Custom, Excise & Service Tax Tribunal
Deepak Cables (India) Ltd vs Commissioner Of Central Excise on 21 July, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No. E/665/2007 [Arising out of Order-in-Appeal No.91/2007 (M-IV) dt. 18.06.2007 passed by the Commissioner of Central Excise (Appeals), Chennai] Deepak Cables (India) Ltd. Appellant Versus Commissioner of Central Excise, Pondicherry Respondent
Appeal No.E/682/2007 [Arising out of Order-in-Appeal No.91/2007 (M-IV) dt. 18.06.2007 passed by the Commissioner of Central Excise (Appeals), Chennai] Commissioner of Central Excise, Pondicherry Appellant Versus Deepak Cables (India) Ltd. Respondent Appearance:
Shri M. Karthikeyan, Advocate For the Assessee Shri K.P. Muralidharan, AC (AR) For the Department CORAM :
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing / decision : 21.07.2017 FINAL ORDER No. 41280-41281 / 2017 Per Bench Issue involved in these appeals being same, they were heard together and disposed by this common order. The parties herein are referred to as assessee and department for the sake of convenience.
2. The brief facts of the case are that assessee are engaged in manufacture of E.C. Grade Aluminium Wire Rod and are having two more units at Tumkur and Kunigal, Karnataka. Officers visited the premises of the assessee's unit on 24.08.2004. On scrutiny of records, it was noticed 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 reduction of penalty.
3. On behalf of assessee, ld. counsel Shri M. Karthikeyan submitted that the assessee is not contesting the liability and would like to submit only on the ground that entire transaction would give rise to a revenue-neutral situation. Thus SCN issued beyond the normal period is not sustainable. He submitted that even if the duty has to be paid by appellant as alleged in the SCN, their sister concern would be able to take credit. Ld. counsel also relied upon the judgment reported as Commissioner Vs Special Steel Ltd. - 2016 (334) ELT A123 (SC) where the Hon'ble Apex Court had upheld the decision of the Tribunal wherein department appeal was dismissed on the ground of revenue-neutrality since the duty paid on the goods cleared to sister unit was available as modvat credit to it and the allegation that such clearances were made at a lesser value was not relevant and only of academic nature. The para of the judgement in Precot Mills Ltd. Vs CCE Calicut - 2014 (313) ELT 789 (Tri.-Bang.) which is also relevant is reproduced as under :
"......To our mind the reliance placed by the lower authorities on the cost of production of the products i.e. processed yarn seems to be improper as that includes various other expenses which are not to be considered for the purposes of arriving at the cost of production of the processed yarn cleared for captive consumption or on job work basis. In view of this, we are of the considered view that the cost adopted by the assessee based upon CAS-4 certificate of the Cost Accountant is correct and the impugned orders holding otherwise are unsustainable.
7.?Before we part with the cases, we note that the duty paid on such processed yarn cleared by appellant is being taken as Cenvat credit, by their own sister concern. This fact is not disputed by the revenue. If that be so, then the question of revenue neutrality arises, as it is an admitted fact that the transaction is mostly between the sister units. If that be so, the demand of duty on the appellant would be of no consequence as it would be revenue neutral. We find that all the case laws cited by the learned counsel support this proposition."
Following the above dictums, we find that confirmation of demand, interest and the imposition of penalty is unsustainable and the impugned order is set aside. Consequently, appeal filed by the department is dismissed. Appeal filed by assessee is allowed with consequential relief, if any, as per law.
(Operative part of the order pronounced in court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S)
Member (Technical) Member (Judicial)
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Appeal Nos.E/665,682/2007