2016 (5) TMI 1316 - AT - Central Excise

Valuation - Differential duty - Penalty - Related Parties - Held that - both the appellants and M/s. Taj Services Ltd. are Companies incorporated under Companies Act 1956. Therefore in terms of ruling by the Hon ble Supreme Court in the case of Calcutta Chromotype Ltd. 1998 (3) TMI 138 - SUPREME COURT OF INDIA we hold that M/s. Residency Foods & Beverages Ltd. and M/s. Taj Services Ltd. during the period covered by the appeal were not related persons. We find that as per the provisions of law as existed during the material period the said deductions were allowable for arriving at the assessable value. After allowing the said deductions there is no differential duty demandable from the appellants - The finalization of the assessment was not challenged by the Revenue before the ld. Commissioner (Appeals). Therefore the impugned show cause notice is hit by limitation - Appeal allowed.

Summary

Issues:
1. Whether the appellants and M/s. Taj Services Ltd. are related persons under Section 4(4)(c) of Central Excise & Salt Act, 1944?
2. Whether the deductions claimed by the appellants were allowable for arriving at the assessable value?
3. Whether the demand raised through the show cause notice is within the period of limitation?

Analysis:

1. The appellants contended that they and M/s. Taj Services Ltd. cannot be considered related persons as both are Companies incorporated under the Companies Act, 1956, citing a Supreme Court ruling. The Tribunal agreed, holding that they were not related persons during the relevant period. The Revenue's argument of common shareholding and management was dismissed, and it was noted that no appeal was filed against finalization of assessments, rendering the show cause notice hit by limitation.

2. The appellants claimed deductions for freight, trade discount, sales tax, and other costs under Section 4(4)(d) of the Act, which were not contested by the Revenue. The Tribunal found these deductions allowable under the law during the material period, leading to no differential duty being demandable. The Revenue's failure to challenge the deductions further supported the appellants' position.

3. The Tribunal emphasized that the assessments were finalized during the relevant period, with no appeal filed by the Revenue against the finalization. As a result, the impugned show cause notice was deemed hit by limitation. Consequently, the Tribunal set aside the Order-in-Original dated 7th April, 2005, allowing all the appeals and granting the appellants consequential benefits without costs.

In conclusion, the Tribunal ruled in favor of the appellants, determining that they were not related persons, the claimed deductions were allowable, and the demand raised through the show cause notice was time-barred. The judgment highlighted compliance with legal provisions, the significance of finalization of assessments, and the impact of failing to contest deductions, resulting in a favorable outcome for the appellants.