Differantial duty as per CAS4

[deepak kalambate]

We are manufacturer exporter & we have two related units (who are manufacturer-exporter) to which we are selling our goods.We are selling same goods to related party and also third party. In some case we have charged lesser rate to related customer being goods are third quality.

Central Excise audit has raised objection that we have to pay C.Ex duty as per CAS4 alongwith interest and penalty.

Now our query is..

a) CAS4 is applicable to us?

b)If yes, we have to make payment alongwith interest?

c)Penalty in this case can imposed?  becoz CAS4 can be obtained after completion of financial year/ finalization of accounts

Pl advise.

 

AI Summary

Related-party valuation: CAS 4 cost-based pricing can trigger differential duty and interest; penalties limited by revenue neutrality.
Related party clearances may be re valued on cost of production certified by CAS 4 and attract differential duty and interest; however, where part of production is sold to independent buyers Rule 8 (notional uplift on cost) is not applicable and Rule 4 valuation is preferred. Tribunal and high court precedents stress revenue neutrality for stock transfers to sister units-duty paid to the receiving unit negates net gain to the exchequer-reducing scope for extended period demands and penalties absent intent to evade. Timely CAS 4 certification is advisable and differential duty, if determined, should be paid with interest.