Tribunal directs consideration of mutually agreed price for related persons' goods, not Rule 10.

The Tribunal set aside the impugned order and directed the Adjudicating Authority to consider the mutually agreed price for valuation of goods sold to related persons, emphasizing that Rule 10 of the Central Excise Valuation Rules, 2000, does not apply when goods are sold partly to related persons and partly to independent buyers. The Tribunal clarified that duty should be paid based on the mutually agreed price, especially when it is comparable to the selling price to independent buyers.

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Issues: Valuation of goods sold to related persons, Applicability of Rule 10 of Central Excise Valuation Rules, 2000

Valuation of goods sold to related persons:
The case involved a dispute regarding the valuation of goods cleared by the appellant to its subsidiary unit. The department contended that since the subsidiary sold the batteries at a higher price, excise duty should be paid based on the price at which the subsidiary sold the goods to independent buyers. The appellant argued that the duty was paid at a mutually agreed price, which was determined based on the price at which goods were sold to independent buyers. The appellant cited various case laws to support their contention that no differential duty was payable in such circumstances. The Tribunal noted that the goods were sold through the subsidiary, but the duty was paid at the mutually agreed price. The Tribunal referred to a CBEC Circular clarifying the application of Rule 10 of the Valuation Rules in cases where goods are sold partly to related persons and partly to independent buyers.

Applicability of Rule 10 of Central Excise Valuation Rules, 2000:
The Tribunal highlighted that Rule 10 would not be applicable when goods are partly sold to related persons and partly to independent buyers. It was clarified that Rule 10 is applicable only when 100% of the goods are sold through related persons. The Tribunal cited a previous judgment where it was held that Rule 9 read with Rule 8 of the Valuation Rules was not applicable when the appellant did not clear 100% of production through related persons. The Tribunal found no justification for insisting on payment of duty at the price at which goods were sold by related persons, especially when the mutually agreed price was comparable to the selling price to independent buyers. The Tribunal directed the Adjudicating Authority to consider the submission made by the appellant regarding the mutually agreed price and to accept it if it was on par with the selling price to independent buyers.

In conclusion, the Tribunal set aside the impugned order and disposed of the appeal with directions to consider the mutually agreed price for valuation of goods sold to related persons.

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