M/S. Arihant Spinning Mills vs Cce, Ludhiana

[Arising out of Order-in-Original no. 10/Ldh/08 dated 24.4.2008 passed by Commissioner of Central Excise, Ludhiana]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

M/s. Arihant Spinning Mills Appellant

Vs.

CCE, Ludhiana Respondent

Appearance: Sh. Rupender Singh, Advocate for the appellant

Sh. R.K. Grover, DR for the respondent

Coram: Honble Sh. Rakesh Kumar, Member (Technical)

Honble Sh. Ashok Jindal, Member (Judicial)

FINAL ORDER NO. 50507/2015

Per Ashok Jindal

The appellant is in appeal against the impugned order wherein duty demand of Rs. 59,67,404/- has been confirmed along with interest and equivalent amount of penalty is also imposed for the period from 1/1/2003 to 31/12/2005.

2. The brief facts of the case are that the appellant is manufacturer of yarn and clearing goods to independent buyers as well as to their sister concern. During the period, the appellant was paying duty on clearance to their sister concern at cost plus 15%, the Revenue is of the view that during that period, the appellant is required to pay duty on transaction value at which goods were sold to independent buyers. Therefore, show cause notice dated 7/8/2007 was issued to the appellant to demand duty for the interim period along with interest and penalty under section 11AC was also proposed. The show cause notice was adjudicated and converted into impugned demand. Therefore, appellant is before us.

3. Ld. Counsel for the appellant submits that during the interim period, initially appellant was clearing goods on transaction value prevailing in the market during the relevant time but an audit was conducted by the Department and on 7/03/2003 an objection was raised to the appellant to ask that the appellant is required to pay duty on cost plus 15% for the clearance to their concern. Consequent to that audit objection, appellant started the clearing goods to their sister concern on the formula of cost plus 15% /10%. Same has been intimated to the department by the appellant and in reply to the show cause notice also, appellant has submitted that they are clearing goods (as per the direction of the audit objection) to sister concern on the value of cost plus 15% or the 10%. Therefore, the entire demand is time barred as show cause notice has been issued by invoking extended period of limitation. In these circumstances, he pleaded that impugned order be set aside.

4. On the other hand, ld. DR, reiterating the findings of the impugned order.

5. Heard both sides and considered submissions.

6. We have gone through the records and find that an audit objection was raised on 7/3/2003 wherein it was pointed out that appellant is required to clear the goods to their sister concern on the value of cost plus 15% whereas the appellant was clearing goods at that time on transaction value prevailing in the market. In these circumstances, the show cause notice cannot be issued by invoking extended period of limitation. Admittedly, in this case, show cause notice has been issued on 7/08/2007 for the period 1/1/2003 to 31/12/2005 by invoking extended period of limitation. In these circumstances, we hold that show cause notice issued to the appellant is barred by limitation. Consequently, demands are also barred by limitation. In these circumstances, we set aside the impugned order and allow the appeals with consequential relief, if any.

(Rakesh Kumar) (Ashok Jindal)

Member (Technical) Member (Judicial)

RITU

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