Revenue neutrality and prior disclosure defeated duty demand and limitation, with extended period held inapplicable.

Clearances of moulds to a sister unit were treated as revenue neutral because any duty paid would have been available as credit to the recipient unit, so the duty demand was not sustainable. Prior disclosure of the clearances to the excise department, coupled with the absence of suppression or intent to evade duty, meant the extended limitation period could not be invoked and the demand was time-barred. The impugned order was set aside and consequential relief followed.

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Issues: (i) Whether clearances of moulds to a sister unit resulted in revenue neutrality so as to negativate the duty demand. (ii) Whether the show cause notice was barred by limitation in the absence of suppression or intent to evade duty.

Issue (i): Whether clearances of moulds to a sister unit resulted in revenue neutrality so as to negativate the duty demand.

Analysis: The moulds were cleared to another unit of the same assessee, and the duty, if paid, would have been available as credit to the recipient unit. The distinction drawn by the lower authority that credit availability to a sister concern is different from credit availability to the assessee was not accepted. The established line of authority treated such inter-unit clearances as revenue neutral where the duty incidence was offset by admissible credit.

Conclusion: The issue was decided in favour of the assessee and the duty demand was not sustainable on the ground of revenue neutrality.

Issue (ii): Whether the show cause notice was barred by limitation in the absence of suppression or intent to evade duty.

Analysis: The assessee had itself informed the jurisdictional excise about the clearances before the departmental visit. On those facts, there was no positive misdeclaration or suppression with intent to evade duty. Since the situation was revenue neutral and the disclosure was voluntary, the ingredients necessary for invoking the extended period were not made out.

Conclusion: The issue was decided in favour of the assessee and the demand was held time-barred.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief to the assessee.

Ratio Decidendi: Where clearances are revenue neutral and the assessee makes a prior disclosure to the department, the extended period of limitation cannot be invoked in the absence of suppression or intent to evade duty.

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