TaxTMI 
TaxTMI 
2018 (8) TMI 13
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....loy the same staff and also share the office premises; appellant and WDPL would be related persons within the meaning of erstwhile Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944. The Additional Commissioner vide Order-in-Original No.12/2005 dated 30.12.2005 has dropped the proceedings initiated vide the Show-Cause Notice. On an appeal filed by the Department, the Commissioner (A) vide Order-in-Appeal No.53/2007-CE dated 30.8.2007 has confirmed a differential duty of Rs. 39,37,780/- along with interest while imposing penalty of equal amount under Section 11AC of Central Excise Act, 1944 and imposed penalty of Rs. 25,000/- on Shri Prakash Ladhani, Director of the appellant-company. The appellants have preferred appeals against the above impugned order. 2. The learned counsel for the appellants has submitted that the show-cause notice alleges that the appellants have cleared the goods on payment of duty to WDPL, who in turn have cleared the goods to KSPL at higher value and have contravened the provisions of Section 4 of Central Excise Act, 1944. The Additional Commissioner has examined the records/documents and has given a clear finding of facts in the Order-in-Original; the pr....
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....ion from the buyer to the seller, transaction value could be depressed. There was no basis in the impugned order to hold that WDPL was a ruse to depress the transaction value. More so, in view of the finding of the original adjudicating authority that it cannot be concluded that WDPL was created for evasion or avoidance of duty. 2.3 The show-cause notice proposes the value to be determined in terms of Rule 9 or Rule 10 of Central Excise Valuation (Determination of the Price of Excisable Goods) Rules, 2000; the Commissioner (A) has determined the value of goods by adopting the price at which WDPL has sold the goods; a perusal of the Valuation Rules, shows that in order to invoke Rule 9 or Rule 10, there must be a clear finding that the seller and buyer are 'related persons' in terms of Clause (ii), (iii) or (iv) of Section 4(3)(b) of the Central Excise Act, 1944. In the absence of such clear finding that the appellant and the WDPL are 'related persons' in terms of the above, determination of the value in terms of Rule 9 and Rule 10 is not legally sustainable. CBEC Circular F. No.354/81/2000-TRU dated 30.6.2000 has also clarified the same. They have relied upon the following case la....
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....i. Steel Tubes of India Ltd. vs. CCE, Indore: 2005 (217) ELT 506 (Tri.-LB) iii. Homag India Pvt. Ltd. vs. CCE, Bangalore-II: 2017 (357) ELT 1194 (Tri.-Bang.) 3. The learned authorized representative has stated that the statement of facts appended to the show-cause notice has brought out very clearly that certain documents/records belonging to WDPL were found and also one rubber stamp depicting the name and address of WDPL was also recovered from the premises of the appellant. Shri B. Hemadri, Accountant of the appellant in his statement dated 31.10.2002 could not confirm or deny the existence of WDPL. It has been stated that all dealings were done as per the direction of their registered office and no person of WDPL has approached them so far. Mr. Syed Khasim Hussaini, Finance Manager of the appellant-company stated that he represents the Brindavan Group of Companies and he represented WDPL as authorized signatory for Sales Tax matters up to March 2004. He was getting salary from both Brindavan Group of Companies and WDPL. The statement of facts brings out very clearly that KSPL, New Delhi pays by cheque to WDPL. However, those cheques are dispatched to the appellants and this a....
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..... The appellants are not concerned about the price at which WDPL sells the material to further KSPL in terms of the agreement which is purely commercial in nature and the appellant's obligation was to manufacture and clear the goods as per the agreement. The original adjudicating authority has relied upon the judgment of Hon'ble Supreme Court in Atic Industries Ltd. vs. Union of India & Others: 1984 (17) ELT 323 (SC), wherein it was held that if the transactions between the manufacturer and its customers were on principal to principal basis and wholesale price charged by the assessee to the customer was the sole consideration for the sale and no extra commercial considerations entered in the determination of such price, the customer cannot be held to be a 'related person'. It cannot be held that appellant and WDPL to be 'related persons' merely on the ground that they were operating from the same premise and sharing the part time employees unless mutuality of interest and financial flow-back, if any, is established. There was nothing on record to show that there was either mutuality of interest or flow-back from WDPL to the appellant so as to make them 'related person' in ter....
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....he transaction value between the appellant and the WDPL, the Department requires to show that: The price offered is not a sole consideration. That the appellant and WDPL are 'related persons'. They have mutuality of interest in the business of one another and there is flow of additional consideration of funds. We find that none of the above have been alleged leave alone proving them beyond doubt. The only mention in the show-cause notice is about the appellant and WDPL being related and other than that it has not been shown as to how they are related. As rightly observed by the original adjudicating authority, mere fact of sharing common premises and services of employees do not make the two entities related in terms of Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944. No discussion or proof regarding any flow-back of funds or consideration from WDPL to the appellant has been brought forth. Mutuality of interest in one another is also not established. Under these circumstances, we find that the allegation that WDPL have been put in place only with an intention to depress or suppress the value is not tenable. We find that the department has not put forth any cogent reasoni....