TaxTMI 
TaxTMI 
2025 (7) TMI 336
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....rconnected undertaking. Based on this, Department felt that valuation cannot be arrived at in terms of Section 4(1)(a) of the Act and therefore the recourse was to be taken to Section 4(1)(b) of the Act. Therefore, it was proposed to compute the value for the purpose of charging central excise duty in accordance with the Valuation Rules 10(a) read with Rule 9 of the Central Excise Valuation Rules, 2000 (Rules). 3. Learned Advocate has taken us through the history of the case by pointing that as early as 01.09.1995, show cause notices were issued based on the agreement between them and M/s Opto-Sensors Inc, alleging that there was a mutuality of interest between the appellant and the Joint Venture entity and therefore, the joint venture's sales price will have to be taken as value for the purpose of discharging the central excise duty by the appellant. This matter, on adjudication, was examined by the Adjudicating Authority vide Order-in-Original dated 04.08.1997, wherein, interalia, Adjudicating Authority examining various clauses and sub-clauses of the Joint Venture agreement as well as submissions of the appellant, came to the conclusion that there was no mutuality of interest....
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....(a) of the Central Excise Valuation Rules read with rule 9 would be applicable. This issue in terms of various show cause notices issued post 01.07.2000, has been decided and the demand has been upheld vide the impugned order. 5. Learned Advocate's main argument are as under: a) It is not disputed by them that they would be deemed to be an "interconnected undertaking" post 01.07.2000 b) The allegation that they have not sold to anybody else other than Joint Venture is not correct and it is submitted they have been selling independently also to different parties apart from selling products to the joint venture c) As regards the mutuality of interest clause, which is mandatorily to be invoked along with their being interconnected undertaking, it is clearly a settled matter that they are not having any mutuality of interest in terms of the same agreement, which was earlier analysed by the Adjudicating Authority and Tribunal and subsequently upheld by the Hon'ble Supreme Court. 6. He further submits that the term related person as such has not undergone any change and essentially there is no change in the definition of related person prior to 01.07.2000....
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....appellants are not denying that they are not interconnected undertaking post 01.07.2007 in terms of Section 4(3)(B) of Central Excise Act. However, for the purpose of taking recourse to valuation as per Rule 10(a) read with Rule 9 of the Central Excise Rules as proposed in the show cause notice, it is mandatory that the parties are also related in terms of sub-clause (ii) or (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of Central Excise Act. We find that the show cause notice has alleged that the appellants are related to ECRL in terms of sub-clause (iv) of clause (b) of sub-section (3) of Section 4. Therefore, they have to be also related, apart from being interconnected undertaking, in the sense that they have interest, directly or indirectly, in the business of each other. Further, since, in terms of earlier round of litigation, it is now settled position that they were not treated as related person for having any mutuality of interest in terms of the same Joint Venture Agreement, therefore, even for post 01.07.2007 factual matrix of their being not related on account of their not having any interest directly or indirectly in the business of each other, will hold.....
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...., as it was during the period 01.12.2010 "when the assessee so arranges that the excisable goods are not sold by him except to or through an interconnected undertaking, the value of the good shall be determined in accordance with the manner indicated at Rule 10(a) & 10(b)". We find that there are instances, when goods have been sold by the appellant to some other independent buyers also. Further, we note that apart from this, these interconnected undertakings are also required, interalia, to be related in terms of said Clause (ii) or (iii) or (iv) of clause (b) of sub-section (3) of Section 4. As per sub clause (iv) clause b of sub- section (3)3 of Section 4, apart from their being interconnected undertaking they are required to be associated in a manner that they have interest directly or indirectly in the business of each other. Department is relying on the fact that any increased realisation of price shall result in increased dividend to the appellant to prove that they have interest in the business of each other. We find that the issue that there is no mutuality of interest between the appellant and the joint venture company ECRL is already a settled matter in terms of the agre....