TaxTMI 
TaxTMI 
2019 (3) TMI 856
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.... under Chapter 76 of the Central Excise Tariff Act, 1985. The contention of the Department is that the appellants were allowing cash discount of Rs. 4/- per kg on Aluminium Powder to all buyers who were making 100% payment in advance. However, they were allowing cash discount of Rs. 5/- per kg to M/s. Sri Kaliswari Fire Works. 2.2.1 The contention in the first Show Cause Notice dated 30.03.2011 relating to Appeal No. E/40697/2013 is that M/s. Sri Kaliswari Fire Works is a partnership firm consisting of 18 partners. Out of the 18 partners of M/s. Sri Kaliswari Fire Works, 17 partners jointly hold 55.87% shares in the appellant's company. Hence, the appellants and M/s. Sri Kaliswari Fire Works are associated and related persons. 2.2.2 T....
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.... interest in extending Re. 1/- extra discount based on large quantum of purchase by M/s. Sri Kaliswari Fire Works. (ii) In this, there is no mutuality of interest. It is submitted that 'mutuality' of interest in each other's business means that there should be a 'two way flow'. There is no such allegation in the notice itself and mere extending discount to an industrial consumer would not entail the Department to apply the transaction as a sale to a related person. There is absolutely 'no' mutuality of interest. Therefore, the impugned Order is liable to be set aside. (iii) Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 though referred in the Show Cause Notice, the same is not applicable....
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.... as per Section 4(1), transaction value is to be determined for each removal. For sales to unrelated buyers, valuation will be done as per Section 4(1)(a) and for sale of the same goods to related buyers, recourse will have to be taken to the residuary Rule 11 read with Rule 9 (or 10). Rule 9 cannot be applied in such cases directly since it covers only those cases where all the sales are to related buyers only. (vii) As per the said clarification, the sales to unrelated buyers cannot be adopted for sales to related buyers. As per Section 4(1), sale of the same goods to related buyers recourse will have to be taken to the residuary Rule 11 read with Rule 9 or 10. Rule 9 alone cannot be applied in such cases directly since it covers only ....
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....eproduced as under : "RULE 9. [Where whole or part of the excisable goods are sold by the assessee to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of such 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 mann....