TMI Blog2007 (10) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (HGPL). They are engaged in the manufacture of iron ore pellets. HGPL was incorporated in the year 2000 and was formerly known as Essar Minerals Ltd. It was under the management of Essar Steel Ltd. (ESL), Hazira who were holding Central Excise Registration No., 9/94. ESL made an exit and HGPL took over the management and operation of the unit in 2000. HGPL were registered under a new Registration No. 7/2000. HGPL manufacture the pellets on their own account as well as on job work basis for other parties. As far as the present appeals are concerned, the issue is in respect of valuation of the pellets cleared through ESL on job work basis. The appellants HGPL received free of cost iron ore from ESL and they converted the same into pellets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vice President for HGPL, Visakhapatnam under Rule 209A of Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2001 and 2002. Further he imposed a penalty of Rs. 5/- Lakh on M/s. Essar Steel Ltd. under Rule 209A of the Central Excise Rules 1944 and Rule 26 of the Central Excise Rules, 2001 and 2002. 2. The appellants are highly aggrieved over the impugned order. Hence, they have come before this Tribunal for relief. 3. Shri M. Chandrasekharan, learned Sr. Counsel and Shri N.K. Jain, learned Counsel appeared on behalf of the appellants. Ms. Sudha Koka, learned SDR for the Revenue. 4. We heard both sides. The learned Sr. Counsel invited our attention to two orders passed by the Assistant Commissioner on finalization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s upto 31-3-2004 were finalized in terms of the Assistant Commissioner's order, the department issued Show Cause Notice dated 9-8-2005 for the period from July 2000 to June 2005 alleging that: Ø The goods manufactured by HGPL on job work or conversion basis and supplied to ESL could not be assessed under Rule 8 of the Valuation Rules as the same were not manufactured by HGPL as its own goods or in its own account. Ø According to the department, the appellant HGPL should have adopted the valuation in terms of the Apex Court's decision in Ujagar Prints case. Ø It was also contended by the department that as per the conversion agreement entered into between HGPL and ESL, they were described as seller and buyer respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CCE, Indore v. S. Kumar's Ltd. [2005 (190) E.L.T. 145 (S.C.)] have held that the valuation method in terms of Ujagar Prints case would not be applicable for related person. So he relied on this decision to hold that the method adopted by them for valuation was correct. Further, he said that even though M/s. Stemcor Minerals Ltd. held 51% of the shares, they partly paid only Rs. 5/- of the face value of Rs. 8/-, whereas the shares held by ESL were fully paid at. Consequently, majority voting rights in the company were held by the ESL. In view of the above development, ESL can be said to control the appellant company. In view of these things, the appellant company and ESL are interrelated and once they are interrel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellants had actually suppressed the information regarding the conversion agreement entered into between ESL and them. In the conversion agreement, the appellant is described as seller and the ESL is described as buyer. This clearly indicates that these two entities are not related at all. It was also pointed out that the appellants were clearing iron pellets to other independent buyers as well as to some other units on job work basis. The method adopted by them for valuation in these cases is on the basis of the Ujagar Prints decision. Therefore, the appellants were very much knowing that the valuation method to be adopted cannot be under Rule 8. The case of the department is that the appellant had full knowledge of the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, there is no justification to invoke longer period as the entire exercise is revenue neutral and the intention to evade duty cannot be proved. Hence, the longer period cannot be invoked. 4.6 As far as the merits of the case is concerned, the appellants have clearly shown that in view of the fact that ESL owns 49% of the share on which the full face value of Rs. 10/- for each share has been paid and also due to the tact that the other company M/s. Stemcor Minerals Ltd. paid only 5% of the face value of Rs. 10/- per share. Even, though M/s. Stemcor Minerals Ltd. held 51% of the nominal share capital, the majority voting rights vested only with ESL. In this sense, ESL controlled during the appellant company during the relevant per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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