TMI Blog2022 (8) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of above discussion it is also observed that the word related is held to have same meaning as is assigned to it in clause 41 of Section 2 of Companies Act, 1956 - From the very definition of related , it becomes clear that the definition is applicable to persons as individuals and not to the companies or Undertakings or body corporates. Companies are the separate legal entity as defined from its owner / members / share holders of/ Directors of companies are simultaneously the body corporates. The only case of the department rests on two counts: (i) the appellant has shown three of said companies as its Associated and Joint ventures in their balance sheet; and (ii) The directors of appellants are the directors in either of the three undertakings - In the present case, it is observed that the Department has not produced any evidence of proving the mutuality of interest of three other companies with the appellant. There is no evidence that M/s. Mahendra Strips Pvt Ltd. Raipur, M/s. Super Ispat (Raipur) Pvt Ltd., and M/s. Animesh Iron, Raipur along with the appellant are so associated that they have interest directly /indirectly in the business of each other. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated based upon the information given by the appellant in the balance sheet of the year 2014-15 wherein three of the above named companies were shown as Associated and Joint Ventures . The aforesaid three companies were observed to have used /consumed those goods in further manufacture by them. Accordingly vide Show Cause Notice No. 5291 dated 04.04.2016, it is alleged that the value of the goods cleared by the appellants to the related firm should have been determined in the manner specified in Rule 8 and in terms of Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as Valuation Rules ). 2. Accordingly, Central Excise duty amounting to Rs.2,58,14,047/- along with interest and appropriate penalty was proposed to be recovered from the appellant. The said proposal was confirmed vide Order-in-Original No. 014/2019 dated 21.03.2019. Being aggrieved the appellant is before the Tribunal. 3. We have heard Shri Manish Saharan, learned Counsel appearing for the appellant and Shri Rakesh Agarwal, learned Authorised Representative appearing for the department. 4. It is submitted on behalf of the appellant that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much lower than the transaction value of the sale to the independent buyers. Impressing upon no infirmity in the order under challenge, the appeal is prayed to be dismissed. 7. After hearing rival contentions and perusing the entire record, it is observed and held as follows: Based upon the disclosure in the balance sheet of the appellant about three of the companies namely M/s. Mahendra Strips Pvt Ltd. Raipur, M/s. Super Ispat (Raipur) Pvt Ltd., and M/s. Animesh Iron, Raipur to be the appellant s Associated and Joint Ventures , that the impugned show cause notice was issued to the appellant proposing the calculation of their duty demand in terms of Rule 8 / Rule 9 of Valuation Rules instead of in terms of Rule 4 thereof. 8. Foremost, it is held necessary to look into the legal provisions. Duties of excise are leviable on the value of the goods determined as per Section 4 of the Central Excise Act read with Central Excise Valuation (determination of price of excisable goods) Rules, 2000. As per section 4 the assessable value for each removal of the goods is the transaction value if four conditions are met: (a) there is a sale; (b) the sale is for delivery is at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail : Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8. Rule 9 prior to 1.12.2013 reads as follows: Rule 9 prior to 01.12.2013 - When the assessee so arranges that the excisable goods are not sold by an assessee except to or through a person who is related in the manner specified in any of the 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 goods in retail: Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value of goods shall he determined in the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares, whether preference or equity, of the body corporate; or (ii) exercise control, directly or indirectly, whether as director or otherwise, over the body corporate; (E) if one is owned by a body corporate and the other is owned by a firm having bodies corporate as its partners, if such bodies corporate are under the same management; (F) if the undertakings are owned or controlled by the same person or by the same group; (G) if one is connected with the other either directly or through any number of undertakings which are inter-connected undertakings within the meaning of one or more of the foregoing sub-clauses. Explanation 1 . - For the purposes of this clause, two bodies corporate shall be deemed to be under the same management, - (i) if one such body corporate exercises control over the other or both are under the control of the same group or any of the constituents of the same group; or (ii) if the managing director or manager of one such body corporate is the managing director or manager of the other; or (iii) if one such body corporate holds not less than one-fourth of the equity shares in the other or controls the composition of not less tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takings or body corporates. Companies are the separate legal entity as defined from its owner / members / share holders of/ Directors of companies are simultaneously the body corporates. Resultantly, the appellants and other three of the companies named herein being the private limited companies cannot ever be relatives/ related. Hence sub-clause (i) of Section 4(3)(b) of Central Excise Act, 1944 does not apply to them. It is not the case of the department that M/s. Mahendra Strips Pvt Ltd. Raipur, M/s. Super Ispat (Raipur) Pvt. Ltd., and M/s. Animesh Iron, Raipur, are the distributor of the appellant company or sub-distributor of such distributor. Nor it is the case that they are so associated that they have interest, directly or indirectly in the business of each other. Hence, undertaking/ companies herein including that of appellate do not even fall under clause (iii) and (iv) of Section 4(3)(b) of Central Excise Act, 1944. 8. In the final order of M/s. Khyati Ispat Pvt Ltd. (supra), this Tribunal has held as under:- 13. The Valuation Rules treat cases where the buyer and seller are related persons because of being inter-connected undertakings different from those cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Valuation Rules. 10. We are of the opinion that the fact about two or more Directors in two companies to be common, it does not automatically apply that two companies are related person. This issue also stands settled in terms of decision of Hon ble Apex Court in the case of CCE vs. Sanghi Organisation vs CCE reported as [2007 (209) ELT 160 A (SC)]. Even this Tribunal in the case of Continental Furnishers vs CCE NOIDA reported as [2015 (330) E.L.T. 787 (Tri. - Del.)] has held the same. We also observe that the similar allegations were also been raised by the Department against the present appellant and alleged other three companies. The said earlier show cause notice has been falsified by the Department itself vide Order in Appeal No. 423- 16-17 dated 17.2.2017. In the case of appellant themselves it has already been held that three companies named herein are not to be considered as interconnected or related companies. Based on this finding that the duty as was demanded in said earlier show cause notice in terms of Rule 9 or Rule 8 of the Valuation Rules has already been set aside by the Commissioner (Appeals) in the said order. It is specifically held by Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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