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2015 (11) TMI 1033 - AT - Central ExciseDemand of differential duty - Undervaluation - Mutuality of interest - related persons - Imposition of penalty - Held that:- It is the same group of persons, the three brothers, Shri Satnam Singh, Shri Mohinder Singh and Shri Bhupinder Singh who have all pervasive control over SBM, RD and RWM and the three units are being as one entity and the separate firm/company have been created for reducing their tax liability. There is no explanation as to why SBM in respect of their sales to RWM and RD being on long term credit, are selling goods to RWM at a price much below the cost of production and also much below the price at which the same goods were being sold during the same period to other independent buyers on cash payment. In view of these circumstances, we hold that there is mutuality of interest between SBM and RWM, and therefore, in respect of the SBM sales to RWM, the sale price of SBM cannot be accepted as assessable value. However, in our view, the Commissioner's decision to adopt the average sales price at which the grey acrylic spun yarn was being purchased by RD from other suppliers would not be correct and that the correct assessable value in respect of the sale of grey acrylic spun yarn by SBM to RWM and RD would be the average price at which SBM were selling the same goods to other independent buyers during that period. Accordingly, the assessable value has to be determined on this basis and the duty demand has to be quantified. - Decided against the assessee. Wrong availmnent of exemption - concessional rate of duty in respect of the dyed yarn - notification no. 5/99 and 6/2000 CE - Held that:- in respect of grey acrylic spun yarn, the duty has been short paid by taking recourse to under-valuation, the grey acrylic spun yarn cannot be said to be the goods on which the appropriate duty has been paid and hence, the dyed yarn made out of grey yarn would not be eligible for exemption. However, if SBM pay the differential duty on the clearance of grey yarn to RD, as determined by the assessing officer, the exemption notification no. 5/99 and 6/2000 CE would be applicable in respect of the dyed yarn manufactured out of grey yarn received from SBM. - Decided partly in favor of assessee. Clandestine removal of goods - Allegation is based only on the presumption and there is absolutely no evidence to substantiate the same. Even if there is mutuality of interest between SBM and RD on one hand and SBM and RWM on the other hand, it cannot be presumed that the yarn sold by SBM to RWM had actually be diverted to RD who had used it for unaccounted manufacture of died yarn. In view of this, we hold that duty demand of ₹ 36,78,122/- is not sustainable and is to be set aside. - Decided in favour of assessee.
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