2017 (5) TMI 1816 - AT - Central Excise

Method of valuation - Rule 8 read with Rule 9 of the Central Excise (Valuation) Rules 2000 or not - clearing goods to their alleged sister unit as well as the independent buyers - HELD THAT - Admittedly the said issue came up before the Larger Bench of this Tribunal in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. RAIGAD 2007 (2) TMI 5 - CESTAT MUMBAI wherein it is held that when the assessee is clearing goods to sister unit as well as to independent buyers at the same price in that circumstance Rule 8/Rule 9 of the valuation rules are not applicable. Further it is found that in the case of M/S HH INTERIOR AND AUTO COMPONENTS LTD. SHRI. PARVESH SONI SHRI. RAJEEV KUMAR RAI VERSUS CCE DELHI-IV FARIDABAD 2017 (1) TMI 1229 - CESTAT CHANDIGARH this issue came up before this Tribunal and this Tribunal held that in such case Rule 8/Rule 9 of the Central Excise (Valuation) Rules 2000 are not applicable and no charge of under valuation is sustainable. The charge of under valuation is not sustainable against the appellants as they cleared goods to sister unit as well as to independent buyers at the same price - There are no merit in the impugned order and no force of the argument advanced by the Ld. AR. Appeal allowed.

Summary

Issues:
Appeal against demand of duty, interest, and penalties for under-valuation of goods.

Analysis:
The appellants contested the demand of duty, interest, and penalties imposed for under-valuation of goods. The case involved the clearance of goods to an alleged sister unit and independent buyers, leading to a dispute over the application of Rule 8 read with Rule 9 of the Central Excise (Valuation) Rules, 2000. The Revenue argued that valuation should be done as per these rules due to the clearance of goods to both entities. The appellants challenged this, citing a previous Tribunal decision in the case of Ispat Industries Ltd. to support their claim.

The Tribunal considered the arguments presented by both sides. The central issue was whether Rule 8 read with Rule 9 of the Valuation Rules applied to the case where goods were cleared to a sister unit and independent buyers. The Revenue maintained that the rules should apply due to the clearance to the sister unit. However, the Tribunal noted that the appellant cleared goods to both the sister unit and independent buyers at the same price, which was a crucial factor in determining the applicability of the valuation rules.

Referring to previous Tribunal decisions, including the case of Ispat Industries Ltd. and HH Interior and Auto Components Ltd., the Tribunal concluded that when goods are cleared to a sister unit and independent buyers at the same price, Rule 8/Rule 9 of the Valuation Rules are not applicable. Therefore, the charge of under-valuation was deemed unsustainable in this case. The Tribunal found no merit in the Revenue's arguments and set aside the impugned order, allowing the appeals with consequential relief.

In summary, the Tribunal ruled in favor of the appellants, holding that the charge of under-valuation was not valid as goods were cleared to the sister unit and independent buyers at the same price, rendering Rule 8/Rule 9 of the Valuation Rules inapplicable to the case.