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2016 (6) TMI 1092 - CESTAT CHANDIGARH

2016 (6) TMI 1092 - CESTAT CHANDIGARH - TMI - Valuation - Related person - nature of clearance - Held that:- Commissioner has examined the issue in details and found that the respondent is not a related persons to M/s IAFL. We further observe that in this case the respondent is making clearance in the open market also. As respondent is selling goods in the open market, the prices of the goods at which the goods are sold in the open market should be treated the transaction value but in the show c .....

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when the price on which the goods are sold to independent buyers is available, the same is to be treated as transaction value. It is not the case of the Revenue that transaction value at which the independent buyers have purchased the goods be the transaction value, therefore, the impugned order having merits, accordingly, the same is upheld. - Decided against revenue - Central Excise Appeal No. 2898 of 2006 - Final Order No. 60097/2016 - Dated:- 19-5-2016 - Mr. Ashok Jindal, Member (Judicial) .....

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he brief facts of the case are that the respondents are engaged in the manufacture of electrical apparatus. They were selling most of the their manufactured goods through Indo Asian Marketing Ltd. (IAML) and investigation was conducted in their factory on 8.11.1991 and after scrutinising all the records it was alleged that transaction between the respondent and IAML were not at arm s length as both of them appeared to be related person within the ambit of Section 4(4) (c) of the Central Excise A .....

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used for payment of Central Excise duty by IAFL; (g) IAML were referring to facilities available with IAFL as its own; (h) approximately 97% sales by IAFL were to IAML etc. Therefore, the show cause notice was issued to demand duty on the value on which M/s IAML has cleared the goods in the open market whereas the respondent has paid duty on the value at which the goods were sold to IAML clearance to IAFL. Initially the matter was adjudicated and travelled before this Tribunal and the Tribunal .....

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nnected pleas during the re-hearing proceedings. In respect of the issue whether the goods were cleared to related person was not decided by the Tribunal. As the matter was remanded to the adjudicating authority with liberty to the party to raise all the connected pleas during the re-hearing, the adjudicating authority was duty bound to go into the issue afresh in respect of related person. As the adjudicating authority had not gone into this issue, therefore, we find that it is a fit case for r .....

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ppeal before us. 3. Heard the parties extensively and examined the issue. In the show cause notice it was alleged that respondents and M/s IAML are related person on the following allegations : (a) directors either themselves or their relative are common in both the companies; (b) premises of one company are being used by the officers of other company; (c) Employees of one unit are doing the work of other company; (d) they are bearing misc. Expenses on behalf of each other; (e) convenience at wh .....

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.S. Gandhi are directors in assessee company whereas Shri R.S. Gandhi is a Director in M/s. Motorol Technologies Ltd. and have interest, directly or indirectly in the business of each other; (ii) both are manufacturing automobile oils with the same brand name MOTOROL using similar printed stationery for clearance of goods with only difference in name of the company; (iii) the brand name is unregistered brand name owned by M/s. Motorol Lubricants (P) Ltd., a marketing agency of M/s. Motorol Techn .....

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/s. Motorol Technologies Ltd. are looking after the work of M/s. Motorol Lubricants (P) Ltd., which is a marketing agency of the assessee company as well as M/s. Motorol Technologies Ltd.; (v) the price list of automotive products manufactured by the assessee company and marketed by M/s. Motorol Technologies Ltd. is given by Shri H.S. Nagaraj, Manager (Sales & Administration) on a letter head of M/s. Motorol Lubricants (P) Ltd., which clearly shows the inter-relationship of the units; (vi) f .....

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(P) Ltd. as can be seen from the ledge account wherein an amount of ₹ 91 lakhs in the year 2002-2003 and ₹ 1.5 crores in the year 2003-2004 have been so adjusted; (viii) the assessee company is giving finished goods in bulk quantities to M/s. Motorol Technologies Ltd. on loan basis for repacking into smaller packs which have been cleared on payment of duty to M/s. Motorol Lubricants (P) Ltd. for trading; the assessee company M/s. Motorol Technologies Ltd. and M/s. Motorol Lubricants .....

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red in affirmative for coming to the conclusion that MSO and MTL are related to each other have not been examined in detail. As per Rule 9, the concept of related person and adoption of price charged by the related person as basis for arriving at the assessable value arises only when the assessee so arranges that all the goods are sold by him only through the related person. Nowhere there is a finding to this effect in the order of the lower authorities. No evidence has been gathered to show tha .....

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, there has to be a finding that either there is a flowback or the price charged is very low. While it has been mentioned that the price charged is much lower, there is no detailed discussion to show how much lower is the price, whether it is much beyond the normal commercial transactions between the purchaser and buyer. There is no finding of a flowback. There is no evidence to show that all the shares are owned by the family members and no evidence to show that the price charged by the MSO to .....

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ere are common directors, common employees, same premises etc. two companies do not become related to each other, intention to evade duty and suppression of facts is to be clearly established by the Revenue. We find that the evidences referred to by the department are not sufficient to come to the conclusion and, therefore, on the ground of limitation also appellants succeed. Once, the duty demand is not upheld penalties also cannot be upheld. 3. We have seen that in the case of Motorol Speciali .....

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