Case Law Details
Gripsurya Re-cycling LLP Vs Commissioner of Central GST and Central Excise (CESTAT Delhi)
CESTAT Delhi held that if the audit points out some wrong assessment which was not pointed out by the officer scrutinizing the ER-1 return, the fault lies at the doorstep of the officer. Hence, invocation of extended period of limitation bad-in-law.
Facts- The appellant manufactures waste rubber granules falling under Central Excise Tariff heading 40040000 and clears them after paying excise duty. It has also been filing excise returns as required in ER-1. Its records for the period 2015-16 to 2017-18 (up to June 2017) were scrutinized by the audit team which found that the appellant had sold goods to M/s. GRP Ltd which was its parent company and hence a related party and paid duty on the invoice values. GRP, in turn, used the waste rubber granules to manufacture its final products.
Revenue felt that since it was a case of sale of goods to a related party who, in turn, consumed the goods captively, duty should have been paid under Rule 8 of Customs Valuation Rules, 2000 at the rate of 110% of the cost of production as certified in the CAS 4 certificates and not on the invoice values. Accordingly, it was felt that differential duty needs to be paid by the appellant. A memorandum was issued to the appellant asking it to pay the differential duty and the appellant by a letter dated 25.05.2020 declined to pay it on the ground of revenue neutrality. A Show Cause Notice was issued to the appellant proposing recovery of the differential excise duty invoking an extended period of limitation u/s. 11A along with interest u/s. 11AA. It was also proposed to impose a penalty u/s. 11AC.
The proposals in the SCN were confirmed by the order-in-original. On appeal, the Commissioner (Appeals) upheld the order-in-original by the impugned order.
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