Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 164 - AT - Central ExciseValuation - related party transaction - the appellant is clearing excisable goods to independent buyers as well as to relater person and the price charged by the appellant from their related person were comparatively low, as compared to the price charged from independent buyers - it was alleged that the appellant has undervalued the goods cleared to their related person - in case where the goods are sold to independent buyers as well as to related person, in that case, how the assessable value of the goods cleared to related buyers is to be arrived? - Held that: - there is no dispute that there is no specific provisions for valuation of the goods cleared to independent buyers as well as to related person to arrive at the assessable value for the goods cleared to the related person. Therefore, Rule 11 is applicable to the facts of the case which has not been disputed by both sides. As per Rule 11, valuation of excisable goods, is to be using reasonable means consistent with the principles of and general provisions of these rules and sub-section (1) of Section 4 of the Act. As per section 4 (1(a) of the Act which is applicable for the goods sold to independent buyers. Therefore, section 4(1) (a) is not applicable to the facts of the case and correct provision of section 4(1) (b) is applicable which states that in other cases i.e. which include sale made to independent buyers as well as to related person. In that circumstance, the value is to be determined as per Rule 11 of the Valuation Rules. CBEC vide Circular No.643/34/2002-CX. Dated 01.07.2002 has clarified that Rule 9 would apply only if the entire production is sold to related person. However, part of production is sold to related person and part of production is sold to non-related person, Rule 9 as such may not apply for valuing goods sold to related person. Still the value cannot be determined under Section 4(1)(a), as that section does not apply to sales to related person. Therefore, circular provides that such sales to related person would be assessed under Rule 11 read with Rule 9. The correct valuation is required to be arrived under Rule 11 read with Rule 9 of the Valuation Rules which has not been alleged in the show cause notice. Contrary to that in the show cause notice, the valuation is sought to be arrived under Rule 11 read with Section 4(1) (a) of the Act and Rule 4 of the Valuation Rules which is not applicable to the facts of case. The SCN is defective - impugned order not sustainable - appeal allowed - decided in favor of appellant.
|