Revenue-neutral excise credit dispute: no intent to evade duty, so extended limitation, interest, and penalties could not stand.

A revenue-neutral excise dispute involving credit on inputs transferred to a sister unit was treated as one where immediate corresponding credit was available, so no intent to evade duty could be attributed. On that basis, the extended limitation period could not be invoked, and the consequential demand for interest and penalties under the Central Excise Act and Rules was held unsustainable. The analysis also noted that voluntary payment before the show-cause notice supported the absence of suppression or evasion, and the appellate authority had correctly followed binding Tribunal precedent.

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Issues: Whether, in a revenue-neutral situation where duty was voluntarily paid before issuance of the show-cause notice, the demand, interest, and penalties under the Central Excise Act and Rules could be sustained.

Analysis: The dispute arose from credit taken on inputs removed from one unit to a sister unit, where the sister unit could have availed the corresponding credit immediately upon payment of duty. On those facts, the situation was revenue neutral and no intention to evade duty could be attributed. In such circumstances, the extended period could not be invoked and the consequential levy of penalty under Section 11AC, penalty under Rule 173Q, and interest under Section 11AB were not warranted. The appellate authority had correctly followed the binding Tribunal precedent relied upon before it.

Conclusion: The demand, interest, and penalties were not sustainable and the Revenue's appeal failed.

Ratio Decidendi: Where the matter is revenue neutral and there is no basis to attribute intent to evade duty, the extended period and the consequential penal and interest liabilities cannot be invoked.

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