Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Rak Ceramics India Pvt Ltd on 27 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE CIRCUIT BENCH AT HYDERABAD Appeal(s) Involved: E/1114/2011-DB, E/1115/2011-DB [Arising out of Order-in-Appeal No. 32/2010 (V-II) CE dated 30/12/2010 passed by the Commissioner of Central Excise & Customs (Appeals), Visakhapatnam.] [Arising out of Order-in-Appeal No. 33/2010 (V-II) CE dated 30/12/2010 passed by the Commissioner of Central Excise & Customs (Appeals), Visakhapatnam.] For approval and signature: HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Commissioner of Central Excise, Service Tax and Customs VISAKHAPATNAM-II CENTRAL EXCISE BUILDING, PORT AREA, VISAKHAPATNAM, - 530035 ANDHRA PRADESH Appellant(s) Versus RAK CERAMICS INDIA PVT LTD PEDDAPURAM, EAST GODAVARI DIST AP Respondent(s)
Appearance:
Mr. Geelani Basha, Advocate For the Appellant Mr. N. Anand, AR For the Respondent Date of Hearing: 27/05/2015 Date of Decision: 27/05/2015 CORAM:
HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 21451-21452 / 2015 Per : B.S.V.MURTHY Differential duty of more than Rs.20 lakhs has been demanded with interest and penalties under Section 11AC of Central Excise read under Rule 25 of Central Excise Rules have been imposed on the ground that respondent did not pay correct Central Excise duty in respect of the supplies of sanitary ware products made to interconnected undertaking by the original authority.
2. On an appeals filed by the respondent, Commissioner (A) allowed the appeals taking a view that according to Valuation Rues just because supplies are made to an interconnected undertaking, the transaction value cannot be rejected unless it is shown that the interconnected undertaking is related person in terms of definition under Section 4. Revenue is in appeal against this decision.
3. Heard the learned AR and the learned counsel for the respondents.
4. There is no dispute that the ceramic tiles and sanitary ware supplied by the respondents to M/s. Ras Al Khaimah Ceramics India Pvt. Ltd., Mumbai (RAK, Mumbai) and that in the balance sheet of the respondent M/s. RAK, Mumbai has been shown as an associate company. The respondents submitted that respondent is a wholly owned subsidiary of M/s. RAK Ceramics, PSC, UAE which also hold 60% shareholding interest in RAK Mumbai. The Commissioner (A) in the impugned order has considered the provisions of law such as Section 4(3)(b), Rule 10 of Valuation Rules, the Circular issued by CBEC F.No.354/81/2000-TRU dated 30.6.2000 and the Circular No.643/34/2002-CX dated 1.7.2002 and came to the conclusion that in view of the fact that appellants were supplying to independent suppliers also and as required under Rule it could not be said that appellants were not selling their product except or through an interconnected undertaking or a related person, the price at which goods are sold to RAK, Mumbai, cannot be rejected in terms of Rule10(b) of Valuation Rules. Therefore he came to the conclusion that in the absence of any evidence to show that RAK Mumbai was a related person, when there were independent sales to other buyers, as per provisions of Rule 10(b), the sales to RAK, Mumbai has to be considered as a sale to an unrelated person. In the appeal memorandum as well as the submissions of learned AR, what is being stated is that this order is not correct and the decision of the appellate authority taking a view that valuation should be done on the Rule 10(b) is not correct and Rule 11 should have been applied.
4.1 We do not find merit in the submissions. RAK, Mumbai is an interconnected undertaking as per Section 2(g) (vi) of the MRTP Act. In terms of Section 4(3)(b), the person shall be deemed to be related if:
(i) They are interconnected undertakings;
(ii) They are relatives;
(iii) Amongst them the buyer is a relative and a distributor of the assessee, or a sub distributor of such distributor; or
(iv) They are so associated that they have interest, directly or indirectly, in the business of each other.
4.2 CBEC in their Circular dated 30.6.2000 had clarified that if clauses (ii),(iii) & (iv) do not exist in transactions between interconnected undertakings, then for assessment purposes, they will not be considered as related.
4.3 In such a situation, Rule 10(b) would come into play. Rule 10 of Central Excise (Valuation) Rules, 2000 reads as under:
Rule 10: When the assessee so arranges that the excisable goods are not sold by him except to or through an interconnected undertaking, the value of goods shall be determined in the following manner, namely;-
(a) If the undertakings are so connected that they are aslo realted in temrs of sub-calsue 9ii) or (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act or the buyer is a holding company or subsidiary company of the assessee, then the value shall be determined in the manner prescribed in Rule 9.
Explanation. In this clause holding company and subsidiary company shall have the same meanings as in the Companies Act, 1956 (1 of 1956).
(b) In any other case, the value shall be determined as if they are not related persons for the purpose of sub-section 91) of Section 4.
In the absence of any finding that the two parties to the transactions in this case can be considered as related persons and in the absence of any evidence to show the same in the appeal memorandum or in the submissions of the learned AR, we do not find any reason to interfere with the conclusions reached by the learned Commissioner (A) in the impugned order. In view of the above, both the appeals filed by the Revenue merits dismissal. Accordingly, both the appeals are dismissed.
(Operative portion of the order was pronounced in open court on 27.5.2015.) B.S.V.MURTHY TECHNICAL MEMBER JUSTICE G. RAGHURAM PRESIDENT rv 2