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2018 (11) TMI 719 - AT - Central ExciseValuation - related party transaction - Revenue took a view that the valuation of the goods for clearance from GEL to GISCO, cannot be the transaction value - applicability of Rule 8 & 9 of the Central Excise Valuation Rules, 2000 - Held that - The present issue has been settled by the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. 2007 (2) TMI 5 - CESTAT, MUMBAI . The Larger Bench considered the question of valuation of the goods are sold to related parties when part of the goods were also cleared to independent buyers and held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers. In the present case, GEL has been clearing the goods to the related buyers, GISCO at price comparable to the clearance to independent customers - there is no justification for adopting the value in terms of Rule 8 & 9 of the Central Excise Valuation Rules, 2000. Appeal allowed - decided in favor of appellant.
Issues:
Valuation of goods for clearance between related companies under Central Excise Act, 1944. Detailed Analysis: The case involved two appeals filed against the Order-in-Original No.30/MP/Commr./2008 dated 30.12.2008. The issue revolved around the valuation of goods cleared between two related companies, M/s Gangotri Electrocastings Ltd. (GEL) and M/s Gangotri Iron and Steel Company Ltd. (GISCO), falling under Central Excise Tariff Heading No.72061090. The Revenue contended that since both companies were part of the same group, the valuation of goods from GEL to GISCO should not be based on transaction value but as per Central Excise Valuation Rules, 2000, specifically Rule 8 & 9. The differential duty was demanded from GEL based on this valuation. The impugned order upheld the duty demand, interest, and penalty on both companies, leading to the filing of the appeals (para 2). The appellant argued that as per Section 4(3)(d) of the Act, GEL and GISCO could be considered related persons. However, they highlighted that GEL had also cleared identical goods to independent buyers. Citing the decision of the Larger Bench in the case of Ispat Industries Ltd. Vs. Commr. of Central Excise, Raigad, the appellant contended that if goods are cleared to both related and independent buyers, it is not necessary to assess values for related buyers under Rule 8 & 9 of the Central Excise Valuation Rules, 2000. They emphasized that the value for clearance to related buyers can be the same as that for independent buyers (para 4). The Tribunal analyzed the issue in light of the decision of the Larger Bench in the Ispat Industries Ltd. case. The Tribunal concurred with the principle that Rule 8 of the Valuation Rules does not apply when some part of the production is cleared to independent buyers. It was also noted that Rule 4 should be preferred over Rule 8 for determining value, as it aligns better with the statutory provisions of the Central Excise Act, 1944. Referring to previous orders, it was observed that GEL had cleared goods to GISCO at prices comparable to those for independent buyers. Consequently, the Tribunal found no justification for adopting the valuation under Rule 8 & 9 of the Central Excise Valuation Rules, 2000. As a result, the demand for differential duty was set aside, along with the penalty (para 7-9). In conclusion, the impugned order was set aside, and the appeals were allowed based on the Tribunal's findings regarding the valuation of goods cleared between related companies.
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