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2014 (12) TMI 73 - CESTAT NEW DELHIClandestine removal of goods - Mis declaration of goods - Undervaluation - Sale made to related person - Evasion of payment of duty - Wrong classification of goods - prime quality zinc ingots cleared as zinc metal residue - Held that:- Goods, in question, on which the duty demand has been raised, and which were cleared by M/s. IZL to M/s. IMTL, were zinc ingots of at least 97.5% purity. The statements of Shri Ashok Singh of M/s. IZL, Shri Pawan Kumar of M/s. Agrawal Tubes or Shri Manoj Agrawal of M/s. Nilkanth Tubes do not throw any light on this aspect. All it has been stated by Shri Ashok Singh in his statement is that M/s. IZL were selling only zinc ingots to M/s. IMTL while Shri Pawan Kumar of M/s. Agrawal Tubes in his statement has stated that they had purchased zinc ingots from M/s. IMTL. The statement of Shri Manoj Agrawal does not indicate that he had purchased prime quality zinc ingots from M/s. IMTL. No sample of the goods sold by M/s. IZL to M/s. IMTL was available or has been tested. When the criteria for classification of the goods under sub-heading 7901.10 is that the metal must contain at least 97.5% zinc and when in this regard there is absolutely no evidence, the duty demand based on classification of the goods under heading 7901.10 would not be sustainable. There is no dispute that entire sales of M/s. IZL were not to or through M/s. IMTL and there were substantial sales to independent buyers. In view of this, Rule 6(c) of Central Excise Valuation Rules, 1975 could not be invoked and, as such, the entire basis of duty demand by treating the price at which the M/s. IMTL sold the goods to independent buyers is incorrect. With regard to invoking Rule 6(c) of Central Excise Valuation Rules, 1975 when the sales are to or through a related person, the percentage of sales of an assessee to or through related person is not relevant. For invoking this rule, what is relevant is as to whether entire sales are to or through related person and only in that case, this rule would be invokable and if there is some percentage of sales, however small the same may be, to independent buyers, it is the sale price to independent buyers which would be the assessable value in respect of sales to or through related person. In this case, there is no allegation that the sale prices of M/s. IZL to independent buyers was higher than sale price to M/s. IMTL - Therefore neither the duty demand against M/s. IZL is sustainable nor penalty on M/s. IZL and their Director nor the confiscation of the land, building plant and machinery of M/s. IZL under Rule 173Q(2) is sustainable. - Decided in favour of assessee.
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