2020 (1) TMI 375

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....e motor cycles themselves are manufactured. The appellant's factory at Faridabad transfers spare parts of motor cycles ,which they manufacture, to their factory at Surajpur. Since they are sister units, it is only a case of stock transfer and not a case of sale. Therefore, there is no transaction value under Section 4(1)(a). In other words, the goods are captively consumed by the appellant. As per Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, in such cases, the value of the goods shall be 110% of the cost of manufacture. This cost of manufacture is determined as per the CAS-4 certificate. 2. During audit, it was observed by the Department that the appellant was not paying service tax as per R....

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.... be 110% of the cost of production. It does not matter whether the appellant was earning any profit or not. The appellant may be earning 10% profit or more than that or may be running in loss. As far as the valuation is concerned, it has to be in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 which is not dependent on the profit/margin, if any, earned by the appellant. For this reason, he urged that the demand is sustainable on merits. As far as the question of extended period of limitation is concerned he urged that the appellant is a large company with adequate manpower and expertise even in the field of law relating to excise duty. They are expected to follow the rules which required d....

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....lity of the goods or on their valuation. The appellant willingly evaded payment of duty because they decided that they will pay duty only on 100% of the cost of production even though the law required them to pay on 110% of the cost of production. This is not a case where the law is ambiguous leaving it open to different interpretations but is a case of open, defiance of law. Therefore, the intention to evade payment of duty is self evident. Merely because the sister unit will get CENVAT Credit, the appellant cannot NOT PAY full duty in open defiance of the law and take shelter under "Revenue Neutrality" to escape liability. It would have been a different case if the Rule could be read or understood in more than one way and the appellant un....