TaxTMI 
TaxTMI 
2018 (10) TMI 1006
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....n 11AC of the Central Excise Act, 1944. 27. I do not propose to impose any penalty under Rule 25 of Central Excise Rules, 2002, since imposition o0f penalty under Section 11AC of Central Excise Act, 1944 meet the ends of justice. 28. The interest at appropriate rate is also recoverable under section 11AB of the Central Excise Act, 1944." 2.1 During the course of preventive checks it was observed that the appellants were clearing the goods to their sister concern on payment of duty on the assessable value which is determined on rate reduced by Re 1 to Rs. 2.50 per kg then the declared assessable value. The said value for clearance was agreed mutually and verbally without any written contract. Statements of the concerned persons in the unit, i.e. Shri Prabhat Singh, Partner, Shri Simon D Rodrigues an employee in the unit and Shri Panchdeo Singh Business Controller and Partner in M/s Indian Extrusions (sister concern) were recorded. 2.2 On the basis of the investigations undertaken it was alleged that the Appellants and their sister concern are interconnected units and hence related person for the purpose of Central Excise. Since the sister concern was captively consuming the g....
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....ected undertakings are covered by the provisions of Section 4(1)(b) read with Rule 10 of Central Excise Valuation (DPEG) Rules, 2000 and not by Rule 9 read with Rule 8 as have been held by the authorities below. vii. Further the orders of authorities below is erroneous because even if the clearances made by them were to be valued in terms of Rule 9 read with Rule 8, then also the assessable value should be 110% of the value arrived on cost construction and not 110% of the invoice value. viii. They have been following the same practice for clearance to the sister concern for last twenty years and they were under bonafide belief that Rule 8 is not attracted in their case as they were selling the goods to independent buyers too. There was no intention or motive top evade Central Excise duty and hence extended period of limitation has been wrongly invoked. ix. Since demand itself is not sustainable imposition of penalty cannot be justified. 4.1 We have heard Shri S K Babaladi, Consultant for the Appellants and Shri M R Melvin, Superintendent Authorized Representative for the revenue. 4.2 Learned Consultant submitted that in the case of clearances made to interconnected unit, the v....
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....al Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 Rule 8. Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. 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 subclauses (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. Rule 10. When the assessee so arranges that the excisable goods are not sol....
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....f Commissioner (Appeals) order, Commissioner (Appeal) records " ......... Further the clause (g) of Section 2 of Monopolies and Restrictive Trade Practices Act, 1969 defines "inter-connected undertakings" where the undertakings are owned by firms, if such firms have one or more common partners. M/s Amardeo Plastics M/s Indian Extrusions Names of Partners (S/Shri) Names of Partners (S/ Shri) 1 Amarnath H Singh 1 Amarnath H Singh, Karta Amarnath H Singh, HUF 2 Panchdeo H Singh 2 Shail V Singh 3 Rahul A Singh 3 Manju R Singh 4 Prabhat B Singh 4 Panchdeo H Singh As may be seen from above table there are one or more common partners and as such can definitely be called as "inter-connected undertakings." 5.6 Thus it is quite evident the case of department is that the appellant and their sister concern fall within the definition of inter-connected undertakings and hence are related persons as defined under sub section (3) to Section 4 of the Central Excise Act, 1944. There appears to be no dispute that the supplier and recipients are inter-connected undertakings and hence are related in terms of clause (i) of said sub-....
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....y the element of mutuality and we have already held above that this mutuality principle has not been satisfied in the instant case. 17. Apart from the above, it would be significant to mention that after taking over of the assessee company by Goodyear, more than 70 per cent of the sales by the assessee company are to the third parties. That apart, there was another contention of the assessee, viz., that the goods sold to the outsiders are at a lesser rates than sold to Goodyear. These two contentions have not been refuted by the Revenue. The case, therefore, would be clearly covered by a recent judgment of this Court in 'Commissioner of Central Excise, Hyderabad v. M/s. Detergents India Limited and Another' [2015 (4) SCALE 631 = 2015 (318) E.L.T. 559 (S.C.)] wherein it was held : "We are of the view that the "arrangement" spoken of in the proviso must be something by which the assessee and the related person "arrange" that the goods are sold at something by which the assessee and the related person "arrange" that the goods are sold at something below the normal price, so that tax is either avoided or evaded by such arrangement. Secondly, the expression "generally" also shows th....
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....rough a person who is related in the manner stated in S.4(3)(b) of the Act. There are four eventualities provided in subclause (i) to (iv) which such a person can be related. Section 4(3)(b) : ........... 7.However Rule 9 mentions relationship that is visualised in sub-clauses (ii) to (iv) only and excludes clause (i). 8.Thus, this Rule would be applicable only in those cases that assessee is related in the manner specified in either of sub-clause (ii), (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act and not in those cases where the person is related in the manner as stated in clause (i) thereof. In those cases where Rule 9 is applicable, for the purpose of valuation, normal transaction value at which such goods are sold by the related person, is to be taken as the value of the goods. Proviso becomes applicable only when goods are not sold by the related person at all and used or consumed for home production. As there is no sale transaction by the related person, question of value thereof will not be available and therefore, to arrive at the value in such a situation one has to fall back on Rule 8. 9.However, if main Rule 9 is not attracted, question o....