2005 (3) TMI 609 - AT - Central Excise

Summary

Issues Involved:
1. Determination of whether Ceat and Goodyear were "related persons" to SATL under Section 4(4)(c) of the Central Excise Act, 1944.
2. Basis for assessable value of goods sold by SATL to Ceat and Goodyear.
3. Applicability of clause (iii) of proviso to Section 4(1)(a) of the Central Excise Act, 1944.
4. Deduction of transportation charges and interest on receivables from the price for determining assessable value.
5. Addition of amortized cost of moulds supplied by Goodyear and Ceat to the assessable value.
6. Eligibility for abatement towards interest on receivables.

Issue-wise Detailed Analysis:

1. Determination of Related Persons:
The Commissioner of Central Excise, Aurangabad, initially held that Ceat and Goodyear were related persons to SATL under Section 4(4)(c) of the Central Excise Act, 1944. However, CEGAT in a previous order concluded that SATL and M/s. Ceat and SATL and M/s. Goodyear are not related since there was no mutuality of interest. This decision was upheld for the period after 25-8-1998 as well, as the grounds for the relationship remained unchanged.

2. Basis for Assessable Value:
The Deputy Commissioner's Order-in-Original dated 30-8-2000 finalized the assessable value based on the price at which Goodyear sold goods to its buyers. However, the Commissioner (Appeals) later held that the price at which SATL sold goods to Goodyear should be determined by the off-take agreement, which was cost of production plus 1.5% profit. This same basis was used for sales to Ceat, who was not considered a related person.

3. Applicability of Clause (iii) of Proviso to Section 4(1)(a):
The impugned order of the Commissioner (Appeals) was found to be beyond the show cause notice, which relied on the off-take agreement to treat the price of Goodyear and Ceat as the basis for assessable value. The CEGAT's previous decision, which rejected the related person status based on the off-take agreement, applied here as well. Therefore, the price at which SATL sold to Goodyear was not influenced by any relationship, making clause (iii) of proviso to Section 4(1)(a) inapplicable.

4. Deduction of Transportation Charges and Interest on Receivables:
The Commissioner (Appeals) allowed for the deduction of transportation charges and interest on receivables from the price at which Goodyear sold the goods to determine the assessable value. SATL was required to present satisfactory evidence to show that interest charges for sales on credit to independent buyers were built into the price charged by Goodyear from its customers.

5. Addition of Amortized Cost of Moulds:
The Commissioner (Appeals) held that the amortized cost of moulds supplied by Goodyear and Ceat should be added to the assessable value. This was a point of contention that required further examination in the de novo proceedings.

6. Eligibility for Abatement Towards Interest on Receivables:
The eligibility for abatement towards interest on receivables was contingent upon SATL providing satisfactory evidence that such interest charges were built into the price charged by Goodyear and that customers were informed of their liability for interest on delayed payments.

Conclusion:
The Tribunal allowed the appeals as remand for de novo adjudication to re-determine whether there exists a factory gate sale for like goods and to address the other issues involved. The Tribunal emphasized that the price at which SATL sold goods to Goodyear was genuine and not influenced by any relationship, and the same basis for pricing was used for sales to Ceat, an independent buyer. The appeals filed by the revenue were rejected based on the CEGAT's previous decision, which set aside the Commissioner's order on the related person issue. The de novo proceedings were to address the determination of whether the tyres and tubes sold to Ceat and Goodyear were same/similar excisable goods and to establish the applicability of clause (iii) of proviso to Section 4(1)(a).