2018 (7) TMI 1520 - AT - Central Excise

Valuation - Interpretation of Statute - definition of related person under section 4 of Central Excise Act, 1944, read with definition of interconnected undertakings in Section 2(g) of MRTP Act, 1969 - Held that - The same issue has been decided by this Bench in the case of BLACK GOLD PROFILES PVT LTD. VERSUS CCE, C&ST, VISAKHAPATNAM 2018 (2) TMI 1231 - CESTAT HYDERABAD , where it was held that The combined shareholding of the partners in each firm, who are also shareholders in the body corporate can alone be added up for the purpose of determining whether they cross the 50% shareholding bench mark. M/s Black Gold and the two firms cannot be considered as related persons for the purpose of section 4(3)(b)(i) of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Delay in filing appeal before the Tribunal, eligibility to avail the valuation of goods supplied to related persons.

Analysis:
1. Delay in filing appeal: The appellant filed an application for condonation of delay of 49 days in filing the appeal before the Tribunal. The reasons cited for the delay included the concerned officer handling the issue being on medical leave and the impugned order getting misplaced. The Tribunal, after considering the explanations provided and a sworn affidavit from the Director of the appellant, accepted the justifications and condoned the delay.

2. Eligibility to avail valuation of goods: The issue revolved around the eligibility of the appellant to avail the valuation of goods supplied to related persons. The Tribunal referred to a previous order dated 14.11.2017 where a similar issue concerning the same appellant was disposed of. The bench analyzed the definition of "related person" under the Central Excise Act, 1944, and emphasized the need for a literal interpretation of statutory provisions. The Tribunal concluded that the shareholding of close relatives cannot be added to determine the 50% shareholding benchmark for related persons. It was held that the partners of the firms did not exercise control over the body corporate, thus, the entities could not be considered as related persons. Consequently, the impugned order was deemed unsustainable and set aside, allowing the appeal.

3. Conclusion: The Tribunal, in its detailed analysis, clarified the legal interpretation of the term "related person" and provided a clear rationale for setting aside the impugned order. By referencing a previous judgment involving the same appellant, the Tribunal ensured consistency in its decisions. The judgment highlighted the importance of adhering to statutory provisions and established principles of interpretation in resolving legal disputes related to taxation and valuation of goods supplied to related entities.