TMI Blog2019 (2) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Central Excise Act, 1944 however, specifically excludes from its operation cases where the goods are partly sold to un-related wholesale dealer and partly to related person. It is clear from the wording of the said proviso itself. The Commissioner in the impugned order has admitted the fact that the appellant in addition to sale of the goods to EPL has also sold the goods to unrelated buyers. There is also no dispute on the fact that the comparable price to independent customer has been adopted as the basis for discharging duty on sale to EPL - further, in the present case there is no evidence led in by the department to show that the relationship has influenced the price for the same to be rejected. Similar issue has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted party, the price at which EPL sold to their customers should be adopted as the basis for determining duty. The notice proposed to demand differential duty of ₹ 42,23,240/- for the period of 01.12.1998 to 31.03.1999. The Commissioner by the impugned order has confirmed the demand on the ground that the appellant had sold goods to its related party (Exide Products Limited) for further sale, hence in terms of proviso (iii) to Section 4(1)(a) of the Central Excise Act, 1944, the value at which the related party sold the goods should be adopted as assessable value for the purpose of levy of excise duty. The impugned order has confirmed the demand alongwith interest and imposed penalty under Section 11AC of the Central Excise Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, i. e. (i) presence of arrangement, (ii) sale of goods generally through related party and (iii) sale of goods directly and indirectly through related party. It was submitted that first condition was not satisfied inasmuch as the Department failed to show any arrangement in place. Further, the percentage set by Hon ble Supreme Court i.e. 50% does not flow any statute to be adopted in all cases. He further submitted that the Department has also failed to show that price at which goods were sold was lower than sale made to other wholesale dealers. Thus, Section 4 (1)(a)(iii) of the Central Excise Act, 1944 was not applicable in the instant case. 6. We have considered the submissions made by both sides and perused the documents on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods in retail. The above provision clearly stipulates that the same will apply when the goods are generally not sold in wholesale trade except to or through the related person. In the present case, admittedly the appellant has sold goods to independent customers in addition to sale to EPL. The price at which the goods were sold to independent buyers was adopted as the basis for the valuation of goods sold to EPL. 8. In our considered view, the above provision specifically excludes from its operation cases where the goods are partly sold to un-related wholesale dealer and partly to related person. It is clear from the wording of the said proviso itself. The Commissioner in the impugned order has admitted the fact that the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons relied upon by the ld. Counsel for the appellants. We do not find this position anyway affected by the fact that most of the sales are from the depots of the assessee. 8. In view of our above findings, we hold that proviso (iii) to Section 4(1)(a) is not attracted to the present case and the duty demand made in the impugned order by taking resort to this proviso is not sustainable. Penalty imposed cannot survive independently of the duty demand. Accordingly, we set aside the impugned order and allow appeal with consequential relief, if any, to the appellants. We are not going into the merits of other submissions of the appellants as the appeal succeeds on the question of applicability of proviso (iii) to Section 4(1)(a) itself. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person - it can even be through the related person. 11. We are of the view that the arrangement spoken of in the proviso must be something by which the assessee and the related person arrange that the goods are sold at something below the normal price, so that tax is either avoided or evaded by such arrangement. Secondly, the expression generally also shows that such goods must predominantly be sold by the assessee to or through the related person - in mathematical terms, sales that are to or through a related person must consist of at least 50% of the goods that are manufactured and sold. The expression to or through a related person again goes back to the arrangement and is another way of saying that such sale can be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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