2012 (9) TMI 381 - AT - Central Excise

Tribunal rules in favor of appellant on various issues including retrospective circular, related party transactions, and penalty liability.

COMMISSIONER OF C. EX., AHMEDABAD Versus KISSAN INDUSTRIES LTD.

COMMISSIONER OF C. EX., AHMEDABAD Versus KISSAN INDUSTRIES LTD. - 2012 (280) E.L.T. 276 (Tri. - Ahmd.) Issues:1. Computation of Central Excise duty based on Circular No. 692/8/2003-CX and CAS-4 principles.2. Time bar for the demand of Central Excise duty.3. Related party transactions between M/s. Kisan Industries and M/s. Nirma Ltd.4. Assessable value determination based on costing rules.5. Liability for penalty and interest under the Central Excise Act, 1944.Analysis:1. The first issue revolves around the computation of Central Excise duty based on Circular No. 692/8/2003-CX and CAS-4 principles. The appellant argued that the Circular was prospective and not retrospective, questioning the application of CAS-4 for the years 1996-97 and 1997-98. The appellant also raised concerns about the treatment of interest on working capital and fixed overheads, challenging the adjudicating authority's methodology. The appellant contended that the fixed overheads should not be apportioned and that works overhead expenses should be allocated based on normal capacity. These arguments were thoroughly examined by the Tribunal.2. The second issue pertains to the time bar for the demand of Central Excise duty. The appellant contested the applicability of a previous CESTAT order, arguing that the extended period of 5 years was justified due to willful mis-declaration and suppression of the cost of production. The Tribunal analyzed the facts and circumstances of the case, including the submission of price lists and RT-12 returns, ultimately concluding that the demand was barred by limitation.3. The third issue involves related party transactions between M/s. Kisan Industries and M/s. Nirma Ltd. The Tribunal found common control between the two entities, indicating non-transparency in their transactions. It was observed that the operations were conducted under common control, suggesting that the transactions were not at arm's length. The Tribunal upheld the Commissioner's findings regarding the relationship between the two parties.4. The fourth issue concerns the determination of assessable value based on costing rules. The Tribunal examined whether the assessable value calculated under Rule 6(b)(ii) of Valuation Rules led to a higher value compared to the duty paid by M/s. Kisan Industries. The Tribunal considered the sale prices to independent buyers and the influence of these prices on transactions with M/s. Nirma Ltd., ultimately affirming the Commissioner's decision on the matter.5. The final issue addresses the liability for penalty and interest under the Central Excise Act, 1944. The Tribunal reviewed the arguments presented by the appellant and the Revenue, ultimately rejecting the Revenue's appeal. The Tribunal found no merits in the Revenue's contentions, leading to the dismissal of the appeal.In conclusion, the Tribunal thoroughly analyzed each issue raised in the case, considering the legal principles, precedents, and factual evidence presented by both parties before delivering its judgment.