2017 (10) TMI 124 - AT - Central Excise

Principles of Mutuality of interest - scope of related person - whether subsidiary company included within the scope of Related person? - Extended period of limitation - Held that - after the amendment to Section 4 with effect from 01.7.2000, subsidiary company has been specifically included in the scope of the definition of related person , hence, to establish mutuality of interest is no more relevant in such cases - the value to be determined as per Rule 8 of the Central Excise Valuation Rules, 2000 on clearances to their subsidiary M/s Raghuvir Exim Ltd. - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Whether the demand invoking extended period of limitation is sustainable.
- Whether the Respondent's appeal regarding the limitation period is valid.
- Whether the Respondent's cross-objection on the merit of the case is justified.

Analysis:

1. Issue 1 - Extended Period of Limitation:
The Revenue contended that the Respondents contravened Rule 8 of the Central Excise Valuation Rules by clearing goods to their subsidiary at transaction value, resulting in short payment of duty. The Revenue argued that the extended period of limitation should be invoked due to non-disclosure of facts. However, the Respondent maintained that all clearances were disclosed in their returns and audits, including the subsidiary relationship, hence, the limitation period cannot be extended. The Tribunal upheld the Commissioner's decision, stating that the Respondents' disclosure of all relevant facts and the export of cleared goods supported the non-sustainability of the extended limitation period.

2. Issue 2 - Merit of the Case:
The Respondent filed a cross-objection challenging the merit judgment. The Respondent argued that the subsidiary relationship alone does not establish a related person status without mutual interest. Referring to legal precedents, the Respondent contended that the Commissioner erred in deciding against them on merit. However, the Tribunal rejected the cross-objection, citing the amendment to Section 4, which included a subsidiary company in the definition of a related person. The Tribunal held that mutual interest is no longer necessary, and the duty should be determined as per the Valuation Rules on clearances to the subsidiary.

3. Final Decision:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision on the limitation period. The Tribunal also rejected the Respondent's cross-objection on the merit of the case, citing the amended definition of a related person. The judgment highlighted the importance of disclosing all relevant facts and upheld the duty determination as per the Valuation Rules for clearances to subsidiaries. The decision was pronounced on 20/9/2017 by the Tribunal.