Revenue neutrality defeats differential duty demand on clearances to sister units where credit is available

Differential duty demanded on goods cleared to sister units was held unsustainable on the ground of revenue neutrality. Because the clearances were to the appellant's own units, any additional duty payable would have been available as credit to the recipient units, and the record also showed that those units paid duty through PLA. The resulting exercise was duty-neutral and would not have produced any net revenue gain for the department. On that basis, the valuation dispute was not examined further, and the appeals were allowed.

---

---

Issues: Whether the demand of differential duty arising from valuation of goods cleared to sister units was unsustainable on the ground of revenue neutrality.

Analysis: The clearances were made to the appellant's own units, and any differential duty, if payable, would have been available as credit to the recipient units. The record also indicated that the recipient units had paid duty through PLA, making the entire exercise duty-neutral. In such a situation, the duty demand would not result in any net revenue gain to the department. Since the appeal was decided on the basis of revenue neutrality, the dispute on valuation was not examined further.

Conclusion: The duty demand was not sustainable and the appeals were allowed.

---