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2013 (11) TMI 1549 - AT - CustomsValuation of goods - MRP based valuation - Related companies - Held that:- M/s. Legrand and M/s. DIPL are inter-connected as per sub-clauses (c), (d) and (g) of Section 2 of the MRTP Act. Therefore, the decisions relied upon by the respondent in the case of Kanchan Industries [2005 (3) TMI 268 - CESTAT, NEW DELHI]; Playworld Electronics Pvt. Ltd. [1989 (5) TMI 57 - SUPREME Court]; Sanghi Organization [2006 (12) TMI 489 - SUPREME COURT]; Alembic Glass [2006 (8) TMI 180 - SUPREME COURT OF INDIA] and Kaira Dist. Co-Op. Milk Producers Union (2002 (11) TMI 97 - SUPREME COURT OF INDIA) would not help them as all of them dealt with a situation in respect of Section 4 as it stood prior to 1-7-2000. In view of the amended definition of related person, so as to include inter-connected undertakings within the purview of related person, these decisions have no relevance. - findings of the adjudicating authority that they are not related is unsustainable in law. As per the definition of inter-connected undertakings “mutuality of interest in the business of each other” is not required. As per item (d) of sub-clause (iii) of clause (g), if “one body corporate exercises control over the other body corporate in any manner” would suffice to hold them as inter-connected. From the annual audited accounts of DIPL for the years 2000-01 to 2003-04, it has been found that DIPL had sold its products to Legrand below its cost of production and during the span of four years, it has sold the products at an average loss of ₹ 12 lakhs per year. Paras 7.10 to 7.13 of the show cause notice, dated 2-8-2005 refers. Therefore, the question is when an assessee continuously sells its products at a loss over a period of time, can it be said that price is the sole consideration for sale. - M/s. DIPL and M/s. Legrand are related as they are inter-connected undertakings and hence related as defined in law. Further, since DIPL has been selling its products to Legrand at a price lower than its manufacturing cost, the sale price cannot be held to be the sole consideration for sale. Therefore, the Central Excise Valuation Rules, 2000, would come into play. Since both DIPL and Legrand are inter-connected undertakings, Rule 10 of Central Excise (Valuation) Rules, 2000 would be relevant. Sale value is below the cost of production of DIPL and does not include the cost of tools, dies, moulds, drawings, etc. used in the production of the goods sold and the sale value also does not include the cost of R&D work undertaken by Legrand for the goods manufactured by DIPL and the staff cost of Legrand deputed to DIPL for supervising the operations and providing technical assistance. These are additional considerations flowing from Legrand to DIPL. Therefore, the provisions of Rule 6 of the Central Excise Valuation Rules would come into play and the ratio of the decision of the Hon’ble Apex Court in the Fiat India case (2012 (8) TMI 791 - SUPREME COURT) would squarely apply - money value of goods and services, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable has to be included under the provisions of Rule 11 read with Rule 6 of the Valuation Rules. Since in the present case, the money value of additional consideration received has not been included, the matter has to go back to the adjudicating authority for fresh consideration of these issues and we order accordingly. Agreement has not been intimated to the Revenue and the basis of the transactions were not made known to the Revenue, the charge of suppression is clearly sustainable and accordingly, extended period of time has been rightly invoked. It is further noted that the price at which the respondents were selling the goods to M/s. Legrand during the entire period was far less than the cost of production. Nobody with ordinary business prudence would like to sell products below the cost of production. Therefore, the ratio of the decision of the Hon’ble Apex Court in the case of Fiat India Pvt. Ltd. (supra) would come into play and therefore, in the present case, the transaction value as declared to the department cannot be considered as the sole consideration for the sale of the goods. - Remanded back - Decided in favour of Revenue.
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