2023 (11) TMI 300 - AT - Central Excise

Method of Valuation - related parties - allegation is that the appellant has been clearing the finished products at lesser value to the buyer M/s Gera Enterprises, Faridabad - time limitation - Suppression of facts or not - HELD THAT - In the present case, the demand has been confirmed by relying upon Rule 8 and 9 of Central Excise Valuation Rules, 2000 whereas it is an admitted fact in the show cause notice that the entire production has not been cleared to a related person M/s Gera Enterprises in this case. In the show cause notice itself it has been stated that the noticee has been clearing the finished goods at lesser (assessable) value to M/s Gera Enterprises as compared to other customers. Once this fact is admitted then applying Rule 9 is not legally sustainable in view of the larger bench decision of the Tribunal in the case ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD 2007 (2) TMI 5 - CESTAT, MUMBAI . Besides, this Tribunal in the case of SUDERSHAN CASTINGS PVT. LTD., SUDERSHAN STEELS PVT. LTD., TRIKUTA STEEL ROLLING MILLS, ROMESH CHANDER GUPTA, SHRI. NARINDER KUMAR GUPTA, MG. DIRECTOR OF SHRI SUDERSHAN KUMAR SHARMA VERSUS CCE, JAMMU. 2017 (5) TMI 1816 - CESTAT CHANDIGARH held that when the goods are sold to related persons as well as to independent buyers, in that case, Rule 9 will not be applicable. Time Limitation - HELD THAT - The appellant has been filing the monthly returns regularly and has not concealed any material fact from the department. Therefore, alleging suppression or fraud to invoke the extended period of limitation is not legally sustainable. The impugned order is not sustainable in law and the same is set-aside by allowing the appeal of the appellant.

Summary

Issues:
The issues involved in this case are valuation of excisable goods under Section 4(1)(b) of the Central Excise Act, 1994 read with Rule 8 and 9 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, and the applicability of the extended period of limitation for issuing a show cause notice.

Valuation of Excisable Goods:
The appellant, engaged in the manufacture of non-alloy bright bar, was alleged to have cleared finished products at a lesser value to a related person. The show cause notice invoked the extended period of limitation and proposed recovery for violation of valuation rules. The impugned order calculated the assessable value at 110% of the value charged to the related person, citing Rule 8 and 9 of the Valuation Rules. However, the appellant argued that Rule 9 is not applicable as the goods were sold to both related and unrelated persons, relying on precedents. The Tribunal found that since the entire production was not cleared to the related person, applying Rule 9 was not legally sustainable, as per the larger bench decision in Ispat Industries.

Extended Period of Limitation:
The appellant contended that the show cause notice was time-barred as there was no suppression or fraud, and monthly returns were filed regularly. Citing the decision in Ispat Industries, the Tribunal held that invoking the extended period of limitation without evidence of suppression or fraud is not legally sustainable. The appellant's appeal was allowed, setting aside the impugned order.