Full Judgment
2. The appellants have two units - one at Talasari (Maharashtra) and the other in the Union Territory of Daman. At the Talasari unit they manufacture HDPE Barrels and certain parts thereof. They were paying duty on the said products which were being removed to their Daman unit for placing lids and other operations, from where the goods were cleared on payment of duty once again, after availing modvat credit of the duty paid at Talasari unit.
3. Valuation of goods at Talasari unit as impugned in the present proceedings. These prices were arrived at and determined under Section 4(1) (a) read with Rule 6 (b) (ii) of Valuation Rules, 1975 and Rule 8 of Valuation Rules, 2000 on the 'cost of production' and not based on the formula applied at by the appellant i.e. the resale price of goods by Daman unit less expenses at Daman unit.
4. Learned Advocate of the appellants, for the purpose of this Stay Application, contended that the demands are barred by limitation; that out of the total demand of Rs. 62,81,378.08/- an amount of Rs. 34,37,099/-relates to the extended period and due to the revenue neutrality, the two units being of the same company, there was no loss of revenue or intention to evade duty. There was complete declaration made to the department, therefore, the extended period could not be invoked. He stressed on the issue of valuation being covered in his favour and submitted that interest costs will not form part of cost of production. The duty demands would therefore come down. He also stressed on the point that because of revenue neutrality the demands are not sustainable and submits that the said issue of Revenue neutrality is covered in their favour. He relies on the case of CCE v.Chloride Industries reported at 1997 (22) RLT 586 and also the case of Gopal Zarda v. CCE as reported at 2001 (128) ELT 409 and other decisions on this aspect.
5. The learned JCD appearing for Revenue re-iterates the reasons of the Adjudicator to submit that there was no case for waiver of any amount in view of the ineligible manner of valuation, resorted to by the Talasari unit.
6. After considering the material on record and the submissions made, we find a lot of force in the contention made by the Ld. Advocate. The decision on appropriate valuation are required to be settled at the final hearing. However, from the chart as prepared and brought on record by the appellants, we notice that both the units i. e. at Talasari and Daman have paid considerable amounts of duty from PLA; that was not required to be paid at Daman unit, if the Talasari unit had discharged the duty on valuation now being determined. We, therefore, find that in the facts of this case complete waiver of pre-deposit requirements under Section 35F of all the amounts as determined, is called for. We order accordingly and direct that the recoveries of the amount so determined are not to be enforced, pending the hearing of these appeals. The matter to be listed in due course.