The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the excise duty is leviable on clearance of colas from the transferor unit under the Central Excise Act,1944.
Mahanadi Coalfields Limited, the appellant assessee is engaged in the business of production and selling of coal and their coal mines located in the State of Odisha and the assessee had ten units generally referred to as area offices.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of Central Excise Duty and Clean Energy Cess proposed for the period March 2011 to March 2015.
Rajeev Agarwal and S. Dixit, the counsels for the assessee contended that it was a case of revenue neutrality as their sister unit to whom the goods had been transferred without payment of duty by the assessee had paid the duty on their clearances. Thus the demand for duty and cess is not sustainable.
S. Chattopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee had cleared the goods without payment of duty. Therefore, they are liable to pay the duty that they had evaded.
The Bench observed that although it was a situation of revenue neutrality, the assessee was monthly required to pay duty at the time of clearance from the transferor unit, otherwise, the Central Excise Act would become redundant.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that the clearance of coal from the transferor unit is liable to Central Excise Duty.
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