2015 (10) TMI 1840

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....the imposition of penalties. 2. The facts of the case are that M/s. SIPL is engaged in manufacture of wooden / modular furniture & allied wooden items, wooden doors, frames, panels and aluminum structures etc. They are availing Cenvat Credit on inputs and also availed necessary exemption vide notification No. 09/2001 upto 31.03.2002. An investigation was conducted in the factory premises of the appellant M/s. SIPL and it was revealed that there was another unit in the name of M/s. Continental Furnishers (CF) at Panchkuian Road, New Delhi, engaged in the business of construction, purchase, trading, manufacture of handmade carved artistic goods and decorative furniture termed as "Handicraft" who claim the exemption under notification no. 7....

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....windows fabricated at the site of M/s. Addi Industries, Noida along with interest and penalties against all the appellants before were also proposed. Matter was adjudicated. Both the lower authorities confirmed the demand as proposed in the show cause notice along with interest and penalties were also imposed. Aggrieved from the said orders appellants are before us. 4. The Ld. Counsel for the appellants submits that the allegation in the show cause notice is that as both M/s. SIPL and M/s. CF are related persons, therefore, the price at which the clearance took place from M/s. SIPL to M/s. CF is not correct transaction value and profit of 18% is to be added thereon. That allegation is on the basis of that both are related person. He subm....

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...., 20.23% and 3.20% respectively which shows that M/s. SIPL was not selling the goods manufactured by them through M/s. CF. As per the Rule 9 and 10 of the Valuation Rules during the impugned period the said rules could only be made applicable where all the sales in general are routed through the related persons. Therefore, loading of 18% to the transaction value is not justifiable. He further submits that the goods sold by M/s. SIPL to M/s. CF, M/s. SIPL earned gross profit of 18.70%, 16%, 15.79% and 19.60% respectively. He further submits that the goods sold by M/s. SIPL to other independent buyers also on the same gross profit. Therefore, the addition in transaction value is not sustainable. It is also submitted that the panels were purch....

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....terprises as Central Excise duty is leviable only on the activity of manufacture and appellant being trader, therefore, duty cannot be demanded from the appellant. He further submits that as demand of duty is not sustainable, therefore, penalties on all the appellants are not imposable. 6. On the other hand, Ld. AR reiterated the findings of the impugned order. 7. Heard the parties. Considered the submission. 8. In this case, there are two issues: a) Whether M/s. CF is related to M/s. SIPL or not, if so whether there is any mutuality of interest in the business of each other. b) Whether the demand of duty can be confirmed on fabrication of aluminum windows by M/s. K S Enterprises in the hands of M/s. SIPL or not. 9. In the....

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....n the year 2001-02 i.e. 8.9%, in the year 2003-04 i.e. 3.20% except in the year 2002-03 i.e. 20.23%. But the gross profit during the impugned period ranges from 16% to 19% whereas the total gross profit of M/s. SIPL during the impugned period is around 18%. If at all, we presume that there is a mutuality of interest in that case also when the goods are sold by M/s. SIPL to M/s. CF on the price at which the goods have been sold to independent buyers, in that case the sale price by M/s. CF cannot be held as assessable value for M/s. SIPL. Therefore, we hold that demand of Rs. 4,84,076/- is not sustainable. Accordingly, same is set aside. The second issue is that whether the aluminum windows fabricated by M/s. K S Enterprises are liable to ....