TaxTMI 
TaxTMI 
2019 (6) TMI 261
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..../ Financial reports. The Appellant filed reply to same contending that the SMS is not their related concern in terms of Section 4 of Central Excise Act and the relation has not influenced the sales price as duty was paid on comparable sales price charged to other independent unrelated buyers or even at higher prices. The adjudicating authority confirmed the demands invoking Rule 8 of Valuation Rules holding that the duty has to be paid on 115% or 110% of cost of production. A second SCN on same grounds for the period April'2006 to March'2008 was also issued based upon similar allegations and came to be decided against Appellant. The Appellant filed appeal before Commissioner (Appeals) who held that there should be mutuality of interest between the two entities and commonness of directors and/ or shareholding cannot be a ground for holding both the entities as related person. He also held that since Rule 8 was not invoked hence the adjudication order is beyond the scope of Show Cause Notices. Vide Order dated 19.03.2008 the Joint Commissioner again confirmed the demands against which the Appellant filed appeal before Commissioner (Appeals) who in turn vide Order-in- Appeal dated 31.....
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....of Rule 9 i.e. at the price at which M/s SMS were selling the goods. That the Appellant were selling goods to M/s SMS at less rate than other buyers. The Appellant and M/s SMS are related person; the sales price to independent buyers vary from time to time and hence the same cannot be invoked. He held that the Appellants are also entitled for cum duty benefit and remanded back the matter to the adjudicating authority. Hence the present appeals before us. 3. Ld. Counsel Sh. T.C. Nair and Sh. Nitin N. Mehta appearing for the Appellant submits that the Appellant and M/s SMS cannot be treated as related person only because there are some common directors or shareholders. There must be mutuality of interest between them. The Appellate Commissioner in first round of appeal before him had admitted that the evidences of comparable prices were provided and that commonness of director and shareholder cannot be criterion for holding both units as related person. The said findings were not challenged by the revenue and the Department cannot take contrary stand in remand proceedings. That even if both the entities are assumed as related person, such relation has not influenced the sales price....
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....not applicable. In his previous remand order vide Order-in-Appeal No. KRS/290/VAPI/2008 dated 30.09.2008 while remanding back the case to the adjudicating authority had held as under: "6.1 on the question of applicability of Rule 9 of Valuation Rules as sought in the SCN, I find that for the application of the said rule one basic requirement that the buyer and seller have interest in the business of each other is required to be fulfilled in terms of sub-clause(iv) of Section 4(3)(b). Sub clause (ii) & (iii) of section 4(3)(b) are not applicable here as buyer and seller are not relatives here. The adj. authority has held the buyer and seller to be related only on the ground that some of the directors are common and the appellants have shown the said concern to be related in their balance sheet. I find that the above is not sufficient to hold them as related person. What is required here to be established is the mutuality of interest and the price charged should be lower than the normal price and the reduction must be on account of extra transactions between them and M/s Stackwell Marketing Services P. Ltd were purely based on commercial consideration, at arm's length and without ....
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....f Section 4 of the Act, the values of 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." 6. The reading of above rule clearly reveals that the aforesaid rule stipulates the consideration of sale price of related person as assessable value only when a manufacturer and buyer are related in terms of Clause (ii) sub clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) (b) of Section 4 of the Act. Thus the findings of the Appellate authority that both the Appellant and M/s SMS are related person in terms of sub - clause (i) as interconnected undertakings in terms of MRTP Act is without any basis. Even sub clause (i) of Section 4 (3) (b) was never invoked in show cause notice and therefore the impugned order is incorrect. The Appellate authority should have restricted his findings only to ascertain that whether there is mutuality of interest in terms of Section 4 (3) (b) sub - clause (iv). However, we find that no evidence of mutuality of interest has been found ex....