TMI Blog2018 (2) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... /2000-TRU dated 30.06.2000 which sought to explain the changes brought about. In para 5 of the said circular, CBEC clarified that new section 4 essentially seeks to accept different transaction values which may be charged by the assessee to different customers for assessment purposes, so long as these are based upon purely commercial consideration, where buyer and seller have no relationship and price is the sale consideration for same - Para 24 of the circular clarifies that a new provision has been made in the valuation rules and even if the assessee and the buyer are inter-connected undertakings, the transaction value will be registered only when they are related in terms of clause (ii), (iii), or (iv) of sub section 4(3)(b) or the buyer is a holding company or a subsidiary company of the assessee. In para 25, it was further clarified that notwithstanding the change in the definition of related personin the new section 4 for practical applications, its scope has been restricted and but for small variation, it would not be much different than that covered under the old section 4 definition - post 01.07.2000, assessee and the buyer shall be deemed to be relatedas per section 4(3)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be considered as related persons for the purpose of section 4(3)(b)(i) of Central Excise Act, 1944. Appeal allowed - decided in favor of appellant. - E/609/2008, E/369/2009 E/370/2009 E/371/2009 E/1557/2012 E/1558/2012 E/1559/2012 E/1560/2012 E/1561/2012 E/1562/2012 E/1563/2012 E/1564/2012 E/2658/2012 E/2659/2012 - A/31919-31932/2017 - Dated:- 14-11-2017 - Mr. M. V. Ravindran, Member ( Judicial ) And Mr. Madhu Mohan Damodhar, Member ( Technical ) S/Shri K.S. Ravi Shankar, R. Dakshina Murty, Advocates for the Appellant Shri S.K. Takbaavare, Superintendent/AR for the Respondent ORDER [ Order Per : Madhu Mohan Damodhar ] 1. All these 14 appeals since relate to same disputed issue and filed by the same appellant, they are taken up together for common disposal. 2. The facts of the case are that M/s Black Gold Profiles Pvt. Ltd, the appellants herein, are manufacturers of Re-bars and CTD Bars, classifiable under chapter 72 of Central Excise Tariff. The appellants cleared substantial quantity of their production to two units viz; M/s A.S. Steel Traders and M/s Sri Vijaylaxmi Steel Traders. These two firms had partners, who also held shares in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.26,44,828 ₹ 5,00,000 was paid during investigation which was appropriated in the adjudication order. Penalty of ₹ 21,44,588 u/s 11AC of the CE Act. Penalty of ₹ 2,00,000 Rule 25(d) of the Central Excise Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 2. E/369/2009 28/2007-08 (JN) dt.20.12.2007 138/2008(V-I) CE dt.30.12.2008 Rs.1,67,523 Penalty of ₹ 1,00,000 Rule 25(1)(a) and 25(1)(d) of the Central Excise Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 3. E/371/2009 4/2008 dt.22.2.2008 138/2008(V-I) CE dt.30.12.2008 Rs.2,24,541 Penalty of ₹ 1,00,000 Rule 25 of the Central Excise Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 4. E/370/2009 5/2008 dt.22.2.2008 138/2008(V-I) CE dt.30.12.2008 Rs.3,04,609 Penalty of ₹ 1,50,000 under Rule 25 of the CE Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified interest u/s 11AB of the CE Act. 13. E/2659/2012 42/2011 dt.29.11.2011 46/2012 (V-I) CE dt.28.6.2012 Rs.3,00,906 Penalty of ₹ 1,00,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 14. E/2658/2012 43/2011 dt.29.11.2011 46/2012 (V-I) CE dt.28.6.2012 Rs.79,461 Penalty of ₹ 25,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. Total Rs.56,55,544/- Rs.34,06,588/- 4. Ld. Sr. Advocate also made oral and written submissions, which can be broadly summarised as under: (i) The fundamental plank of argument of the appellant has been that the two buyer firms are not related persons or inter-connected undertakings and therefore the sale price to these buyers should not have been rejected and such price would be the transaction value for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries of Tribunal decisions following the above judgments. The impugned orders are, therefore, manifestly untenable. Impugned orders are opposed to the decisions of the Tribunal particularly in the cases of Panchaj Kasturi Herbals India Limited Vs. CCE, 2010 (250) ELT 559 (T) and CCE Vs. Akash Ispat Ltd 2016(337)ELT 295(T), Reliance Industrial Products Vs. CCE 2012(276)ELT 107(T), CCE Vs. Seth Brothers Perfumers 2016(344)ELT 647 (T), Handy Wires Pvt. Ltd Vs. CCE 2015(329)ELT 169(T), Surya Wire Pvt. Ltd. Vs. CCE, 2017-TIOL-2979-CESTAT. (ix) Even assuming that there has been inter connection and section 2(g) of the MRTP was attracted, in terms of paras-24 and 25 of the Board Circular issued in MF DR F.No.354/81/2000-TRU, dt. 30.6.2000, even in case of sales to inter connected undertakings, transaction value will be rejected only when they are related under any of the clauses (ii), (iii) or (iv) of section 4(3)(b) or the buyer is a holding of subsidiary company of the assessee. (x) They were regularly assessed to duty of excise, filing returns and in correspondence with the authorities regularly and hence time bar under section 11A applies. Apart from the above, the first s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a body corporate. 6.2 The period of dispute in all these appeals spans from May 2001 to December 2010. Section 4 of Central Excise Act, which lays down statutory provisions concerning valuation of excisable goods for purpose of charging duty, was amended/substituted w.e.f. 01.07.2000, by section 94 of Finance Act, 2000. At the time of introduction of new section 4, the CBEC thought it proper to issue a circular No. 354/81/2000-TRU dated 30.06.2000 which sought to explain the changes brought about. In para 5 of the said circular, CBEC clarified that new section 4 essentially seeks to accept different transaction values which may be charged by the assessee to different customers for assessment purposes, so long as these are based upon purely commercial consideration, where buyer and seller have no relationship and price is the sale consideration for same. Para 23 of the circular states that when goods are sold through related persons, the transaction value is not applicable. The para however also flagged some changes in the definition of related persons, vis-a-vis the definition in the erstwhile section 4 and clarified that the new definition also includes inter-connected undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act and includes his agent; (b) persons shall be deemed to be related if - (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a 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 (54 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956); 6.4 Thus, post 01.07.2000, assessee and the buyer shall be deemed to be relatedas per section 4(3)(b) of the Act. Show cause notices in these appeals allege that the appellant and their two buyer firms are related personssince they are apparently inter connected undertakings in terms of Section 4(3(b)(i) of the Act, read with Section 2(g) of MRTP Act, 1969. Department further alleges that the three entities are so associated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity has proceeded to examine the shareholding pattern in the background of the aforesaid provisions. In this case and also in respect of the adjudication orders in the remaining appeals, which have been upheld by the impugned orders thereat, all have arrived at the same conclusions to hold that the appellant and their two buyer firms are related to each other. In fact, the line of reasoning and conclusions arrived at by the adjudicating authority and confirmation thereof by lower appellate authority in respect of appeal No. E/609/2008, has been followed in respect of all the remaining 13 appeals. The adjudicating authorities have proceeded on the premise, which have been upheld by the lower appellate authorities in the impugned orders, that if partners of AS Steel Traders and those of Sri Vijayalaxmi Steel Traders alongwith their close blood relatives are each holding more than 50 percent of share capital respectively in M/s Black Gold; that this satisfies criteria prescribed in section 2(g)(iv)(a) of MRTP Act, 1969, inasmuch as the partners in each of the two firms are holding indirectly more than 50% shareholding of body corporate, since other shareholders of M/s Black Gold ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks out to 30.80%. In the case of Sri Vijayalaxmi Steel Traders, S/Shri Ramesh Gupta and A. Jagadish, partners cumulatively own 33.80% of the shareholding as Directors of M/s Black Gold. Discernibly then, the combined shareholding of the concerned partners in each of the firms as Directors of M/s.Black Gold does not touch the 50% bench mark in each case, to bring the entities within the fold of interconnected undertakings and by implication related persons, for the purpose of Section 4 of the Central Excise Act. 6.9 The adjudicating authorities in all these cases have however taken the view that not only is the shareholding of the partners of the firms in the body corporate to be taken into account, the shareholding of their close blood relations will also have to be added for the purpose of arriving at the total shareholding of the concerned partners. After making such unilateral addition, the adjudicating authorities have held that partners of both AS Steel Traders and Sri Vijayalaxmi Steel Traders, alongwith their close blood relatives, are holding more than 50% of the share capital of M/s Black Gold; that hence the said partners are holding directly and indirectly more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s time and again been reiterated by higher appellate courts. For example, in the landmark judgment of Doypack Systems (Pvt.) Limited, Vs. Union of India [1988(36)E.L.T 201(S.C)], the Hon ble Apex Court had, inter-alia, held as under: 56. The words in the statute must, prima facie, be given its ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given effect to see Chandravarkar S.R. Rao v. Asha Lata (1986 4 S.C.c. 447 at page 476), approving 44 Halsburys Laws of England, 4th Ed. Paragraph 856 at page 552. Nokes v. Doncaster Amalgamated Colliery Limited (1940 Appeal Cases W 14 at 1022). It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39(b) and (c) of the Constitution. 57. It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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