Tribunal rejects related party claim, dismisses clandestine clearance allegations. Impugned order set aside.

The Tribunal found that the appellant and EJIPL were not related persons and rejected the Department's reliance on EJIPL's sale price for duty calculation. The Tribunal also dismissed the allegations of clandestine clearances due to insufficient evidence beyond discrepancies in gate registers. Consequently, the impugned order was set aside, and the appeal was allowed on 14.03.2018.

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Issues:
1. Whether the appellant and EJIPL are related persons under Section 4(4)(c) of the Central Excise Act, and if EJIPL's sale price should determine duty on the appellantRs.
2. Whether the charges of clandestine clearance are sustainable based on the outward and inward gate registersRs.

Analysis:

Issue 1: Related Persons and Duty Determination
The Department alleged that EJIPL and the appellant were related persons, citing financial interdependence and control by EJIPL's Managing Director over both entities. The Department re-determined the value of clearances based on EJIPL's sale price. The appellant challenged this, asserting independent existence, separate registrations, and principal-to-principal transactions. The Tribunal found no mutuality of interest and no justification to consider them related persons. As the sale was on a principal-to-principal basis, adopting EJIPL's sale price for duty calculation was unwarranted.

Issue 2: Clandestine Clearance Allegations
The Department claimed clandestine clearances based on discrepancies in the outward and inward gate registers maintained by the Security Guard. The appellant contended that rejected motors returned for repairs were not accounted for. The Tribunal noted the allegations were solely based on the Security Guard's records, with no additional evidence. The Security Guard's explanation of returned motors was disregarded by the Revenue. Given the lack of substantial evidence and the return of a significant number of motors, the Tribunal concluded that the charges of clandestine clearance were not proven.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal on 14.03.2018.

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