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2019 (5) TMI 504 - CESTAT AHMEDABADValuation - related entities - related party transaction - Rule 8 of the Central Excise Valuations Rules - revenue neutrality - allegation is based on the relationship of the directors among each other - whether the appellant are related to the buyers of the goods namely, Quartz Metal Industries (QMI) and Balbir Rolling Metal Pvt. Ltd (BRML)? HELD THAT:- A perusal of the SCN shows the entire foundation of allegation is based on the relationship of the directors among each other and not about the appellant and BRML being related persons. The allegations are essetially that the directors and investors in these two entities are related to each other that the relatives of directors own up to 85% of the equity shares in the said group of companies. We find that the above allegation is totally misrepresentation of the statute. The statute requires that the assessee and buyers should be related and not that the directors of the two entities should be related. It is seen that the allegations of relationship between the two is based on the admission of the directors that they are relatives and that 100% of the product of the unit are being transferred to the ‘Balbeer group of companies’, namely QMI and BRML. It has also been asserted that the directors are members of Hindu Undivided Family. These factors are immaterial in so far as relationship between two companies is concerned. The relationship of directors has no relevance whatsoever. Another allegation made in the SCN is that they are using common basic infrastructure and staff. We find that no specific instances have been pointed out. There are no evidences in support of the allegation that M/s VDI and M/s BRML are related in terms of Section 4(3)(b) of the Central Excise Act. Consequently, the demand of duty made against VDI for clearance made to BRML cannot be sustained - In the instant case it is not in dispute that part of the sales during 2010-11 and 2012-13 were to independent buyers. Moreover BRML is not a related entity. Thus, under these circumstances rule 8 can not be invoked - In respect of clearances made by VDI to QMI also Rule 8 of the Central Excise Valuation Rules cannot be invoked as during this entire period part of the clearances were being made to BRML which has been held to be not a related person. Invocation of Rule 8 requires that no clearance should have been made to any independent entity. The appeals of the M/s VDI and Sh. Sharma are allowed - decided in favor of appellant.
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