2006 (3) TMI 34 - AT - Central Excise

Central Excise - Valuation - Assessees sold goods to related person at same price as they sold to independent buyers; hence there is no allegation of receipt of extra consideration and declared value, accepted

Summary

Issues:
- Appeal against setting aside demands for enhancing assessable value of Polyester Sewing Thread sold to related person without declaration.
- Contention of selling goods at the same price to related person as to independent buyers.
- Dispute over assessable value under Section 4 (1) (a) (iii) of Central Excise Act, 1944.
- Allegations of clandestine transactions and suppressed realization of sale proceeds.
- Comparison with previous judgments dismissing similar appeals.

Analysis:

1. The appeal was filed against the setting aside of demands for enhancing the assessable value of Polyester Sewing Thread sold to a related person without declaration. The assessee argued that the goods were sold at the same price to both related and independent buyers, denying any under-valuation. The Commissioner (Appeals) accepted this argument, emphasizing that if goods are sold at the same rates to independent buyers and related persons, the assessable value should be based on the price available to independent buyers under Section 4 (1) (a) of the Central Excise Act, 1944.

2. The Revenue contended that the assessable value should not be based on the price sold to the related person and raised concerns about clandestine transactions and suppressed realization of sale proceeds. However, the Tribunal held that when goods are sold at the same price to independent buyers, the assessable value should reflect this price, even for goods sold to related persons. Referring to a previous judgment, the Tribunal emphasized that assessable value should align with the price available to independent buyers, dismissing the Revenue's appeal.

3. The Tribunal rejected the Revenue's argument that the Commissioner (Appeals) should have considered separate proceedings unrelated to the valuation of goods sold to related persons. Emphasizing that the goods were sold at the same price to both related and independent buyers, the Tribunal upheld the Commissioner's findings. Additionally, the Tribunal referenced a similar case where the Revenue's appeal was dismissed, further supporting the decision to uphold the Commissioner's order.

4. In conclusion, the Tribunal found no merit in the Revenue's appeal and rejected it. The decision was based on the consistent pricing of goods to independent and related buyers, aligning with previous judgments and legal principles. The Tribunal's ruling emphasized the importance of assessing the value of goods based on the price available to independent buyers, even when sold to related persons.

5. The judgment highlighted the significance of maintaining consistency in pricing practices and ensuring that assessable values align with market prices, especially when goods are sold to both related and independent parties. The Tribunal's decision provided clarity on the valuation of goods and upheld the Commissioner's findings based on legal principles and precedents.