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2017 (9) TMI 1253 - AT - Central ExciseValuation - related party transaction - High Tensile Stranded Iron & Steel Wires - some excisable goods are also sold to independent buyers at the same rate - department is of the view that in respect of sales of goods to related persons, the same cannot be assessed on the price sold to independent buyers, but will need to be charged to duty at the rates determined on the basis of cost of production on which profit margin is added - Held that - Rule 8 & 9 comes into play when goods are sold by an assessee only through related person and not when goods are sold both to related persons and independent buyers - similar issue decided in the case of ISPAT INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., RAIGAD 2007 (2) TMI 5 - CESTAT, MUMBAI , where it was held that provisions of Rule 8 would apply only in case where its entire production production of a particular commodity is captively consumed - appeal allowed - decided in favor of appellant.
Issues:
Valuation of goods sold to related persons, application of Central Excise Valuation Rules, 2000, interpretation of Rule 8 & 9, applicability of decision in Ispat Industries Ltd. case. Issue 1: Valuation of goods sold to related persons The case involved a dispute over the valuation of goods sold to related persons when some excisable goods were also sold to independent buyers at the same rate. The department contended that duty on sales to related persons should be assessed based on the cost of production with added profit margin, rather than the price charged to independent buyers. Issue 2: Application of Central Excise Valuation Rules, 2000 The appellant argued that the Central Excise Valuation Rules, 2000, specifically Rule 8 & 9, apply only when goods are sold solely through related persons and not when goods are sold to both related persons and independent buyers. They relied on the decision of the Hon’ble CESTAT Larger Bench in the case of Ispat Industries Ltd. v. CCE, Raigad. Issue 3: Interpretation of Rule 8 & 9 The Larger Bench's decision clarified that Rule 8, read with Rule 9, applies when an assessee's entire production of a commodity is captively consumed, and it does not apply when some part of the production is cleared to independent buyers. The decision in Ispat Industries Ltd. case was cited to support this interpretation. Issue 4: Applicability of Ispat Industries Ltd. case The judgment referred to various cases decided by the Hon’ble CESTAT, Kolkata, based on the decision in Ispat Industries Ltd. case, to establish that the issue was no longer open to debate and was in favor of the appellant. Consequently, the impugned orders were set aside, and the appeals were allowed. In conclusion, the tribunal ruled in favor of the appellant, setting aside the orders-in-original and allowing the appeals based on the interpretation of the Central Excise Valuation Rules and the precedent set by the decision in Ispat Industries Ltd. case.
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