Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 1241 - CESTAT MUMBAI

2015 (11) TMI 1241 - CESTAT MUMBAI - 2015 (329) E.L.T. 169 (Tri. - Mumbai) - Valuation - sale to interconnected units - Discharge of excise duty under Rule 8 and 9 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 - Penalty u/s 11AC - Held that:- Appellant have admitted that the three buyers companies are their interconnected undertakings. However merely because buyers are interconnected undertakings it is not sufficient to hold that the companies are related pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

R> Transaction value of the goods between appellant and these three interconnected undertaking is correct valuation and the same cannot be disturbed, therefore value as provided under Rule 8 is not applicable in the present case. - When for the same goods transaction value is available i.e. transaction value at which the goods are sold to independent buyers, then there is no scope of any notional value such as valuation in terms of Rule 8 or otherwise. For this reason also valuation of Rule 8 c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

air This appeal is directed against Order-in- Original No. 05/2010/C dated 11/1/2010 passed by the Commissioner of Central Excise, Nagpur, wherein total demand of ₹ 8,03,787/-, interest and penalty of equal amount under Section 11AC and also equal amount of penalty under Rule 25 of Central Excise Rules, 2002 were confirmed. The fact of the case is that the appellant M/s. Handy Wires Pvt. Ltd. are engaged in manufacture of M.S. Wire. On scrutiny of the record by the Revenue officer it was o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hree aforesaid entities are interconnected undertaking and therefore contended that these are the related persons. Show cause notice was issued and culminated into adjudication wherein it was held that the appellant is required to discharge excise duty under Rule 8 and 9 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 i.e. 110% of cost of production or manufacture of said goods supplied to all the three related entities and accordingly confirmed demand of duty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pecified in either of sub clause 2, 3, or 4 of clause B of Subsection (3) of Section 4 of the Act, transaction value shall be the value at which the goods are sold by such related person at the time of removal to buyer(not being related person) or where such goods not sold to such buyers(being related person) who sold such goods in retail. He also referred Board Circular no. 354/81/2000 TRU dated 30/6/2000 wherein in para 24 it was clarified that the transaction will be rejected in case of inter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssion that in view of the above provisions, even though the three buyers company are interconnected undertaking of the appellant, these three buyers cannot be treated as related person. Therefore whole foundation of the case gets demolished. He submits that in the impugned order Ld. Commissioner has held that all the three buyers as interconnected undertaking and due to this reason treated as related person and valuation was attracted under rule 8 and 9 of Central Excise Valuation Rules, 2000, w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

only to these three interconnected undertakings but also selling their goods sold to independent buyers. He submits that on the issue when goods are sold to related person as well as to the independent buyers the value at which goods to the independent buyers shall apply also to the clearance made to related buyers. In this support he placed reliance on the Larger Bench judgment of this Tribunal in the case of Ispat Industries Ltd. Vs. CCE Raigad [2007 (209) ELT 185(Tri. LB)]. In the said judgme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e interconnected undertakings are higher than price charged to the independent consumer. For this reason also at the most price charged to the independent consumer shall be applicable and not price arrived at by adopting cost construction method as provided under Rule 8 of Central Excise Valuation Rules, 2000. He submits that on both the counts as submitted above, in any case valuation adopted by Ld. Adjudicating authority in terms of Rule 8 and 9 of Central Excise Valuation rules is not at all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion 4(3) (b) the interconnected undertaking is related person therefore the Ld. Adjudicating authority has correctly applied the valuation of the goods in terms of Rule 8 and 9 of Central Excise Valuation Rules, 2000. He also submits that the directors in all the companies are common therefore appellant and buyer companies are related person. He prays that impugned order be maintained and the appellant's appeal be rejected. 4. I have carefully considered the submissions made by both the side .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es; (iii) amongst them the buyer is a relative and distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. Explanation. In this clause (i) "inter-connected undertakings" shall have the meaning assigned to it in clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) "relative" shall have the meaning as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ges that the excisable goods are not sold by an assessee except to or through a person who is related in the manner specified in either of sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such good .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rice at which goods are sold to these three category of person are made. Provision of rule 9 also shows that merely buyers is interconnected undertaking that alone is not sufficient for holding as related person. We have gone through the Board Clarification referred by the Ld. Counsel in circular No. MF/DR/F/354/81/2020 TRU dated 30/6/2000 is reproduced below. F.No. 354/81/2000-TRU Subject: Central Excise - Section 4- Transaction Value- Regarding. I am directed to say, that as you aware, section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

emoval, the asessee and the buyer of the goods are not related and the price is the sold consideration for the sale, be the transaction value; b. in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. 2. The provisions of the section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of Sec.3. a. "assessee" means the person who is liable to pay the duty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gned to it in Clause(g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969; and ii. "relative" shall have the meaning assigned to it in Clause (41) of Section 2 of the Companies Act, 1956; (c) "place of removal" means. 23. Where goods are sold through related persons, the transaction value is not applicable. However, there is some change in the definition of related personsvis-vis the old definition. It includes "inter-connected undertakings" a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

one body corporate manages the other body corporate, or b. if one body corporate is a subsidiary of the other body corporate, or c. if the bodies corporate are under the same management, or d. if one body corporate exercise control over the other body corporate in any other manner; i. where one undertaking is owned by a body corporate and the other is owned by a firm, if one or more partners of the firms, a. hold, directly or indirectly, not less than fifty per cent of the shares, whether prefe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

meaning of one or more foregoing sub-clauses. Explanation I. For the purpose of this Act, (two bodies corporate), shall be deemed to be under the same management,- From the above clarification it was made clear that the transaction value can be rejected only when the buyers are related in the sense in clause (ii), (iii) or (iv) of Section of 4(3) (b) or buyer is holding company or subsidiary company of the assessee. It was made further clear that while dealing with transaction between interconne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the fact that this appellant and buyers company are interconnected undertaking therefore they are related and consequently applied rule 8 of Central Excise Valuation Rules, 2000 and adopted the valuation of cost construction method. Ld Commissioner have not brought any material to establish that the relationship between appellant and buyers company are one of the relationship as prescribed under sub clause (ii), (iii) or (iv) of Section 4(3)(b) of Central Excise Act therefore in our considered .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version