TaxTMI 
TaxTMI 
2017 (12) TMI 139
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....attributable to goods cleared to M/s SPML. M/s SPL cleared these goods to M/s SPML without payment of duty for the pipes used for UP Jal Nigam. To that effect essential certificate has been obtained from the competent authority. M/s SPL is also clearing the Bearing/Wearing Plates to M/s SPML without payment of duty on the premise that without these Bearing/Wearing Plates the pipe cannot be laid down, therefore, Bearing/Wearing Plates is the integral part of the pipe and to that effect also they have obtained necessary certificate under Notification No. 06/2002 from the competent authority. During the period 2001-2002 to 2003-2004, an investigation was conducted in the premises of M/s SPL. On the basis of investigation, the show cause notice was issued to all the appellants on the ground that as M/s SPL is clearing goods to M/s SPML who is related persons, therefore, goods are to be valued as per Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2002. It was also alleged in the show cause notice that reversal of Cenvat Credit attributable to the exempted goods is not sufficient and M/s SPL is required to pay 8% of the value of the exempted goods cleared by them. It was ....
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..... To support this contention, he relied upon the decision of Union of India & Others Vs. Atic Industries Ltd. - 1984 (17) ELT 323 (SC). He further submitted that if it is taken that M/s SPL and M/s SPML are related person in that case also the valuation has not done in proper prospective by invoking Rule 9 Read with Rule 8 of the Valuation Rules. As Rule 9 deals with clearances made exclusively through the related persons whereas the fact is that M/s SPL is clearing their goods to related person as well as independent buyers. Therefore, on the said ground duty of demand is not sustainable. 5. He further submitted that the issue of reversal of Cenvat Credit attributable to exempted final goods has been settled by the Section 72 of the Finance Act, 2010 wherein it has been provided that proportionate reversal of Cenvat Credit is sufficient with retrospective effect and it is fact on record that M/s SPL is reversing the Cenvat Credit attributable to exempted goods therefore, demand @ 8% of the exempted goods is not sustainable. He also submitted that as the goods are exempted and the Cenvat Credit attributable to exempted goods has already been reversed, therefore, the issue of under....
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.... the adjudicating authority has rightly demanded the amount of 8% on clearance of the exempted goods. He also submits that the appellants were knowing that the Bearing/Wearing Plate is not pipe and deliberately misclassified that the same as pipe, therefore, M/s SPL is required to pay duty on these Bearing/Wearing Plate. He also submits that as M/s SPL is deliberately misclassified the Bearing/Wearing Plate and also not brought the fact in the knowledge of the Department, therefore, extended period of limitation is rightly invoked. 9. Heard both the sides and considering the submissions in details. 10. On going through the arguments in advanced by both the sides the following issues have been emerged:- 1 Whether M/s SPL and M/s SPML are related person or not 2 In alternate, if it is held that they are related person whether the provision of Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000 are applicable in the facts of this case or not 3 Whether in terms of Finance Act, 2010 the reversal of proportionate Cenvat Credit attributable to exempted goods is sufficient or not 4 Whether M/s SPL is required to pay duty on Bearing/Wearing Plate or not 5 Whe....
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....y the Supreme Court in Calcutta Chromotype Ltd. 1998 (99) ELT 202 (SC) the corporate veil can be lifted. The person behind manufacturer and buyer are same and the financial flow back is also there in the form of payments to third party on account of repayment of funds to assessee. In fact a perusal of list of share holders of the assessee and its directors vis-a-vis the schedules forming part of the Balance Sheet and Profit & Loss Account of SPML makes it clear that the seller and buyer are very closely related. It does not require a financial or a legal wizard to come to that conclusion." We find that if two of the directors of M/s SPL are in M/s SMPL that cannot be the ground to hold that both are related person. We further found that during the course of investigation, M/s SPL and M/s SPML has clearly explained certain funds transfer entries in their accounts and the same has not been form the part of the show cause notice, therefore, the said ground cannot be alleged that they are related person. The adjudicating authority has relied on the balance sheet of M/s SPML for the year 2001-2002 to show that M/s SPL is a subsidiary company which is factually incorrect as the extract ....
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....elated person. It is fact on record in the show cause notice that Sh. D.C. Mandal stated that they are taking Cenvat Credit of duty paid on all the dutiable raw materials in RG-23A Pt-II and make debit therefrom of the amount of credit attributable to the inputs used in the exempted final product on the actual consumption basis; that they do not maintain separate inventory for exempted as well as dutiable final products and as the assessee was maintaining consolidated accounts in respect of the inputs used for the manufacture of dutiable as well as exempted pipes i.e. by availing credit of duty paid on inputs going into the manufacture of both categories of pipes, the assessee was required to reverse Cenvat Credit equivalent to 8% of the value of the exempted goods as per the provisions of Rule 6 (3) (b) of Cenvat Credit Rules, 2002. But the assessee did not reverse the same correctly. 14. The reversal of Cenvat Credit shown in the ER-1 returns is neither at the rate of 8% of the sale value of exempted pipes nor on actual basis, as all the inputs consumed in the manufacture of exempted goods were not taken into consideration while calculating the actual reversal. Moreover, the rev....
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....he Heading 6811.83 covers both pipes and fittings/couplings there is no separate classification of pipe fitting, as stated in the circular for asbestos cement pipes. The circular is not applicable in the case of appellant. Its applicability is limited to those pipes, in respect of which the findings are classified in a separate heading. In terms of above clarification also the case of appellant is squarely covered by the above decision and thus exemption is available to the couplings. Further, the clarification issued by the board is neither an Act nor rule framed under the law and thus cannot take away the benefit provided in the public interest by the Government. I further observed that appellant, as per condition of the notification, has produced the certificate from the prescribed authority and genuineness of certificate has not been challenged by the Department. Department cannot go behind the certificates and hold that the same is not acceptable. It has been held in so many cases by the CESTAT that production of the certificate must be treated as proof of the fact that the conditions enabling them to obtain the benefit under the exemption have been fulfilled. I find t....