Custom, Excise & Service Tax Tribunal
Gajra Gears Pvt. Ltd vs Cce & St, Indore on 24 February, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-III
Excise Stay Application No.E/S/53897/2014 in
Excise Appeal No.E/53495/2014-EX[DB]
[Arising out of Order-in-Appeal No.IND/CEX/000/APP/67/14 dated 28.02.2014 passed by the Commissioner (Appeals), CCE & ST, Indore].
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
__________________________________________________
Gajra Gears Pvt. Ltd. Appellant
Vs.
CCE & ST, Indore Respondent
Present for the Appellant : Shri.Ravi Gulani, Chartered Accountant Present for the Respondent: Shri.R.K.Grover, DR Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL) HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing/Decision: 24/02/2015 FINAL ORDER NO. 50717/2015 PER: RAKESH KUMAR The appellants are manufacturers of motor vehicle parts, transmission shaft, tools etc. chargeable to central excise duty under sub-heading 8708, 8483 & 8207 of the Central Excise Tariff. Besides having sales to several automobile manufacturers they also have certain clearances during the period from 01.04.2011 to December 2011 to M/s. Gajra Differential Gears Pvt. Ltd. who used those goods for captive consumption, that is for use in the manufacture of their final products. The Department is of the view that the appellant company and M/s. Gajra Differential Gears Pvt. Ltd. are interconnected undertakings within the meaning of this term as defined in section 2 (g) of Monopolies and Restrictive Trade Practices Act, 1969 and hence in terms of the provisions of section 4 (3) (b) they have to be treated as related person and accordingly, in accordance with the provisions of Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000, they would be liable to pay duty in respect of clearances to M/s. Gajra Differential Gears Pvt. Ltd. on the value determined under rule 8 of the Central Excise Valuation Rules. Since according to the Department, the appellant did not give details regarding cost of production, the department proposed charging of duty on 110% of the sale price of the goods. It is on this basis that the duty demand of Rs.59,631/- was confirmed by the Assistant Commissioner against the appellant alongwith interest under section 11AB and penalty of Rs. 5000/- imposed and penalty of equal amount was imposed. On appeal being filed before the Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order in Appeal dated 28.02.2014, rejected their appeal. In the course of appeal proceedings before the Commissioner (Appeals), the appellant pleaded that merely because the appellant and M/s. Gajra Differential Gears Pvt. Ltd. are interconnected undertakings, they do not become related person for the purpose of Rule 9 of the Central Excise Valuation Rules, as the two interconnected undertaking can be treated as related persons only if conditions prescribed in this regard in rule 10 of the Central Excise Valuation Rules are also satisfied and since these conditions are not satisfied, the appellant company and M/s Gajra Differential Gears cannot be treated as related person but the Commissioner (Appeals) did not give any finding on this point. Against this order of the Commissioner (Appeals), this appeal has been filed alongwith stay application. Though the matter is listed for hearing of the stay application, after hearing the matters for some-time, the bench was of the view that the matter can be taken up for final disposal. Accordingly, requirement of pre-deposit is waived for hearing of the appeal, and with the consent of both the sides, the matter was heard for final disposal.
2. Shri Ravi Gulani, Chartered Accountant, the ld. Counsel for the appellant pleaded that even if the appellant and M/s. Gajra Differential Gears Pvt. Ltd. are covered by the definition of interconnected undertakings under section 2(g) of Monopolies and Restrictive Trade Practices Act, 1969, they cannot be treated as related person for the purpose of valuation, as in terms of Rule 10 of the Central Excise Valuation Rules, when an assessee so arranges his sales that the excisable goods are not sold by him except to or through an inter-connected undertaking the two shall be treated as related person only if they are also related in terms of clause 2nd , 3rd or 4th of Section 4 (3) (b) or the buyer is a holding company or subsidiary company of the assessee, that in this case these conditions are not satisfied and hence, the appellant and M/s. Gajra Gears Pvt. Ltd. cannot be treated as related person, that in any case since the entire sales of the appellant are not to or through M/s. Gajra Differential Gears Pvt. Ltd. differential gears, the provisions of Rule 10 of the Valuation Rules would not apply and that in any case, even if this Rule is applied the assessable value cannot be determined on the basis of 110 % of the selling price, as in case, the Rule 10 read with Rule 8 is invoked assessable value is 110% of the cost of production. He therefore, pleaded that the impugned order is not correct as the same has been passed without considering the submissions made by the appellant.
3. Shri R.K. Grover the ld. DR defended the impugned order by reiterating the findings of the Commissioner (Appeals).
4. We have considered the submissions from both the sides and perused the records.
5. Merely because the assessee and his buyers are interconnected undertakings in terms of section 2(g) of Monopolies and Restrictive Trade Practices Act, 1969, for the purpose of valuation, the two cannot be treated as related person and the transaction value cannot be rejected merely on this basis, that for rejecting the transaction value in such cases the conditions prescribed in Rule 10 of the Central Excise Valuation Rules have to be satisfied which are that (a) all the sales of the excisable goods are to or through the interconnected undertaking; and (b) either the assessee or its buyer are the holding company or subsidiary company or they are also related in terms of clause 2nd, 3rd or 4th of section 4 (3)(b) and only when the above conditions are satisfied , the transaction value can be rejected and has to be determined in the manner prescribed in Rue 10. In this case according to the appellant, these conditions are not satisfied, but the commissioner (Appeals) in the impugned order has not examined this plea. In view of this, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for de-novo decision.
[Dictated & Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Anita 0 5