AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 530
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.... Onida are buyers of goods manufactured by the appellant - M/s VPIPL. 2. The issue in these appeals, arising out of common impugned order, is, whether the appellants herein namely; M/s L. G. & M/s Onida are related to the appellant - M/s VPIPL as per the provisions of Section 4(3)(b) of the Act, and if they are so related, whether the goods cleared by M/s VPIPL to the other appellants are liable to be valued in the light of Rules 8 & 9 read with Central Excise Valuation Rules, 2000 for the purpose of payment of duty on such goods and further, whether penalties have been rightly imposed on M/s VPIPL under Rule 173Q of the Central Excise Rules, 1944 along with penalty under Rule 26 of the Central Excise Rules, 2001/2002 on M/s L. G. & M/s Onida. 3. This is the second round of litigation before this Tribunal. In the earlier round, this Tribunal had remanded the matter for de-novo adjudication with direction to the ld. Commissioner to provide non-relied upon documents also to the appellants. 4. Show Cause Notice dated 19/05/2006 was issued for the period 2001-02 to 31/12/2005 invoking the extended period of limitation, as it appeared to Revenue that M/s VPIPL is related parties as r....
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....oducts through their own workers and in their own factory. They had been purchasing the raw materials independently and accounting the same in their Books of Accounts. There is no dispute that all the clearances of various types of plastic moulded components were being effected on issuance of Central Excise Invoice issued u/r 11 of Central Excise Rules and thereby properly accounting for the same in their records. They have been paying Duty of Central Excise on all the clearances affected and for which they had been filing their monthly returns regularly as well. 5.3 The customers of VPIPL have been LG, Onida, Moser Baer, Panasonic, Samsung Electronics and various other independent companies engaged in manufacturing of Electrical Appliances, TV, Washing Machine etc. 5.4 Each manufacturer of the Appliances like Washing Machine, AC and like such goods have their own design and shapes. Therefore, it is the customers like LG, Onida and others, who have been supplying (on returnable basis and free of cost) the moulds to VPIPL for making use of the same towards manufacture of Plastic Moulded Components. Supply of Moulds by the customer is a normal commercial practice. All such moulds a....
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....d 2005 - 2006 of Rs. 1,74,04,85,618/-, they sold goods of a value of Rs. 96,25,37,640 to LG and Rs. 13,07,70,176/- to Onida. The remaining sales were affected to Moserbaer, Samsung, Panasonic and others. In this connection, they have placed on record such details duly certified by the Chartered Accountant. 5.9 M/s VPIPL also placed on record the tables duly certified by the Chartered Accountant showing that for the year 2001-02 to 2005- 06, they purchased Plastic Dana of Rs. 85,36,80,676/-, out of which Plastic Dana of Rs. 2,90,66,145/- was purchased from LG and of Rs. 7,83,889/- from Onida. All such purchases were duly accounted in their regular Books of Accounts, for which there is no dispute. Besides the Plastic Dana purchased, there also appears on record the purchase of other material of about Rs. 22 Crores by VPIPL. 5.10 The Moulds and Dies by the respective customer are supplied free of cost to VPIPL and such Moulds are duly returned to the customer supplying such moulds by VPIPL. 5.11 During the course of investigation, various statements of the representatives of LG, Onida and VPIPL were recorded. The statement of Sh Sanjay Bhatt of VPIPL confirmed that while selling th....
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....rogate Manufacturer' of M/s LG and M/s Onida and further by alleging about there being a mutuality of Interest between M/s LG/M/s Onida with M/s VPIPL on the ground of moulds having been supplied free of cost to M/s VPIPL, a SCN dated 19.05.2006 was issued, wherein it was alleged about M/s VPIPL being covered under the term 'RELATED' u/s 4(3)(b)(iv) of Central Excise Act. Accordingly, provisions of Rule 9 r/w Rule 8 of the Valuation Rules were invoked, thereby alleging that the Transaction Value ought to have been determined at 115/110 per cent of the cost by M/s VPIPL. The demand of Differential Duty was, accordingly, raised along with Interest and penal action by invoking extended period. M/s LG and M/s Onida were also asked to show cause as to why penalty should not be imposed on them u/r 26 of Central Excise Rules, 2002/Rule 209A of the erstwhile Central Excise Rules. The above demand along with Interest and imposition of Penalty was, however, confirmed by the Commissioner of Central Excise, Noida, vide Order in Original No 09/CONN/Noida/2009 dated 27.02.2009. He also imposed penalty of Rs. 50 lacs each on M/s LG and M/s Onida. 5.18 Challenging the Order of the Commissioner, M....
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....n M/s VPIPL. Besides, all these respective three companies being incorporated independently under the Companies Act and independently registered with Sales Tax, Income Tax and other allied laws of the country, it cannot be said that they are Related to each other in any way. 5.21 Not an iota of evidence exists in respect of any extra consideration received by M/s VPIPL over and above the price settled between them and M/s LG/M/s Onida and as declared in the Central Excise Invoice. 5.22 Like VPIPL, M/s LG/M/s Onida had also been procuring/purchasing the Plastic Moulded Components from various other suppliers. Accordingly, in the facts and circumstances, where the transactions are purely commercial and where the buyer has a Right of Rejection and the supplier has a right of receiving his Sales Consideration, it cannot be said about there being any mutuality of Interest, directly or indirectly in the business of each other. The provisions of Section 4(3)(b)(iv) have no application accordingly and the Commissioner erred in invoking and holding so while passing the Order. 5.23 Drawing the attention of the Bench that even the demand in question against M/s VPIPL was mostly barred by l....
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....t aside on this score alone, as the whole foundation of the SCN is based on the allegation of these parties being related to each other. Accordingly, he prays for setting aside the penalty imposed on the appellant- M/s L.G. as well as setting aside of the impugned order. 7. Similarly, the Counsel for the appellant - M/s Onida, Shri Jitendra Singh urged that the whole case of Revenue is that M/s Onida supplied Moulds & Dies (free of cost for use in the manufacture of goods, as per their specifications and also supplied some plastic granules at reduced price), thus the manufacturer - M/s VPIPL and the appellant - M/s Onida had interest in each other‟s business and therefore the clearances by M/s VPIPL to M/s Onida have to be treated as transaction between 'related parties' under the provisions of Section 4(3)(b)(iv) of the Act read with Rule 8 & 9 of the Central Excise Valuation Rules, 2000. It is also urged that as per the allegations and findings in the impugned order, Rule 6 of the Central Excise Valuation Rules, 2000 is rendered otiose which provides for amortization of the cost of Moulds & Dies in the cost of goods manufactured and supplied to the supplier of moulds for t....
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....rkers of M/s VPIPL, and the Agreement entered was not between Employer and Employee but between two independent Companies. 11. The order passed by the Commissioner of Central Excise, Noida, does not provide any evidence which could nullify the Terms of the Agreement, referred to above. The Terms of the Agreement goes on to establish that such terms could only be where the Transactions between the Buyer & Seller are on Principle-to-Principle basis. Further, the case records perused by us confirm about the prices for supply/Sale of Plastic Moulded Components were settled between M/s VPIPL with M/s L. G. / M/s Onida. The Balance-Sheets of M/s VPIPL placed on record confirms about M/s VPIPL has been a Profit-Earning-Company. It is further, not in dispute if M/s VPIPL received Sales Consideration over and above the price settled with M/s L. G./ M/s Onida. 12. There is not an iota of evidence which could establish about M/s L. G./M/s Onida having any Managerial, Administrative and Financial control on M/s VPIPL or vice-versa. M/s VPIPL has Share-Holding of the members of Batra family M/s L.G/ M/s Onida being Multi-National-Companies. In no way they can be considered under the Term "Rel....