Custom, Excise & Service Tax Tribunal
Gangotri Iron &Amp; Steel Co. Ltd. vs Coms C Ex - Patna on 27 September, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
EASTERN ZONAL BENCH: KOLKATA
Ex.Appeal Nos.157,158/09
(Arising out of Order-in-Original No.30/MP/Commr./2008 dated
30.12.2008 passed by the Commissioner of Central Excise & Service
Tax, Patna)
M/s Gangotri Iron & Steel Co. Ltd.
M/s Gangotri Electrocastings Ltd.
Applicant (s)/Appellant (s)
Vs.
CCEx, Patna
Respondent (s)
Appearance:
Shri B. N. Chattopadhyay, Consultant for the Appellant (s) Shri S. S. Chattopadhyay, Supdt. (AR) for the Revenue CORAM:
HON'BLE SHRI P.K.CHOUDHARY, MEMBER (JUDICIAL) HON'BLE SHRI V. PADMANABHAN, MEMBER (TECHNICAL) Date of Hearing : 27.09.2018 Date of Decision : 27.09.2018 ORDER NO...FO/A/76759-76760/2018 Per Bench :
The present two appeals have been filed against the Order-in-
Original No.30/MP/Commr./2008 dated 30.12.2008.
2. Brief facts of the case are that one of the appellant, M/s Gangotri Electrocastings Ltd. (GEL) is engaged in the manufacture of M.S.Ingots falling under Central Excise Tariff Heading No.72061090 of the Schedule to the Central Excise Tariff Act, 1985. A part of goods are cleared to their other related company, namely, M/s Gangotri Iron and Steel Company Ltd. (GISCO) for manufacture of M.S. Bars. The 2 Ex.Appeal Nos.157,158/09 Department noticed that both the above Companies were part of the same group i.e. Gangotri Group having common interest in the business of manufacture of M.S.Ingots and M.S.Bars. Two of the Directors were common to both the Companies. After going through composition of the Companies, the Department came to the conclusion that GEL and GISCO were related as defined under Section 4 (3)(d) of the Central Excise Act, 1944. Consequently, the Revenue took a view that the valuation of the goods for clearance from GEL to GISCO, cannot be the transaction value. Further, that such clearances are to be valued as per Central Excise Valuation Rules, 2000. Since the goods were cleared from GEL to GISCO for further use in manufacture, Revenue was of the view that the valuation is to be determined on the basis of 110% of the cost of manufacture of goods in terms of Rule 8 & 9 of the Central Excise Valuation Rules, 2000. After working out the value as above, the differential duty was demanded from GEL. The issue was decided vide the impugned order by upholding the duty demand along with interest and imposition of penalty both on GEL as well as GISCO. Challenging the impugned order, the present two appeals have been filed.
3. The appellant is represented by Shri B.N.Chattopadhyay, ld. consultant and Revenue is represented by Shri S.S.Chattopadhyay, Ld. D.R, ld. D.R.
4. The submissions made on behalf of the appellants are summarized below :
(i) Both the Companies, viz. GEL & GISCO may be considered as related persons in terms of Section 4(3)(d) of the Act. It is on 3 Ex.Appeal Nos.157,158/09 record that GEL has also made clearance of identical goods to independent buyers ;
(ii) It is settled position of law that if the goods are partly cleared to related person and partly to independent buyers, it is not necessary to assess the values for clearance to related person in terms of Rule 8 & 9 of the Central Excise Valuation Rules, 2000. In this regard, he relied on the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. Vs. Commr. of Central Excise, Raigad reported in 2007 (209) ELT 185 (Tri.-LB) and submitted that as long as a part of the clearance has been made to independent buyers, the same value can be adopted for payment of Excise duty for clearance to the related buyers also ;
(iii) The above decision has been followed in several cases. He also pointed out that the dispute pertaining to the same assessee for an earlier period came before this Tribunal and the Tribunal vide its Final Order No.A-220-221/Kol/2012 dated 17.04.2012 had remanded the issue to the adjudicating authority for denovo adjudication keeping in view the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. (supra). In the said denovo proceedings, the ld.Commissioner has decided the issue vide his order dated 28.11.2013 in which he dropped the demand by accepting the value adopted for clearance to independent buyers. For the further period, the Additional Commissioner has also dropped the demand vide his order dated 09.01.2015 ;
(iv) Finally he submits that the impugned order may be set aside.
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Ex.Appeal Nos.157,158/09
5. The ld.D.R. for the Revenue justified the impugned order.
6. Heard both sides and perused the appeal records.
7. The dispute in the present appeal is on the question of value for assessment of the goods cleared for home consumption to the related buyers, when similar goods are also sold to independent buyers. The present issue has been settled by the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. (supra). The Larger Bench considered the question of valuation of the goods are sold to related parties when part of the goods were also cleared to independent buyers - whether value is required to be determined after Rule 4 & Rule 8 of the Central Excise Valuation Rules, 2000. The observations of Larger Bench are as follows:
"9. In view of what we have observed above, we answer the reference in the following terms :
(a) the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers;
(b) the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944."
8. For the earlier period, in the denovo proceedings, the Commissioner (Appeals) vide his order dated 28.11.2013 has recorded 5 Ex.Appeal Nos.157,158/09 that GEL has cleared to GISCO the goods at price comparable to the price at which they were cleared to the independent buyers. After such verification, he has dropped the demand for the differential duty made on the basis of costing of transaction. For a different period, the Joint Commissioner vide his order dated 19.01.2015 has also come to identical conclusion.
9. In view of the above, it appears to us that GEL has been clearing the goods to the related buyers, GISCO at price comparable to the clearance to independent customers. Hence, we find no justification for adopting the value in terms of Rule 8 & 9 of the Central Excise Valuation Rules, 2000. Consequently, we set aside the demand of differential duty raised in the impugned order. Penalty is also set aside.
11. In the result, impugned order is set aside and appeals are allowed.
(Dictated and pronounced in the open court.) Sd/ Sd/ (P.K.Choudhary) (V.Padmanabhan) Member (Judicial) Member (Technical) mm