2017 (6) TMI 974

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....ld to their distributors for spare market. During the year 1998, the appellant started another motor cycle manufacturing unit at Jaipur. Certain parts manufactured at Chennai plant were stock transferred to Jaipur plant for manufacture of motor cycles. On verification of records, the department alleged that certain elements of expenses were not taken into account resulting in undervaluation of the parts cleared. Hence a show cause notice was issued to the appellant-company demanding differential duty of Rs. 15,49,853/- with interest. Penalty under Section 11AC was also proposed to be imposed on the appellant. After due process of law, the Joint Commissioner of Central Excise, Chennai-I Commissionerate confirmed the demand with interest and ....

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....goods. This demand amounting to Rs. 44,315/- is not being challenged by the appellant as conceded by the learned advocate during arguments. Accordingly, it is held as sustained. 5. The second limb of the dispute involving the total demand of about Rs. 11 lakhs is with reference to components manufactured at Chennai factory and cleared to Jaipur unit on payment of duty on the basis of cost of manufacture determined by the appellant. The department disputed the manner of determination of cost of manufacture and raised such demand. The contention of the appellant is that the CBEC vide their Circular No.692/8/2003-CX dt. 13.2.2003 has directed the field formations to determine the cost of production of captively consumed goods, the same shou....

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....g paid by the appellant at the time of dispatch to Jaipur unit. The learned advocate on behalf of the appellant has further submitted that even if the differential duty arises, if different method of working of the value is followed as has been adopted by Revenue, any duty so paid is to be available as cenvat credit/modvat credit to the job work unit of the appellant. Accordingly, the situation is of revenue-neutral and it is settled position of law that the duty demand does not survive in such cases. We have examined the argument of the appellant carefully. We note that differential duty has been demanded by Revenue by confirming the value differently from that adopted by the appellant. However, any differential duty payable at the s....