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TMI Blog2023 (7) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust 2008 itself, the appellant has written a letter to the department requesting to clarify in regard to the quantification of short payment of duty. Ld. Counsel has submitted that the audit party had informed them to pay the differential duty which was calculated on the basis of cost of production of the company as a whole including Unit I II. Further a letter dated 21.1.2008 was issued to the department. Appellant has also furnished all the details as and when requested by department. However, the show cause notice has been issued only on 2.5.2012 invoking the extended period of limitation alleging that the appellant has suppressed facts with intention to evade payment of duty. It has to be noted that appellant has paid excess duty for certain periods. This being so, it cannot be alleged that there is any deliberate act on the part of the appellant to suppress facts with intent to evade payment of duty. Further, the entire situation is revenue-neutral as Unit I would be able to take credit of the duty paid by Unit II. The Hon ble Supreme Court in the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT] had occasion to consider a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that appellant (Unit II) transferred their products to Unit I on stock transfer basis by paying duty adopting the value based on their declared cost of production. The value so adopted by the appellant was found to vary with actual cost of production of the castings as per CAS 4 statement prepared on the basis of the audited accounts of the appellant as certified by Chartered Accountant. From letter dt. 12.08.2008 addressed by the appellant to the Deputy Commissioner of Central Excise (Audit), Coimbatore, it appeared that there is no sale involved on the clearance of castings from Unit II to Unit I and also that they have determined the assessable value based on the cost of production. When the goods are not sold by the manufacturer-assessee but are used captively by them on their behalf in the manufacture of other articles, the valuation of goods for the purpose of Central Excise duty, has to be done a per Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The said Rule 8 states that "where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the manufacture of other articles, the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details on the method of determining the value of the goods manufactured and stock transferred from Unit II to Unit I. The appellant furnished all the details and books of accounts as sought by the department. However, show cause notice dated 02.05.2012 was issued invoking the extended period alleging that the appellant has suppressed facts with intention to evade payment of duty. It is alleged in the SCN that the value adopted for the stock transfer of goods by Unit II to Unit I varies with actual cost of production as per CAS 4 statements prepared on the basis of audited accounts. It is alleged in the SCN that the appellant had not adopted correct assessable value of 110% of the cost of production arrived at on the basis of CAS-4. Thus it is alleged in the SCN that non adoption of the correct assessable value has resulted in short payment of duty for certain periods and excess payment of duty for other periods. It was further alleged that the excess payment of duty has resulted in transfer of excess cenvat credit to Unit I. SCN has proposed to demand differential duty of Rs.61,81,244/- along with interest from Unit II for the period 2007-08, 1.4.2008 to 31.1.2009 and 1.4.2011 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and all the details were known to the department. In fact, the demand has been raised from the figures available in the accounts of the appellant. It is also pointed out by the Ld. counsel that for some period, there is excess payment of duty. This itself would establish that the appellant had no intention to evade payment of duty and the short payment, if any, has arisen only due to the fact that the cost of production was not available for computation of the assessable value of rough castings at the time of clearance of such goods. 11. Ld. Counsel vehemently argued that the issue being revenue-neutral, the invocation of extended period cannot sustain. The duty if any paid by Unit II would be eligible for availing credit by Unit I. Therefore, there cannot be any malafide intention to evade payment of duty. To support this argument, Ld. Counsel relied upon the judgement in the case of Nirlon Ltd. Vs CCE Mumbai - 2015 (320) ELT 22 (SC); CCE Chennai Vs Tenneco RC India Pvt. Ltd. 2015 (323) ELT 299 (Mad.). and final order of the Tribunal in the case of Deepak Cables (India) Ltd. Vs CCE Pondicherry - 2018 TIOL-17-CESTAT MAD. The decision in the case of Precot Mills Ltd. Vs CCE C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate of the financial years ending 31st March by 31st December of the next financial yar. The short payment of duty has occurred because they did not adopt the value as per CAS 4. It is violation of provisions of law and therefore the demand of duty and denial of credit are legal and proper. Ld. A.R prayed that the appeals may be dismissed. 16. Heard both sides. 17. The Ld. Counsel has put forward arguments mainly on the ground of limitation. The demand of differential duty is for the period from April 2007 to January 2009 and April 2011 to September 2011. The allegation is that the assessable value adopted for payment of duty on rough castings is not based on 110% of the cost of production arrived at based on CAS-4 statement as certified by Chartered Accountant. It is an undisputed fact that for the same reason of not adopting assessable value as per CAS-4 there is indeed excess payment of duty. The details of the value adopted, short and excess payment of duty paid for the years 2007-08 to 2012-2013 is furnished by appellant as under : Financial Year Value adopted based on estimated cost of production Actual cost of production as per CAS-4 computed after the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no sale involved on the clearance o castings from Unit No.II to Unit No.I, we have determined the assessable value based on the cost of production. The applicable duty of excise was paid on the basis of the cost of production including profit margin since the commence of the operations in July 2005. (b) (i) The rough castings so cleared by Unit No.II were duly received and accounted by us at Unit No.1 in their records. We also availed the cenvat credit as per the statutory provisions contained in Cenvat Credit Rules. The cenvat credit availed by us was utilized towards the payment of duty of excise on the final product cleared by us from our unit No.I. Thus it could be noticed that the entire duty of excise paid by us from our Unit No.II on the clearance to Unit I was eligible for set off against the payment of duty of excise from our Unit No.I. … …. … (ii) However, we are of the considered opinion that the cost of production adopted by us is based on the actual cost of various inputs used in the manufacture of the rough castings during the relevant years. As desired b the audit, we are also working on the cost of production of the rough castings c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I under Section 4 of the Act was filed on 1-3-1994 and 28-3-1994. It was again filed on 1-3-1998. The price declaration so made was looked into by the Superintendent of Central Excise and he was not satisfied with this declaration as according to him, the price could not be declared at the same rate at which the goods are sold by the appellant at the factory gate to others. According to him, there was a difference between the goods which were cleared at the factory gate to be sold to the third parties and removed for captive consumption by the appellant itself for its Tarapur factory. This resulted in the appointment of a cost accountant by the Commissioner to go into this issue. .. … ….. 8. We may note that Mr. K. Radhakrishnan, learned Senior Counsel appearing for the Revenue, vehemently countered the aforesaid submission of the appellant and argued that there was clear intention to evade the Excise duty. His submission was that the clearance of the goods which were sold at the factory gate were totally different as they differed in technical specifications from those removed for captive consumption which was confirmed by the appellant itself vide its letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee's Chennai unit and Pondicherry units were clearing E.C. Grade Aluminium Wire Rod to their sister units at Tumkur on stock transfer basis. The assessable value in respect of the goods stock transferred should be determined in terms of 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. Thus when the goods are used for consumption by the assessee's unit value shall be 110% of the cost of production for manufacture of such goods. Scrutiny of records revealed that the value adopted for stock transfer was not based on CAS-4 read with Rule 8 of Central Excise Valuation Rules, 2000. SCNs were issued alleging undervaluation of the product while stock transferring to their sister concern and after due process of law, original authority confirmed the duty demand along with interest and imposed equal penalty. In appeal, the Commissioner (Appeals) upheld the duty demand. However, penalty was reduced to Rs.4 lakhs. Thus assessee is in appeal against the confirmation of duty demand, interest and the penalty imposed. The department has filed Appeal No.E/682/2007 against reduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. Appeal filed by assessee is allowed with consequential relief, if any, as per law." 23. From the ratio laid down by the above judgements, we have no hesitation to conclude that the facts present is a revenue-neutral situation and therefore the demand invoking extended period cannot sustain and requires to be set aside which we hereby do. The demand for the normal period is sustained. The appellant succeeds on the ground of limitation. 24. The next issue is with regard to denial of cenvat credit. It is alleged by the original authority that the appellant is not eligible to take credit on the excess duty paid by Unit II. The excess duty happened to be paid because of the same reasons of short payment of duty. When the duty has been paid by Unit II as per the invoices, the credit cannot be denied to the receiving unit. Further in the appellant's own case for different periods, subsequently, the Commissioner (Appeals) has held the issue in favour of the appellant and held hat credit is eligible. For these reasons, we find that the denial of credit cannot sustain and requires to be set aside which we hereby do. 25. From the foregoing, the impugned order is set aside. Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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