TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 181
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....ducation Cess amounting to Rs. 1,19,63,690/- 2. In the Show Cause Notices, it has been alleged that the Appellant and M/s Titagarh Wagon Ltd. (hereinafter referred as TWL) are "related persons" and hence the valuation of goods sold to TWL by the Appellant should be made in accordance with Rule 9 read with Rule 11 of the Central Excise (Determination of Value) Rules 2000 for purpose of discharging Central Excuse duty and not under Section 4 of the Central Excise Act, 1944. 3. The Appellant contented that TWL is not a related party to them on the basis of the Board Circular No. 354/81/2000-TRU/ dated 30.06.2000 and hence differential duty arrived at by 110% of cost of production, as demanded in the Notices cannot be sustained. 4. The said ....
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....re all the sales are to related buyers only." 7. In their submissions, the Appellant stated that though the adjudicating authority has admitted that the Appellant has sold the goods to TWL at the same rate at which they have sold it to independent buyer, the Indian Railways, he has confirmed the demand by relying on the Board Circular 643/34/2002-CX dated 1- 7.2002 and citing the decision of the Hon'ble Supreme Court in the case of "C.C.E. Vadodara, Vs. Dhiren Chemical Industries 2002 [(139) ELT 3 (S.C.)]" in support of his contention that the Board Circular is binding on the Revenue. 8. In their submissions, the Appellant stated that they have sold their products (Bogies and Coupler) to TWL at the same rate and price in which they have ....
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.... the same rate in which they have sold the said goods to Indian Railways and other customers. We find that the adjudicating authority has admitted this fact that the Appellant has sold the goods to TWL at the same rate at which they have sold it to independent buyer, Indian Railways . However, the adjudicating authority went on to confirm the demands. 14. Thus, the issue to be decided here is whether 110% of cost of production can be adopted to determine the differential value, when the same goods are sold to TWL and independent buyers at the same rate. 15. We find that the decisions of the Tribunal Larger Bench in the case of "Ispat Industries Ltd., Vs Commissioner of Central Excise, Raigad [ 2007(209)ELT 185 (Tri-LB)]" and "Aquamall Wat....
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....rd Circular. As per the Circular cited above, when there is independent sale along with sale to 'related persons', Rule 9 is not applicable and recourse will have to be taken to the residuary Rule 11. As per the best judgment method under Rule 11, the value of the goods sold to the independent buyer should be the value for the sale to 'related persons' also. This view has been taken by the Hon'ble Apex Court in the case of Commissioner of Central Excise & Service Tax, Rohtak Vs. Merino Panel Products Ltd.,- [(2022) 1 Centax 59 (S.C.). The relevant paras of the decision are reproduced below: "27. Based on our reliance on Ratan Melting (supra) and Ahmedabad Urban Development (supra) we have no reason to doubt that if a circular has been iss....
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....for the related party sales can be established by referring to the normal price under Section 4(1)(a) of the CEA, which is readily available in the present case. This is, in our opinion, the true meaning and intention underlying the Circular of 1-7-2002. The reference to Rule 11 in Point No. 12 of the Circular simply mandates the usage of "reasonable means" keeping in mind Section 4(1)(a) of the CEA and Rule 9 of the CEVR. This is merely a method by which the Revenue is required to apply its mind to a case of partial sales to both independent and related parties. The conclusion reached through this process may very well be in consonance with our analysis. 37. Regardless of the value the Revenue finally settles upon, we do not find the ci....