Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S.Akash Ispat Ltd on 14 January, 2016
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:14.01.2016
Excise Appeal No.2000/2007-EX(DB)
[(Arising out of Order-in-Appeal No.69/RPR-I/2007 dated 22.03.2007 passed by the Commissioner (Appeals-I), Customs & Central , Raipur)]
For approval and signature:
Honble Shri S.K. Mohanty, Member (Judicial)
Honble Shri B. Ravichandran, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
CCE, Raipur ...Appellants
Vs.
M/s.Akash Ispat Ltd. Respondent
Appearance:
Rep. by Shri B.B. Sharma, AR for the appellant. Rep. by none for the respondent.
Coram: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No.50079/2016 Dated:14.01.2016 Per B. Ravichandran:
The Revenue is in appeal against the order dated 22.3.2007 of the Commissioner (Appeals)-I, Raipur.
2. The brief facts of the case are that the respondent are engaged in the manufacture of M.S. Ingots liable to central excise duty. The proceedings were initiated against them for short payment of central excise duty on the goods cleared to related buyers. After due process, the Original Authority vide order dated 13.11.2006 held that the respondents are liable to pay the differential duty of Rs.16,78,974/- with interest. He imposed penalty of Rs.1,50,000/- on the appellant. On appeal, the Commissioner (Appeals) vide order dated 22.03.2007 set aside the order and allowed the appeal. Aggrieved by this, the Revenue is before us in appeal.
3. Ld. AR reiterated the grounds in the appeal. He submitted that the Directors/Partners/Proprietors of the respondent and the buyers units were common/relatives in terms of Schedule-I A of Section 6 of the Companies Act, having relationship and running, controlling and managing the inter-connected undertakings. The profit accruing from the sale through related persons goes to the same family or relative, as deemed in Section 4(3)(b) read with Section 2 (41) of the Companies Act, 1956 and thereby mutuality of interest gets established and Section 4 (1)(b) of Central Excise Act, 1944 is invokable.
4. The respondent vide their letter dated 23.11.2015 filed further written submissions and requested the case to be decided on merits.
5. We have heard the ld. AR and perused the appeal records. The original order dated 13.11.2006 as well as the impugned order 22.03.2007 examined in detail the various legal provisions and their application to the facts of the case. The point for decision is whether or not the respondent paid correct central excise duty for sale of final products to five buyers, who are said to be related to them or the declared sale value is vitiated. The respondent is a Public Limited Company having three Directors viz. S/Shri Krishna Kumar Agarwal, Rajesh Kumar Agarwal and Anand Kumar Agarwal. Out of five buyers, four are proprietary concerns. These are M/s. Kishan Steel Rolling Mills, Proprietor, Shri Rajesh Kumar Agarwal, Shri Kishan Mechanical Works, Proprietor, Shri Anand Kumar Agarwal, Shree Krishan Steel Unit-II, Proprietor, Shri Naval Kishor Agarwal and Shee Ram Steels, Proprietor, Shri Krishna Kumar Agarwal. The fifth buyer, M/s. Cosmos Ispat Pvt. Ltd is a Private Limited Company having three Directors. The Original Authority held that the respondent and the four buyers, who are proprietary concerns, do not fall under the category of inter-connected undertakings under Section 2(g) of MRTP Act. The Original Authority found that the respondent and M/s. Cosmos Ispat Pvt. Ltd. are inter-connected undertakings in terms of sub-clause (iv) of Explanation-I in Section 2 (g) of MRTP Act. The Original Authority further held that the respondent and all the buyers are related in terms of sub-clause (ii) of Clause (b) of sub-section (3 ) of Section 4 of the Central Excise Act. He arrived at this conclusion treating the companies also as natural person and being relative of one another. The impugned order rejected the findings of the Original Authority regarding the respondent and the buyers being relative. It was further held that since all goods produced were not sold to these buyers, the scheme as contemplated under Rule 9 of Valuation Rules will not be applicable regarding the respondent and M/s. Cosmos Ispat Pvt. Ltd. being inter-connected undertakings. The lower Appellate Authority held that the transaction value under Section 4(1)(a) of the Act is applicable as there is no evidence that the price charged is not the sole consideration for sale or any additional consideration was flowing directly or indirectly from the buyers to the respondent. The impugned order concluded that the respondent are not covered and hence not contravened the provisions of Section 4(1)(b) read with the Central Excise Rules and Valuation Rules. He set aside the original order.
6. We find that the appeal against the above detailed findings of the lower authorities is not based on any sound legal principles. We find that the Revenue asserted in the appeal that in terms of MRTP Act, two body corporates will be treated as under the same management if one or more Directors constitute 1/4th of the Directors of the other. Hence, it was pleaded by the Revenue that all the buyers are inter-connected with the respondent. We find that this submission is legally untenable and misconceived. The provisions of MRTP Act talks about inter-connectivity between two body corporates. Here, it is an admitted fact that four out of the five buyers are proprietory concerns. The respondent is a Public Limited Company. The Revenue also relied on the provisions of Rule 9 without specifically alleging that all the goods manufactured by the respondent are sold, to or through these purported related persons. Further, we find that the Revenues assertion that a jurisdic person also can have a relative in terms of Section 2(41) of the Companies Act is totally untenable. The relative as defined under Section 2(41) should be in such way as specified in Section 6 of the Companies Act. In terms of Section 6, a person shall be deemed to be a relative of other, if, and only if, they are members of a HUF or husband and wife or one is related to other, in a manner like father, mother, daughter, brother, etc. A corporate entity, the respondent being a Public Limited Company, cannot fit into being called a relative in this context. It is apparent that the understanding by Revenue is due to mixing up of related person with relative. Further, the submission that the profit accruing from sale through related persons goes to same family or relative is without any factual support and in any case the respondent being Public Limited Company the profit, if any, should flow to all the share holders.
7. After careful examination of the impugned order and the grounds of appeal by the Revenue, we find no reason to interfere with the impugned order and as such, the appeal filed by the Revenue is dismissed.
[Operative portion already pronounced in open court] (S.K. Mohanty ) Member (Judicial) ( B. Ravichandran) Member (Technical) Ckp.
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