2026 (2) TMI 227 - AT - Central Excise

Excise duty adjustment and CAS-4 based interunit transfer valuation resolved; appeal allowed and impugned order set aside.

Adjustment of excise duty arose where excess duty paid in some months was offset against short payments in others; valuation for interunit transfers ... Adjustment of excess duty against short payment - valuation under Rule 8 based on CAS-4 - annual CAS-4 costing as basis for interunit transfer valuation - provisional assessment and subsequent reconciliation - quantification of differential duty on overall annual basis - HELD THAT:- While paying duty on the basis of actual CAS-4 certificate, they adjusted the excess paid duty towards short paid amount and then, paid the balance duty amount. We find that the issue of adjustment of excess paid duty in certain months with short payment of excise duty in some other months in the case of appellant has already been decided by this Tribunal vide Final Order [2025 (12) TMI 363 - CESTAT AHMEDABAD]. Therefore, the issue is no more res Integra. Thus, we allow the appeal filed by the appellant and set aside the impugned order with consequential relief, if any. Appeal allowed. Issues: Whether, for clearances to a related/another unit where valuation is determined under Rule 8 based on CAS-4 annual costing, the duty liability for the year must be quantified by considering duty already paid during the year and whether excess duty paid in some months can be adjusted against short payment in other months.Analysis: The Tribunal examined the scheme of valuation under Rule 8 of the Central Excise Valuation Rules, 2000 and the CAS-4 methodology which computes cost on an annual basis reconciled with audited accounts. Authorities and precedent (including Essar Steel, Jindal Steel, Suzlon, Bajaj Tempo and Godrej-related decisions) were applied to the facts: where annual CAS-4 costing forms the basis for valuation, the overall duty liability for the year must be determined on that annual basis. The Tribunal noted that when annual costing is used to arrive at the assessable value, some months may show excess payment and others short payment; quantification of differential duty must therefore account for duty already discharged during the relevant period. Section 11B and unjust enrichment principles were considered and held not to preclude such adjustment when the demand is based on annual costing; provisional assessment under Rule 7 is an alternative where appropriate but was not relied upon by the appellant in the facts of this case.Conclusion: The appeal is allowed. The adjudicating authority is directed to adjust excess duty paid in certain months against short payments in other months when valuation is determined on annual CAS-4 basis and to recover only the net differential, if any, with consequential reliefs as per law.