2013 (11) TMI 877 - AT - Central Excise

Tribunal bars duty demand on BOPP film, citing limitation & revenue neutrality.

The Tribunal held that the demand for duty payment on BOPP film was barred by limitation as the Revenue failed to justify invoking an extended period. The ... Extended Period of limitation – Valuation of BOPP film cleared to the sister concern - Held that:- The appellant had filed the price declaration showing clearance of the goods to their sister concern unit on the basis of cost of production - The declaration stand approved by the Revenue without raising any objection - extended period was not available to the Revenue. Whatever duty was being paid by the assessee, was available as credit to their sister unit and the said credit was being utilized by their sister unit for payment of duty on their final product -the entire situation was revenue neutral – Relying upon CC vs. Textile Corporation Marathwada Ltd. [2008 (9) TMI 57 - SUPREME COURT ] - in case of revenue neutrality, no malafide can be attributed to the assessee so as to justify invocation of longer period of limitation - demand is barred by limitation and is also not sustainable on the point of revenue-neutrality – Decided against Revenue. Issues: Valuation of BOPP film for duty payment, Limitation period for raising demand, Revenue neutralityValuation of BOPP film for duty payment:The dispute in the present appeal revolves around the valuation of BOPP film being cleared by the appellant to their sister concern. The Revenue contends that duty should be paid based on the assessable value at which the goods are sold to independent buyers. A show cause notice was issued raising a demand of Rs.1,45,26,987. The Commissioner dropped the proceedings after considering that the films cleared to the sister units and independent buyers varied in size, accepting the reduced value argument. The Revenue argued for adopting an average price for clearance to the sister unit, acknowledging the availability of lower prices. However, the Tribunal did not delve into the merits, as it found the demand barred by limitation due to the longer period invoked. The appellant had disclosed the clearance to the sister unit based on the cost of production, and the Tribunal noted that the extended period was not justified as the Revenue had approved the declaration without objection.Limitation period for raising demand:The Tribunal found that the demand was barred by limitation as the Revenue sought to invoke the longer period based on the appellant not disclosing the relationship between the directors of the sister unit and the appellant unit. However, the Tribunal deemed this reasoning unjustified, emphasizing that the appellant had filed a price declaration showing clearance based on the cost of production. The Tribunal held that the extended period was not available to the Revenue, especially since the clearance to the sister unit was known and approved by the Revenue without any objection.Revenue neutrality:The Tribunal considered the revenue neutrality aspect, highlighting that the duty paid by the appellant was available as credit to the sister unit, which utilized it for duty payment on the final product. Citing various decisions, including those of the Supreme Court and High Court, the Tribunal noted that in cases of revenue neutrality, no malafide could be attributed to the assessee to justify invoking a longer period of limitation. The Tribunal referred to several decisions where similar principles were upheld, ultimately concluding that the demand was both barred by limitation and unsustainable on the grounds of revenue neutrality. Therefore, the appeal filed by the Revenue was rejected based on these grounds.This detailed analysis of the judgment provides insights into the issues of valuation for duty payment, the limitation period for raising demand, and the concept of revenue neutrality as addressed by the Tribunal in the case.