2008 (7) TMI 664 - AT - Central Excise

Summary

Issues: Valuation of goods sold to related persons under Central Excise Valuation Rules.

In this judgment, the issue revolved around the valuation of goods sold by the appellants to their subsidiary company under the Central Excise Valuation Rules. The appellants argued that since the sale of batteries to their subsidiary constituted only 0.41% of their total production and were sold at the same or slightly higher price as to independent buyers, Rule 9 and Rule 10 of the Valuation Rules should not apply. On the other hand, the Respondent contended that the subsidiary was reselling the goods at a higher value to other customers, and thus, Rule 9 and Rule 10 should be applicable. The Tribunal noted the absence of specific rules covering situations where goods are partly sold to related persons and partly to independent buyers, leading to unnecessary litigation. The Tribunal referred to past Supreme Court decisions and its own precedent to support the appellants' argument that valuation based on the price of comparable goods sold to independent buyers is legally permissible.

The Tribunal observed that the Department had not raised any doubts regarding the sales to independent buyers, which should be prima facie accepted as arms length transactions. Citing Supreme Court decisions and its own precedent, the Tribunal held that when goods are sold to independent buyers at a similar price, it indicates that the relationship did not influence the price. Therefore, the Tribunal concluded that it is legally permissible to assess the impugned goods based on the price of comparable goods sold to independent buyers. As a result, the Tribunal waived the requirement of pre-deposit during the pendency of the appeal.