TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 664
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.... their sister concerns M/s. Taurus Powertronics Private Limited and M/s. Taurus Powertronics Systems and in turn they have sold the goods at higher value to their customers, proceedings were initiated and show-cause notice was issued alleging undervaluation, wrong classification and short payment of excise duty. Thereafter, adjudication authority as per the impugned order, confirmed the demand and also imposed penalty under Section 11AC(1)(c) of the Central Excise Act, 1944. Aggrieved by said order, present appeal is filed. 4. When the appeal came up for hearing, learned counsel for the appellant submits that the allegation regarding undervaluation is prima facie unsustainable since there is no finding regarding interconnectivity of the undertaking. As regards the allegation of related person, learned counsel draws our attention to the finding in the impugned order where it is held that:- "The Show-cause notice alleged that the assessee, M/s. MKS Systems, a Proprietary concern, and M/s. Taurus Powertronics Pvt. Limited, a body Corporate and M/s. Taurus Powertronics Systems, a Partnership Firm, are "Inter-connected Undertakings" in terms of Section 4(3)(b)(i). Further, S....
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.... person, anyone who is related to such person in any of the ways specified in Section 6, and no others; Section 6 - A person shall be deemed to be a relative of another if, and only if, (a) they are members of a HUF; or (b) they are husband and wife; or (c) the one is related to the other in the manner indicated in Schedule 1A Schedule 1A includes sister and sister's husband in Sl. No. 21 and 22." 7. Learned counsel also draws our attention to the judgment of the Hon'ble Supreme Court in the case of State of Punjab Vs. Jullundur Vegetables Syndicate-(1966) AIR 1295 wherein the Hon'ble Supreme Court has examined the issue whether a Firm is a separate assessable entity for the purposes of levy of tax under the East Punjab General Sales Tax Act, 1948. The decision of the Hon'ble Supreme Court is extracted hereunder: "The first question is whether a Firm is a separate assessable entity for the purposes of the Act or whether it is only a compendious term used to denote a group of Partners. The definition of "dealer" takes in three categories of assessable Units, namely, person, firm or a HUF. The substantive and the procedural pro....
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....such as manpower supply for installation, integration, demonstration, warranty support, service calls, stores follow up, etc., for completion of the contract; that they have entered into agreements with sub-contractors for carrying out installation, demonstration, warranty support, service calls, stores follow up, etc, the difference between the purchase price and selling price is on account of huge selling cost and the differential amount is justified, the sub-contractors submit their Bills and are paid by Taurus after completion of warranty period etc. Thus, it is clear that the buyers TTPL and TPS, have not sold the goods purchased by them "as such" or "as it is", but have supplied them along with accessories, Laptops essential for monitoring various parameters, undertaken marketing, advertisement, erection, installation, commissioning, demonstration, training, after sales service during warranty, etc. Therefore, the price / amount charged by TPPL/TPS to their customers is not merely for sale / supply of the goods purchased from the Appellant, but includes price of other goods and services of advertisement, marketing, erection, commissioning, integration with the plant and machi....
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.... in the business of each other. In contrast no such general condition/restriction applies for inter-connected undertakings to be "related" under new Section 4. However, a provision has been made in the new valuation rules that even if the assessee and the buyer are inter-connected undertakings, the transaction value will be "rejected" only when they are "related" in the sense of any of Clauses (ii), (iii) or (iv) of sub-section 4(3)(b) or the buyer is a holding company or a subsidiary company of the assessee. In other words, while dealing with transactions between inter-connected undertakings, if the relationship as described in Clauses (ii), (iii) or (iv) does not exist and the buyer is also not a holding company or a subsidiary company, then for assessment purposes, they will not be considered related. "Transaction value" could then form the basis of valuation provided other two conditions, namely, price is for delivery at the time and place of removal and the price is the sole consideration for sale are satisfied. If any of the two aforesaid conditions are not satisfied then, quite obviously, value in such cases will be determined under the relevant rule. 25. In essence....
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....ublic Limited Company the profit, if any, should flow to all the shareholders." 12. As regards the admissibility of the statements, learned counsel submits that over a period of time from 20.03.2014 to 18.03.2018, five statements of the proprietor were recorded and two statements were recorded from the supplier of raw-materials. The statements were contradictory and the entire case of undervaluation of goods and classification was made on the basis of such statements which is prima facie unsustainable. 13. As regards alleged short payment of duty for the period from March 2012 to March 2013, during audit said observations are made and appellant paid entire amount with interest as applicable. Learned Counsel also draws our attention to copies of challan from 16.05.2014 onwards and the letter dated 27.03.2015 intimating the details of payment and TR-6 challan. However, said amount was not deducted by Adjudication Authority on the ground that the appellant has not produced any documentary evidence to support their claim. 14. As regards proposed classification, the appellant had made classification of goods under CETH 2471 but the Adjudication Authority as per the impugned ord....
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....ultiple microcontrollers, processing units, data interface, digital integrated circuits highlights that it is a Digital Processing Unit. 18. As regarding the product TAURUS PREZIOHM TFR AND PREZIOHM ET The PREZIOHM TFR and ET, Learned Counsel submits that it is a microcontroller based digital data processing equipment which processes and calculates the resistance and inductance of a transmission tower or earth pit. There is no direct measurement of any of the electrical parameters. It is a data processing equipment. The received data from the tower is analysed and processed to give the data in the form of resistance and inductance via either a display or printer or a serial computer interface. 19. Thus, the products manufactured by the appellant comprise of a micro-computer, mother board unit with built-in microprocessor, storage unit and with keyboard interface which is an input device and printer port and a display which forms the output device. It is evident from the parts and contents of the products that they consist of the parts / elements which are required in a product classifiable under CETH 8471. Note 5 (C) of Chapter 84 of the CETA, 1985 prescribes the conditions /....
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....he description of the goods that the item is a Processor. The term Processor and Microprocessor are used synonymously. Moreover, it is on record that the impugned items are actually Pentium-II/Celeron Microprocessor. In these circumstances, it is very clear that the impugned items are actually parts of Computer classifiable under 8473.30. It is also seen that in the existing Tariff, Microprocessors are mentioned in 8473.30.10. Hence, we do not find any merit in the appeal. The impugned order is legal and proper." Thus the classification of the subject goods under CSH 8471 is correct and the re-classification under CSH 9031 8000 in the impugned order is contrary to law and hence untenable". 22. As regarding short payment of excise duty during March 2017 amounting to Rs.1,34,325/-, Learned Counsel submits that as per the impugned order, Adjudication Authority confirmed the demand of differential duty of Rs. 1,34,325/- for the Month of March 2017 on the ground that there was difference between the transaction value of the goods cleared during March 2017 and the value declared in ER-1 Return for March 2017. In this regard, while submitting reply to show cause notice, appellant had s....
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....d, we find that there is no specific clause referred under Section 4(3)(b) read with Section 2(g) of the MRTP Act, 1969 applicable in the present case and the adjudication authority as per the impugned order merely made certain observations that M/s. MKS System has sold the goods to M/s. Taurus Powertronics Pvt. Ltd. (TPPL) and M/s. Taurus Powertronics System (TPS). Though there is no allegation regarding involvement of financial transactions, it is held that they have mutuality of interest. However, Adjudication Authority has failed to appreciate the factual and legal position that the "proprietary concern" cannot be "inter-connected undertakings" with "partnership Firm" and "Body Corporate". The concept of "Inter-connected Undertakings" is applicable to Body Corporates. The principle behind the valuation mechanism has to be considered based on the mutuality of interest. There is no allegation regarding flow back of additional consideration from the related party buyer to the manufacturer seller. 27. As regards reliance of the statement recorded from the Managing Director of M/s. Taurus Powertronics Pvt Ltd., Shri M.N. Ravinarayan, we find that in his statement recorded on 25.0....