2023 (10) TMI 728 - AT - Central Excise

Excise Duty Demand Overturned Due to Late Show-Cause Notice; Appeal Allowed on Limitation Grounds Under Central Excise Act

M/s Mahanadi Coalfields Limited Versus Commissioner of CGST & Central Excise & Customs, BBSR

The Tribunal held that the Appellant was liable to pay excise duty at the time of coal clearance between Area Offices within the same legal entity to ... Demand of Central Excise Duty and Clean Energy Cess - requirement to pay duty at the time of removal by the transferor Area - period March 2011-12 to 2014-15 - revenue neutrality - HELD THAT:- It is fact on record that the Appellant has cleared the goods from their unit without payment of duty to their sister unit and the said sister unit cleared the said coals on payment of duty. Although it is a situation of revenue neutrality, but the appellant was monthly required to pay duty at the time of clearance from the transferor unit, otherwise, the Central Excise Act will become redundant - At the time of clearance of goods, the Appellants was liable to pay duty. Extended period of limitation - HELD THAT:- When the fact of clearance of coals from the transferor unit without payment of duty was in the knowledge of the respondent as various correspondences were made during the impugned period and the show-cause notice has been issued to the Appellant by invoking extended period of limitation, in that circumstances, the whole of the demand is barred by limitation. Accordingly, on limitation, the Appellant succeeds. On merit Appellant is liable to pay duty, but on limitation, the show-cause notice fails. Accordingly, the demand confirmed in the impugned order is not sustainable - appeal filed by the Appellant is allowed. Issues involved:The central excise duty demand against the Appellant for the period 2011-12 to 2014-15, pertaining to coal removal and payment of duty between different Area Offices within the same legal entity.Central Issue:The central issue in this case is whether the Appellant is liable to pay duty at the time of clearance of goods from one Area Office to another within the same legal entity, despite the ultimate payment of duty by the receiving Area Office.Facts and Arguments:The Appellant, engaged in coal production and sales, had separate registrations for each Area Office before obtaining a centralized registration in 2015. During the period in dispute, coal was transferred between Area Offices without immediate duty payment by the transferor, but the duty was paid by the transferee before selling the coal. The Appellant argued for revenue neutrality as the duty was paid by the receiving unit. They also contended that the show-cause notice issued beyond the limitation period was not valid.Decision:The Tribunal acknowledged the revenue neutrality but held that the Appellant was required to pay duty at the time of clearance to avoid rendering the Central Excise Act redundant. However, the Tribunal found that the entire demand was time-barred due to the delayed issuance of the show-cause notice. Therefore, while the Appellant was found liable to pay duty, the demand was deemed unsustainable due to the limitation issue.Conclusion:The appeal was allowed on the grounds of limitation, setting aside the demand confirmed in the impugned order. The Appellant was held liable to pay duty at the time of clearance, but the show-cause notice failed due to exceeding the limitation period. The decision granted the Appellant consequential relief as per law.