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2019 (3) TMI 788 - CESTAT HYDERABADValuation - related party transaction - clearance of goods to sister concerns - Section 4 of the Central Excise Act, 1944 - Held that:- If the transactions are to related parties, in terms of Section 4 of the Central Excise Act, the transaction value can be rejected and there is no requirement of flow back directly or indirectly. In such cases, the transaction value can be rejected and the value can be determined in terms of Central Excise Valuation Rules following Rules 4 through 11 - in the instant case, the extent of alleged undervaluation varied from invoice to invoice and the complete picture can only be found if duty paid with respect to each clearance to the related buyer and the transaction of unrelated buyer used for comparison is available - the SCN is vague inasmuch as the basis for alleging the undervaluation and calculating the extent of differential duty payable are not clear. Validity of subsequent SCN - Held that:- There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties. Thus, in both cases, the show cause notices do not indicate as to how the differential duty was worked out, invoice wise and which invoice value was used for comparison. There is a gap of 6 months between the two invoices. Further, the annexure to this show cause notice which gives the breakup of the differential duty of ₹ 1,04,221/- demanded for the period 2009-10 shows that there was no clearance during April, 2009 and from August, 2009 onwards. There were clearances only in May, June and July, 2009. The differential duty has been worked out with respect to these clearances to related parties compared with the highest transaction value (presumably during the month). There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties - There is nothing on record to show as to why a highest transaction value should form the basis for clearances to related parties. Thus, in both cases, the SCNs do not indicate as to how the differential duty was worked out, invoice wise and which invoice value was used for comparison. The impugned order is set aside on the ground that SCN is vague - appeal allowed - decided in favor of appellant.
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