[Order per : Jyoti Balasundaram, Member (J)]. - The appellants herein manufacture wood veneers at their factory in Gondia in Maharashtra and clear the same after payment of duty to their factory at Tinsukhia in Assam for captive consumption in the manufacture of plywoods. The value of the veneer for assessment at Gondia was arrived at by application of Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 on the basis of cost of manufacture plus margin of profit. The scrutiny of the price list filed by the appellants showed that the costing was not based upon actual cost of raw material and manufacturing expenses/overheads. The department was of the view that the appellants had undervalued the cost of all the Veneers cleared for captive consumption with intent to evade payment of duty. Therefore, show cause notice dated 29-2-2000 was issued to the appellants proposing recovery of duty of Rs. 49,99,425.74 under the proviso to Section 11A(1) of the Central Excise Act and proposing imposition of penalty under Section 11AC and Rule 173Q and proposing to charge interest on duty amount under Section 11AB of the Central Excise Act. The Commissioner upheld the charge of undervaluation and also the charge of suppression and hence confirmed the duty demand, directed payment of interest, and imposed penalty equal to duty amount, confiscated plant machinery, etc., used by appellants to manufacture, store and remove the goods with option to redeem the same on payment of fine of Rs. 10 lakhs. She also imposed a penalty of Rs. 5 lakhs on Shri Jain, Administrative Officer of the appellant's company. Hence, these appeals.
2. We find on hearing both sides that the appellants are correct in contending that the entire demand is barred by limitation as the entire amount of duty payable was available as Modvat credit to the appellants. Thus there could not have been any intention to evade payment of duty and hence the allegation of suppression so as to invoke and apply extended period of limitation does not sustain. Our view is supported by the Larger Bench’s decision in the case of Jay Yuhshin Ltd. v. CCE, New Delhi - . The finding of the Commissioner that Revenue neutrality is not established by the appellants is factually incorrect, as in this case the entire amount of duty payable by the appellants at their Gondia factory would have been available by way of Modvat credit to be utilised towards payment of duty on plywood manufactured in the Tinsukhia factory, thus resulting in Revenue neutral situation.
3. Following the ratio of the law Larger Bench decision we hold that the demand raised in the present case on 29-2-2000 for clearances made during the period from February, 1995 to February, 1999 is barred by limitation, set aside the impugned order and allow the appeals on this ground, without going into the merits of the demand.