2026 (2) TMI 961 - AT - Central Excise

Transaction value not attracted on inter unit transfers between common PAN units supported by Form F; duty demand set aside.

The text addresses whether duty under the proviso to the Cenvat Credit Rules can be levied on inter unit transfers of capital goods where no sale or ... Inter unit stock transfer - transaction value - proviso to Rule 3(5A) of the Cenvat Credit Rules, 2004 - sale between units of the same legal entity - Form F as indicium of non sale - reversal of Cenvat credit on transfer of capital goods -Whether the demand of delay on the transaction value can be confirmed by invoking Rule 3(5A) of Cenvat Credit Rules, 2004 when the transaction is merely an inter unit stock transfer and there is no transaction value in absence of any sale between the two units of the appellant. - HELD THAT:- We find that the short issue emerges in this case whether the demand of delay on the transaction value can be confirmed by invoking Rule 3(5A) of Cenvat Credit Rules, 2004 when the transaction is merely an inter unit stock transfer and there is no transaction value in absence of any sale between the two units of the appellant. The said issue has been examined by this Tribunal in the case M/s RSPL Limited (Dhar Unit-III) [2021 (7) TMI 197 - CESTAT NEW DELHI]. Further, similar view has been taken by this Tribunal in the case of Commissioner of Central Excise & Service Tax, Ghaziabad Vs. M/s RSPL Ltd. (supra), wherein this Tribunal again has observed as under : “4. The facts of the case has not been disputed by the Revenue that the respondent had transferred inputs from their one unit to their another unit. In that circumstances, as no sale has taken place, therefore, the provisions of Rule 6 (3) (b) of the Rules is not applicable to the facts of this case. 5. In that circumstances, I do not find any infirmity in the impugned order, the same is dismissed. The Cross Objections filed by the respondent are also disposed in the above terms.” In view of the decisions, which are applicable to the facts and circumstances of this case, we hold that the impugned demand by invoking the provisions of Rule 3(5A) of Cenvat Credit Rules, 2004, are not sustainable against the appellant. In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any. Issues: Whether duty on transaction value under the proviso to Rule 3(5A) of the Cenvat Credit Rules, 2004 can be demanded on an inter unit transfer of capital goods where there is no sale and no transaction value between two units of the same legal entity.Analysis: The Tribunal examined whether the transfer from one unit of the company to another constituted a sale giving rise to a transaction value for the purposes of the proviso to Rule 3(5A) of the Cenvat Credit Rules, 2004 and Section 4(3)(d) of the Central Excise Act, 1944. Relevant facts include that the units share a common PAN, the transfer was supported by Form F and recorded as stock transfer, Cenvat credit reversal in terms of Rule 3(5A) was made, and no consideration was actually exchanged. The Tribunal relied on prior decisions holding that transfers between sister units having a common PAN and evidenced by Form F are not sales and do not convert such transfers into trading clearances attracting transaction value based duty; accordingly the proviso to Rule 3(5A) is inapplicable where there is no sale or transaction value. Applying that principle to the present facts, the Tribunal found the departmental invocation of the proviso to assess duty on transaction value unsustainable.Conclusion: The demand of duty computed on transaction value by invoking the proviso to Rule 3(5A) of the Cenvat Credit Rules, 2004 is not sustainable in the facts of this case and is set aside; the appeal is allowed in favour of the assessee.