2017 (8) TMI 62 - AT - Central Excise

Tribunal Upholds Commissioner Decision on SSI Exemption and Undervaluation

The Tribunal upheld the Commissioner (Appeals) decision on both issues, emphasizing the inapplicability of SSI exemption when goods bear another brand ... SSI exemption - valuation - brand name of others - N/N. 8/2001-CE dated 01.03.2001, 9/2002-CE dated 01.03.2002 and 9/2003-CE dated 01.03.2003 - Revenue felt that the appellants have wrongly availed the benefit of these notification, and that the valuation of goods cleared to their related person M/s. SEPL was also not done as per valuation Rules - Held that: - Once a finding is given that the goods bear the brand name of another ,the SSI exemption is not attracted and the value of clearances of such branded goods cannot be added to arrive at the aggregate value of clearances. SSI exemption - undervaluation - the department has alleged that there was the appellants is a partnership firm with Sh. Nathu Ram Goel, Sh. Sushil Kumar Goel and Madan Gopal as its partners. They are selling their goods to M/s. SPEL which also have Sh. Nathu Ram Goel and Sh. Sushil Kumar Goel as Directors. - Held that: - nothing was brought on record which would show that the price charged by the appellants from SEPL was obviously different from those charged from other buyers. Besides, the department could not show mutuality of interest or the money flow back between the different entities in question to establish that they are related concerns. Hence, there is no infirmity in the findings of Commissioner (Appeals) on this count. Appeal dismissed - decided against Revenue. Issues involved:1. Eligibility for SSI exemption under Central Excise Tariff.2. Valuation of goods cleared to a related person.3. Alleged undervaluation of goods.Analysis:Issue 1: Eligibility for SSI exemption under Central Excise TariffThe case involved the appellants, engaged in the manufacture of Non-Alloy Steel pipes and tubes, who were observed to be supplying goods to a related person, M/s. Spark Electrodes Pvt. Ltd. (SEPL), without including the value of clearances of branded goods in the aggregate value for computing eligibility for SSI exemption under relevant notifications. The Revenue contended that the appellants deliberately did not avail the SSI exemption to keep total sales below the threshold. However, the Ld. Commissioner (Appeals) correctly analyzed the situation, citing a Board Circular and a Supreme Court judgment to establish that the SSI exemption is not applicable when goods bear the brand name of another. The Tribunal upheld the Commissioner's findings, emphasizing that once goods bear another brand name, the SSI exemption is not attracted.Issue 2: Valuation of goods cleared to a related personThe Revenue alleged that the appellants, being a partnership firm with common directors as SEPL, undervalued goods supplied to SEPL. However, the Tribunal found no evidence showing a difference in prices charged to SEPL compared to other buyers. Additionally, there was no indication of mutual interest or money flow back between the entities to establish them as related concerns. Consequently, the Tribunal upheld the Commissioner (Appeals) decision, concluding that there was no infirmity in the findings regarding the valuation of goods cleared to a related person.Issue 3: Alleged undervaluation of goodsThe department had issued show cause notices alleging undervaluation of goods supplied to SEPL, resulting in demands and penalties imposed by the adjudicating authority. However, the Commissioner (Appeals) set aside the order on merits, leading the appellants to appeal before the Tribunal. After hearing both parties and examining the records, the Tribunal found no illegality or infirmity in the Commissioner's decision and dismissed the appeal filed by the Revenue.In conclusion, the Tribunal upheld the Commissioner (Appeals) decision on both issues, emphasizing the inapplicability of SSI exemption when goods bear another brand name and finding no evidence of undervaluation in the transactions between the appellants and the related person.