2016 (12) TMI 785 - AT - Central Excise

Valuation - interested party transaction - favoured sale to related parties - Held that - similar issue decided in the case of Dagger Die Cutting Vs Commissioner of Central Excise Chennai-II 2010 (4) TMI 304 - MADRAS HIGH COURT - We don t find anything different in facts of both the cases i.e. case before this Tribunal and the reported judgment in the case of Dagger Die Cutting - It appears that the show cause notice dated 19.05.2000 gave rise to the proceeding of 1995-2000 which is similar to the allegation in the show-cause notice dated 20.03.2001 related to the present appeal. When the matter has reached finality before Hon ble High court of Madras in the reported Judgment the Tribunal being subordinate although a final court of fact is bound to follow the Judgement of higher court as Judicial discipline. There is no factual difference brought out by the Revenue in the present case. Finding no difference and noticing that adjudication under appeal was made on the self-same allegations the adjudication made is not sustainable. Accordingly both the appeals are allowed holding that duty demand should be confined to the principles of normal valuation in absence of any related party transaction. At this stage learned departmental representative says that the adjudicating authority shall verify whether the duty in the normal circumstances is paid or not i.e. under section 4(1)(a) of the Central Excise Act 1944. To make it clear that what that is normally payable is to be realized and there is no difference to such proposition of law - Learned counsel prays that consequential relief if any may be admissible in accordance with law. Such prayer is allowed.

Summary

Issues:
1. Allegation of sale to favored party adopting an abnormal valuation methodology.
2. Examination of material facts by the Hon'ble High Court in a previous case.
3. Application of law and fact finding in the present case.
4. Comparison of facts between the present case and a reported judgment.
5. Adherence to the judgment of the higher court as judicial discipline.

Analysis:
1. The appellant argued that a previous judgment by the Hon'ble Madras High Court in their own case found no favored sale to related parties. The High Court held that the allegations in the show-cause notice were insufficient to trigger certain provisions of the Central Excise Act. It was emphasized that the Revenue lacked relevant materials to prove mutual interest between the parties, and the allegations could not be sustained without cogent evidence. The High Court also noted that there was no indication of unreasonably low prices or depressed assessable values, leading to the application of normal valuation rules.

2. In the current appeal, the appellant contended that a similar ruling should apply based on past facts and legal application before the High Court. The period in question for the present case was subsequent to the previous judgment. However, Revenue argued that the circumstances differed between the cases before the High Court and the present matter.

3. After hearing both parties and examining the records, the Tribunal found no factual disparity between the present case and the reported judgment. The show cause notices in both instances were similar, indicating a consistent pattern of allegations. The Tribunal, as a subordinate body, acknowledged the finality of the High Court's judgment and the need for judicial discipline. Without any factual variance highlighted by Revenue, the Tribunal concluded that the adjudication in the present case was unsustainable, leading to the allowance of both appeals with duty demand confined to normal valuation principles in the absence of related party transactions.

4. The Tribunal emphasized the importance of following the higher court's judgment as a matter of judicial discipline. The lack of factual distinctions and the similarity in allegations between the cases supported the decision to allow the appeals based on the principles established in the previous judgment.

5. The Tribunal directed the adjudicating authority to verify the payment of duty under normal circumstances as per the Central Excise Act. It was clarified that the duty payable should align with the usual legal provisions. The counsel's request for any consequential relief was granted in accordance with the law.

This detailed analysis of the judgment highlights the key legal arguments, findings, and the Tribunal's decision based on the issues raised in the case.