise was revenue neutral (i.e. credit of duty paid on captive consumption was available to the Appellant itself), the Appellant could not have achieved any purpose to evade duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, extended period of limitation and consequent demand was set aside. However, the Hon ble Supreme Court upheld demand for the period not barred by limitation by holding that the goods which were removed for captive consumption to be used by Tarapur Factory were to be valued under Rule 6(b)(ii) of the Excise Rules and the price declaration given by the Appellant applying Rule 6(b)(i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Rules was erroneous. Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us. Thanks Best Regards, Bimal Jain FCA, FCS, LLB, B.Com (Hons) A2Z TAXCORP LLP Tax and Law Practitioners Delhi: Flat No. 34B, Ground Floor, Pocket 1, Mayur Vihar Phase-1 Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 110091 (India) Tel: +91 11 22757595/ 42427056 Chandigarh: H. No. 908, Sector 12-A, Panchkula, Haryana - 134115 Kolkata: Ist Floor, 10 R G Kar Road Shyambazar, Kolkata 700 004 Email: [email protected] Web: www.a2ztaxcorp.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X
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