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2020 (2) TMI 1055 - AT - Central ExciseValuation - related party transaction - sister concerns - SCN was issued to the appellant wherein it was contended that the appellant is a private limited company and SSI is a partnership firm some of the Directors of the appellant company or their relatives are either partners of SSI or relatives of such partners - whether the appellant’s transaction value is acceptable in a case when goods were sold to partnership firm wherein one of the partner is Director in the appellant’s company? HELD THAT:- The entire case was made out only on the limited facts that in the buyer partnership firm one of the partner is Director in the appellant’s company, therefore, both the concern are interconnected undertaking. Except this so called relationship there is no other allegation of mutual interest between both the concern, therefore, the matter is examined in terms of the statutory provision as provided under Section 4 (3) (b) and Rule 8/9 of Central Excise Valuation Rules, 2000. From Rule 9, it can be seen that though in Section 4 (3) (b) (i) interconnected undertaking are deemed to be related, however, in Rule 9 only the relationship mentioned under sub-clauses (ii), (iii) or (iv) of clause (b) of sub-Section (3) of Section 4 are considered for the purpose of related person, therefore, even though the seller and buyer are interconnected undertaking, if not related person in terms of sub-clauses (ii), (iii) or (iv) of clause (b) sub-Section (3) of Section 4, the same cannot be qualify as related person. Therefore, merely for the reasons that the partners of the buyer partnership firm are Director or relative of Director, the partnership firm and the appellant which is a private limited company cannot become related person for the purpose of Section 4 (3) (b). In an identical facts where the supplier is a private limited company and buyer is a partnership firm in the case of M/s Surabh Tubes Pvt. Ltd. versus Commissioner of Central Excise, Indore [ 1770009 ], a coordinate bench of this Tribunal having identical facts of the present case the supplies made by a private limited company to a partnership firm it was held that both are not related. Accordingly, the appeal was allowed - In another case of RELIANCE INDUSTRIAL PRODUCTS VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-II [2011 (3) TMI 704 - CESTAT, MUMBAI], the Tribunal has held that a partnership firm and a public limited company having Director who are also partner in the partnership firm, the partnership firm and public limited company cannot be held related person. The appellant and the buyer partnership firm cannot be treated as related person. The Adjudicating Authority mainly contended that the partnership of the buyer partnership firm are either Director in the appellant’s company or relative of Director of the appellant company. The relationship has to be seen between a partnership firm and a private limited company both are artificial juristic person. Only on the basis of natural relationship between the partner of a partnership firm and Director of private limited company, it cannot be a criteria to decide the relationship between a partnership firm and private limited company. The appellant and M/s Sunshine Steel Industries, buyer in the present case, do not fall under the term “related person’ in terms of Section 4 (3) (b) of Central Excise Act, 1944. Therefore, the transaction value on which the goods were sold by the appellant is a correct and legal, hence a deemed value in terms of Rule 8 of Central Excise Valuation Rules, 2000 is not applicable - Appeal allowed - decided in favor of appellant.
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