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2004 (11) TMI 159 - AT - Central ExciseRelated party transactions - Value of clearances - Clubbing of - shortages of goods - Valuation (Central Excise) - abatement towards freight charges in excess of actual amount incurred - Demand - confiscation - HELD THAT - We are of the view that the appellants and M/s. TAPL for all practical purposes function as a single unit only and transaction between the appellant and M/s. TAPL does not appeared to be on a principal to principal basis. The Commissioner has enumerated several grounds to hold that the appellants and M/s. TAPL are related. Each ground in itself may not be sufficient to hold that they are related. Thus, it is very clear that there is mutuality of interest between the appellants and the M/s. TAPL. This is also very clear from the letter of the appellants addressed to Canara Bank. We are inclined to agree with the Commissioner that the appellant and M/s. TAPL are related. Though according to the department, proper entry in the RG I register was not made, there is no charge that the appellants had removed the goods without payment of duty. Under these circumstances, the Commissioner's Order of confiscation of the goods is not sustainable in view of the settled case law on the subject. As regards freight , the appellant is entitled to claim abatement of the actuals only. Claiming abatement in excess of the actual freight is not permissible. In view of the clear findings of the Commissioner on this aspect, the appellant is liable to pay the differential duty of Rs. 1,85,916/-. The Commissioner's order in this respect is confirmed. As we have already confirmed the finding of the Commissioner that the appellant and M/s. TAPL are related, the price at which the appellants cleared the goods to M/s. TAPL cannot be accepted. It is seen from the Order that sales to independent buyers are at a price higher than those charged to TAPL, hence the price of goods sold to independent buyers should be taken for calculation of the duty. In case, the price to independent buyer is not available, the price at which M/s TAPL sold the goods to other buyers should be taken for calculating the duty. On this basis the differential duty as to be re-quantified. As it is not very clear as to how the Commissioner arrived at the differential duty of Rs. 10,80,114/- confirmed by him. As regards the irregular availment of Modvat credit to the tune of Rs. 47,456/-, the appellants have not contested the point. Hence we confirm the Commissioner's decision in this regard. As regard the inclusion of charges for erection, commissioning, etc - We find that the department has not made out a case that the appellants resorted to under-valuation in the guise of collecting charges for erection and commissioning through M/s. TAPL. Under these circumstances the Commissioner's findings that these charges should be included in the assessable value cannot be sustained. Hence, we set aside the demand of duty of Rs. 40,43,034/- on account of non-inclusion of the charges of erection and commissioning. Summing up the demands of duty by the Commissioner excepting that on erection and commissioning are upheld. However in respect of goods cleared to M/s. TAPL, the duty liability is to be requantified. Therefore, the penalty under Section 11AC is limited to the total demand in this order after requantification. Shri Anil Dev appears to be the mastermind in these activities and he is liable for penalty under Rule 173Q. All the other penalties are upheld. Interest u/s 11AB is also payable. Since we find that there is enough justification to invoke the longer period, in view of the suppression of facts regarding relationship between the appellants and M/s. TAPL the question of time-bar will not arise. This disposes of appeal Nos. E/106, 107/2000.
Issues Involved:
The issues involved in the judgment include related party transactions, confiscation of goods, abatement of freight charges, under-valuation of goods, irregular Modvat credit, inclusion of charges in assessable value, penalty under Rule 173Q, and interest under Section 11AB. Related Party Transactions: The Commissioner concluded that the appellants and M/s. TAPL are related persons based on various grounds, including common directorship, shared office premises, mutual invoicing, and inter-company transactions. The Tribunal agreed with the Commissioner's finding, emphasizing the mutuality of interest between the two entities. Confiscation of Goods: The Commissioner ordered confiscation of goods not accounted for in the statutory register, but the Tribunal held that without evidence of removal without payment of duty, confiscation was not justified, citing established case law on the matter. Abatement of Freight Charges: The Tribunal upheld the Commissioner's decision that the appellant could only claim abatement of actual freight charges, not in excess, leading to a confirmed liability of differential duty. Under-valuation of Goods and Modvat Credit: The appellants were found liable for under-valuation of goods cleared to M/s. TAPL, resulting in a differential duty. Additionally, irregular Modvat credit availed without payment of duty led to a confirmed duty liability. Inclusion of Charges in Assessable Value: While the Commissioner held that charges for erection and commissioning should be included in the assessable value, the Tribunal disagreed, setting aside the demand for duty on these charges. Penalties and Interest: Penalties under Section 11AC were limited to the total demand after re-quantification, with additional penalties upheld. Interest under Section 11AB was deemed payable, and the longer period was justified due to the suppression of facts regarding the relationship between the appellants and M/s. TAPL. Separate Appeal - Appeal No. 353/2002: This departmental appeal focused on the inclusion of charges for ancillary works in the assessable value. The Tribunal rejected the appeal, upholding the Commissioner (Appeals) decision that such charges were not includible in the assessable value. Separate Appeal - Appeal No. 659/2002: In this appeal, the show cause notice for payment of differential duty was set aside due to being time-barred, as the period overlapped with a previous case and the longer period could not be invoked. The Order-in-Original was consequently set aside without delving into the merits of the case.
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