TaxTMI 
TaxTMI 
2025 (8) TMI 568
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....tia (E/60177/2016) was Managing Director of the appellant as well as M/s Bony Polymers and controlled both the units; the appellant and M/s Bony Polymers are related in terms of Section 4 (3) (b) (1) of the Central Excise Act; therefore, the appellants were required to discharge central excise duty on 110% of the cost of production in terms of Section 4 (1) (b) of the Central Excise Act, 1944 read with Rules 8 & 9 of Valuation Rules; three show cause notices dated 12.12.2014, 28.05.2015 & 28.12.2015, covering the periods February 2010 to September 2014, October 2014 to March 2015 and April 2015 to November 2015, seeking to recover central excise duty of Rs.94,84,776/- along with interest and penalty on the appellant and penalty on Shri Raj Kumar Bhatia, Managing Director and Shri Saket Bhatia, Director, (E/60181/2016) were issued. Learned Commissioner vide impugned order dated 28.01.2016 dropped the demand under extended period and the penalty under Section 11AC on the grounds that there was no suppression on the part of the appellants and that the issue was revenue neutral; however, he imposed penalties of Rs.10 Lakhs and Rs.5 Lakhs on the Managing Director and the Director.....
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....r assessment purposes, they will not be considered related' ; impugned Order has recorded no finding as to how the Appellant and BPPL are related in terms of clause (ii),(iii) or (iv) of Section 4(3)(b) or that BPPL is a holding company or subsidiary company of the Appellant; Ld. Commissioner himself held that key managerial persons cannot be held to be relatives; therefore, in such a case, valuation of goods is to be done under Rule 10(b) read with Section 4(1)(a) of the Excise Act. She relies on. • DSRM Steel Pvt Ltd & another 2025 (2) TMI 209- CESTAT Chennai • Shree Vaishnav Industries Pvt Limited 2025 (3) TMI 568- CESTAT Mumbai • Shiva Steel Industries (Nagpur) Limited 2025 (3) TMI 955- CESTAT Mumbai • Khyati Ispat Private Limited (Rolling Mill Division) 2022 (3) TMI 399- CESTAT New Delhi • Mahendra Sponge & Power Ltd 2022 (8) TMI 1250- CESTAT New Delhi • Kwality Foundry Industries 2019 (4) TMI 1642- CESTAT New Delhi • Ramsons Casting Pvt Ltd 2017 (357) ELT 431 (Tri. - Mumbai) • Apsara Metallica Industries 2019 (369)....
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....iscation and that the concerned person should have dealt with the goods in the manner specified in the said Rule, are required to be satisfied cumulatively; in the present case, there is no evidence on record to show that the Appellant and their Managing Director and Director had any knowledge or reason to believe that the goods were liable for confiscation; in the absence of such evidence, the penalty imposed is liable to set aside; there is no evidence in the SCN or the Impugned Order that the Appellant and their Managing Director and Director physically dealt with such goods; hence, imposition of penalty under Rule 26(1) is not sustainable. She submits that in order to impose penalty under Rule 26(1), it is necessary that certain goods are confiscated; hence, penalty under Rule 26(1) can only be imposed wherein goods are confiscated. She relies on the following. • Shri Piyush Agarwal Director Basai Steels Power Pvt Ltd 2024 (6) TMI 754- CESTAT Bangalore • Apple Sponge and Power Ltd 2018 (5) TMI 772- CESTAT Mumbai The Impugned Order has not even confiscated any goods. • Gouri Shankar Poddar 2024 (9) TMI 615- CES....
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....60396/2016 is concerned. 10. Heard both sides and perused the records of the case. Brief issue that requires consideration in the instant case is as to whether the appellant and their customer M/s Bony Polymers Pvt Ltd (BPPL) are related in terms of Section 4(3)(b)(i) of Central Excise Act, 1944; consequently, whether the appellants are required to assess the value of goods cleared to them at 110% of the cost of production; whether penalties are imposable on the appellants and their Managing Director and Director. The case of the Department is that the appellant and M/s BPPL are related as the management of the companies is in the same hands and therefore, valuation of the goods cleared by the appellants to M/s BPPL should be done under Rule 8 & 9 of Central Excise Valuation Rules. The appellants, on the other hand, claimed that the appellants and M/s BPPL can at best be termed as inter-connected undertakings and thus, valuation requires to be done under Section 4(1)(a) of the Central Excise Act, 1944 in view of Rule 10 of Central Excise Valuation Rules. We find that it will be useful to have a look at the provisions of the Statute before we proceed further. 11. S....
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....ubsidiary of the other body corporate; or (III) if the bodies corporate are under the same management; or (IV) if one body corporate exercises control over the other body corporate in any other manner; (D) where one undertaking is owned by a body corporate and the other is owned by a firm, if one or more partners of the firm,- (I) hold, directly or indirectly, not less than fifty per cent of the shares, whether preference or equity, of the body corporate; or (II) exercise control, directly or indirectly, whether as director or otherwise, over the body corporate; (E) if one is owned by a body corporate and the other is owned by a firm having bodies corporate as its partners, if such bodies corporate are under the same management; (F) if the undertakings are owned or controlled by the same person or by the same group; (G) if one is connected with the other either directly or through any number of undertakings which are inter-connected undertakings within the meaning of one or more of the foregoing sub-clauses. Explanation I.- For the purposes of this clause, two bodies corporate shal....
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....act in accordance with the directions or instructions of one or more of the directors of the other, or if the directors of both the bodies corporate are accustomed to act in accordance with the directions or instructions of an individual, whether belonging to a group or not. Explanation II.- If a group exercises control over a body corporate, that body corporate and every other body corporate, which is a constituent of, or controlled by, the group shall be deemed to be under the same management. Explanation III.- If two or more bodies corporate under the same management hold, in the aggregate, not less than one-fourth equity share capital in any other body corporate, such other body corporate shall be deemed to be under the same management as the first mentioned bodies corporate. Explanation IV.- In determining whether or not two or more bodies corporate are under the same management, the shares held by financial institutions in such bodies corporate shall not be taken into account. Illustration Undertaking B is inter-connected with undertaking A and undertaking C is interconnected with undertaking B. Undertaking C is inter-connected wit....
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....goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without [payment of duty;] [(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory,] from where such goods are removed; 2[(cc) "time of removal", in respect of the excisable goods removed from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory;] (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not includ....
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....lue shall be the value at which these goods are sold by the related persons to their customers were not related; if the transaction comes under the provisions of Rule 9 then valuation should be done under Rule 8 which prescribes that the assessable value shall be 110% of the cost of production. In the instant case, the appellants cleared the rubber compound manufactured by them to M/s BPPL on payment of excise duty on the transaction value; M/s BPPL further used the rubber compound in the manufacture of automobile components, which are cleared to Maruti Suzuki, Hero MotoCorp etc. 13. In the instant case, there is no doubt that the appellants are clearing 97% of their production to M/s BPPL. We find that the period involved is after the said Rule 9 was amended. We find that whereas the show cause notice alleges that the appellant and M/s BPPL are related under clauses (ii), (iii) & (iv) of sub-section 3 of Section 4, it is not explained as to how they are related. Learned Commissioner finds that the key managerial person being the same cannot be said to be relatives; learned Commissioner relying on the Explanation to Section 2(g) of Monopolies and Restrictive Trade Practice....
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....rictive Trade Practices Act, 1969 (64 of 1969); and "relative" shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956). From the plain reading of the above legal provisions, it appears that interconnected undertakings are also related person. However, as per Rule 9 of Central Excise Valuation Rules, 2000, it is clear that Rule 9 ibid shall apply only when the goods are sold through person as specified under sub-clause (ii), (iii) or (iv) of clause (b) of Section 4 of the Act. Further, Provisio of Rule 9 also suggests that merely because buyer is interconnected undertaking that alone is not sufficient for holding as related person. It is nowhere discussed in the impugned order or any evidence produced by the authorities below to state that the appellants and their interconnected undertaking are related in terms of the above provisions of the Central Excise statute. Therefore, we are of the opinion that on this ground alone the impugned order is liable to be set aside and it does not stand the scrutiny of law. 9.1 We find that in the case of Gajra Gears Private Limited (supra), the Co-ordinate Bench of the Tribunal has h....
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....tal clear that in existing status of interconnected undertaking they should fall under the category of sub-clause (ii), (iii) or (iv) of Section 4(3)(b). In the present case Revenue contended that the respondent and buyers company are interconnected undertaking therefore, they are related and consequently proposed Rule 8 of Central Excise Valuation Rules, 2000 and adopted the valuation of cost construction method. The show cause notice or original order have not brought any material to establish that the relationship between respondent and buyers company are one of the relationship as prescribed under sub-clause (ii), (iii) or (iv) of Section 4(3)(b) of Central Excise Act therefore, in our considered view even if it is accepted that the buyers company are interconnected undertaking of the appellant company it cannot be treated as related person in terms of Section 4(3)(b). In absence of relationship as specified under sub-clause (ii), (iii) or (iv) of Section 4(3)(b). In this position, the transaction value of the goods between respondent and the so-called interconnected undertaking is correct valuation and the same cannot be disturbed, therefore, value as provided under Rule 8 is ....
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....Sunshine Steel Industries (2023) 8 Centax 209 (Tri.-Del) held that: 19. With the assistance of the learned authorized representative appearing for the Department Form ER-I that has to be submitted online has been perused. There is no space designated for the assessee to disclose that it is a related party and indeed the learned authorized representative appearing for the Department has not been able to point out any space where this information was required to be disclosed by the appellant. What has been alleged in the show cause notice is that the appellant had suppressed this information in the ER-I Form. As the said form does not require an assessee to disclose this information, it is not open to the Department to contend that the assessee had suppressed any information. 20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 (the Rules) that the assessee is expected to self-assess the duty and subrule (3) of ....