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2015 (10) TMI 2402 - CESTAT MUMBAIValuation of goods - Undervaluation of goods - Job works - conversion of DTA unit into EOU unit - Benefit of notification 23/2003 - Held that:- During investigations of contract between one party and the respondents was recovered. In terms of the contract with M/s Sulakhi Limited it is clear that it is valid for 10 years from 1 may 2003 as per clause 2.1 and 11.2 of the agreement. It prescribes in paragraph 4 that the material supplied by the respondents to the processor would be the property of the respondent, proper records of the raw materials will be made and reported to the respondents by the processes. It described in paragraph 4 and 5 that the product will be of a particular specification, failing which the processor has to pay damages. The agreement also fixes the processing charges for the job. There was however, no such agreement recovered in respect of M/s Sahastra and M/s Sangadeep. During the examination of various employees of the respondent and one of the processors following has emerged. From the statements recorded it is apparent that the price at which spent goods were being cleared from the respondent s premises was linked to the price at which the processed goods were to be sold back to the respondents. This is clear from the statements recorded and from the terms of the contract. In the circumstances it cannot be said that the price negotiated between the respondent and the processors was price determined on an arm s length. The price of spent goods was directly linked to the price of the processed goods received back from the Processor. There may or may not have been a written contract between the parties to the contract but there was a clear understanding. Therefore in addition to the sale by the respondents to the processor not being an international transaction, it was also not at arm s length. - The Commissioner has failed to appreciate that the transaction in case of a DTA sale is a local transaction price whereas in case of clearance of an EOU unit the assessable value should be the price in the course of International trade. Having arrived at the conclusion that the domestic transaction value is to be accepted as the assessable value, due consideration has not been given to the arguments regarding alternate method of valuation in case the domestic transaction value is not accepted as assessable value. The respondents have raised many issues, like using common processing charges for calculations, regarding the method adopted in the show cause notice which have not been answered in the order of Commissioner as he has accepted the domestic sale price as the assessable value. - Cenvat credit rules limit the amount of credit available in respect of duty paid by EOU and therefore credit of entire duty is not available to the processor and hence it is not the revenue neutral situation. From the above it is clear that it is not a case of revenue neutral situation and Commissioners observation regarding with any neutrality is misplaced. Extended period has been invoked on account of recovery of the contract between the respondents and one of the processor’s in the year 2008. The said agreement was not in the knowledge of the revenue and the terms of transaction between the respondents and the processor’s were not in the knowledge of the Department and were not declared to the Department. I find that the terms between the respondents and it processor’s are of extreme importance in determining the assessable value and therefore non-consideration and nondisclosure of the said terms amounts to misdeclaration and suppression. - impugned order is set aside and the matter is remanded to adjudicating authority for ascertainment of the assessable value after giving due consideration to the arguments of the respondent in this regard. - Decided in favour of assessee.
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