TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 1241
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....Road, Nagpur [Fomerly known as M/s Stewols and Co. (A registered partnership firm) (3) M/s. Spick and Span Stewols Pvt. Ltd. Uppalwadi, kamptee Raod, Nagpur. On further scrutiny of the balance sheet and memorandum of article of the company it was found that all the three aforesaid entities are interconnected undertaking and therefore contended that these are the related persons. Show cause notice was issued and culminated into adjudication wherein it was held that the appellant is required to discharge excise duty under Rule 8 and 9 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 i.e. 110% of cost of production or manufacture of said goods supplied to all the three related entities and accordingly confirmed demand of duty, interest and penalty. 2. Shri. Vinay Sejpal, Ld. Counsel for the appellant submits that though three separate companies, to whom the goods were sold, have been admitted by the appellant as interconnected undertaking but merely because customers are interconnected undertaking, it cannot be said that they are related persons in terms of Section 4. He referred to Rule 9 of Central Excise Valuation Rules, 2000, according to whic....
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....ort he placed reliance on the Larger Bench judgment of this Tribunal in the case of Ispat Industries Ltd. Vs. CCE Raigad [2007 (209) ELT 185(Tri. LB)]. In the said judgment this position has been confirmed that where the goods are sold to related person as well as independent buyers the transaction value charged to the independent buyers shall apply in the case of supply of goods to the related person. He submits that the appellant have submitted detailed chart showing comparison between sale price to these three interconnected undertakings as well as sold to the independent buyers wherein the price are more or less same. In majority of the case the prices to the interconnected undertakings are higher than price charged to the independent consumer. For this reason also at the most price charged to the independent consumer shall be applicable and not price arrived at by adopting cost construction method as provided under Rule 8 of Central Excise Valuation Rules, 2000. He submits that on both the counts as submitted above, in any case valuation adopted by Ld. Adjudicating authority in terms of Rule 8 and 9 of Central Excise Valuation rules is not at all applicable therefore impugned ....
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.... provision is reproduced below:- RULE 9. When the assessee so arranges that the excisable goods are not sold by an assessee except to or through a person who is related in the manner specified in either of sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail : Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8. From the above rule 9 it is very clear that only in cases where goods are sold through the person as specified under clause (ii), (iii) or (iv) of clause (b) of Section 4 the transaction value at which the goods are sold by the said person shall apply and not the sale price at which goods are sold to these three category of person are made. Provision of rule 9 also shows that merely buyers is i....
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....ade Practices Act, 1969. The definition of interconnected undertaking in the said Act reads as follows: "Inter-connected undertakings" means two or more undertaking which are inter-connected with each other in any of the following manner, namely:- i. if one owns or controls the other, ii. where the undertakings are owned by firm, if such firms have one or more common partners. iii. Where the undertakings are owned by bodies corporate, a. if one body corporate manages the other body corporate, or b. if one body corporate is a subsidiary of the other body corporate, or c. if the bodies corporate are under the same management, or d. if one body corporate exercise control over the other body corporate in any other manner; i. where one undertaking is owned by a body corporate and the other is owned by a firm, if one or more partners of the firms, a. hold, directly or indirectly, not less than fifty per cent of the shares, whether preference or equity, of the body corporate, or b. exercise control, directly or indirectly, whether as director or otherwise, over the body corporate. i. if one is owned by a body corporate and the other is owned by firm having bodies c....