2022 (11) TMI 643 - AT - Central Excise

Short payment of duty - SS Flats - SS patta/patti - SS Utensils sold to RSSL - related party transaction - April 2015 to October 2015 - HELD THAT - As the demand is of Rs. 1,95,598/- only and considering the difficulties in checking the price at which each of the SS Utensils was sold by RSSL, we are of the considered opinion that remanding the matter the matter may not serve any purpose and the value can be fixed by the Tribunal exercising powers under rule 11 of the Valuation Rules. The value of the SS Utensils cleared by the appellant be re-determined as 3.83% of the sale price and duty to be calculated accordingly - The order passed by the Commissioner (Appeals) in so far as it confirms the demand of duty on SS Patta is set aside and demand on SS Utensils is reduced from Rs. 1,95,598/- to Rs. 75,000/- - the penalty imposed on the appellant should be set aside. Appeal allowed in part.

Issues:
1. Appeal against order dated 13.06.2018 passed by the Commissioner (Appeals) involving demand of Rs. 9,78,929/- with interest and penalty.
2. Interpretation of related unit status under section 4 (3) (b) of the Central Excise Act, 1944.
3. Demand of duty short paid by the appellant in respect of various goods sold to a related unit.
4. Applicability of Central Excise Act and Valuation Rules on goods not manufactured by the appellant.
5. Determination of assessable value under rule 8 and rule 9 of the Valuation Rules.
6. Re-determination of value for SS Utensils and setting aside of penalty.

Analysis:
1. The appeal challenged the Commissioner (Appeals) order confirming a demand of Rs. 13,32,087/- with interest and penalty, while setting aside a portion of the initial demand. The appellant claimed to be manufacturing SS Circles and SS Utensils, with partners also linked to a related unit, M/s Ramdev Stainless Strips Pvt. Ltd. (RSSL), under section 4 (3) (b) of the Central Excise Act, 1944.

2. A show cause notice was issued proposing a duty demand for goods sold to RSSL, which was confirmed by the adjudicating authority. The Commissioner (Appeals) dropped a portion of the demand but upheld a significant amount, specifically on SS Patta and SS Utensils sold to RSSL.

3. Regarding SS Patta, it was argued that the appellant did not manufacture it, leading to a misapplication of the Central Excise Act and Valuation Rules. Previous orders dropping similar demands for non-manufactured goods supported this argument, resulting in the setting aside of the demand on SS Patta.

4. For SS Utensils, the demand was confirmed under rule 8 of the Valuation Rules, but the appellant contended that rule 9 should apply as the goods were not used for further manufacture. The Tribunal agreed, re-determining the value based on the sale price to RSSL, reducing the demand significantly.

5. The Tribunal exercised its power under rule 11 of the Valuation Rules to fix the value of SS Utensils, reducing the demand from Rs. 1,95,598/- to Rs. 75,000/-. The penalty imposed on the appellant was also set aside in light of the circumstances.

6. In conclusion, the appeal was allowed to the extent indicated, with the demand on SS Utensils reduced and the penalty lifted, emphasizing the correct application of valuation rules and considerations for goods not used in further manufacture.

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