2024 (7) TMI 1393 - AT - Central Excise

Recovery of Central Excise Duty alongwith interest and penalty - determination of assessable value of goods sold or cleared to the related party - section 4(1)(b) of the Central Excise Act read with rules 8,9,10 11 of the Central Excise Valuation Rules 2000 - HELD THAT - It is not in dispute that the facts pertaining to the present appeal and to the aforesaid decided appeal in M/s Khyati Ispat Private Limited (Rolling Mill Division) vs. Principal Commissioner, Central Tax Central Excise 2022 (3) TMI 399 - CESTAT, NEW DELHI in the matter of the appellant are identical. Infact, the period involved in the appeal decided by the Tribunal is from April, 2010 to March, 2014, while the period involved in the present appeal is from April, 2014 to March, 2015. The decision of the Tribunal which has been relied upon by the Commissioner (Appeals) would, therefore, govern the issues raised in this appeal. It cannot be doubted that the dispute in the present appeal is identical to the dispute raised in the appeal decided by the Tribunal. In view of the decision of the Tribunal in the matter of the appellant itself, the present appeal filed by the department deserves to be dismissed and is dismissed.

Summary

Issues:
- Appeal against order confirming demand of central excise duty
- Determination of assessable value of goods sold to related party
- Interpretation of Central Excise Act and Valuation Rules
- Interconnected undertakings and related persons under Section 4(3)(b)
- Comparison with earlier Tribunal decision on similar issues

Analysis:
1. The appeal was filed to challenge the order confirming the demand of central excise duty on goods sold to a related party, M/s Shri Ashutosh Engg. Industries, by M/s Khyati Ispat Private Limited. The dispute involved the determination of the assessable value of goods sold to the related party, which the department claimed should be 110% of the cost of production or manufacture as per Central Excise Act and Valuation Rules.

2. The Commissioner (Appeals) set aside the order passed by the Joint Commissioner, citing that both M/s Khyati Ispat and M/s Shri Ashutosh Engg. Industries were controlled by the same persons, making them interconnected undertakings under Section 4(3)(b) of the Act. This finding was based on the ownership and directorship overlap between the two entities.

3. The Commissioner (Appeals) also referred to Rule 10(b) of the Valuation Rules, stating that when goods are sold to interconnected undertakings but are not related persons as per specific clauses, the value should be determined as if they are not related persons for the purpose of valuation. The decision was supported by a previous Tribunal ruling on a similar issue involving the appellant.

4. The Tribunal's earlier decision in a related appeal for the period April 2010 to March 2014 established that M/s Khyati Ispat and M/s Ashutosh were interconnected undertakings but not related persons under various clauses of Section 4(3)(b). The Tribunal's interpretation of the relationship between the entities and the absence of evidence of mutual business interests led to the conclusion that they were not related persons for valuation purposes.

5. The Tribunal in the present appeal relied on the earlier decision and dismissed the department's appeal, emphasizing the identical nature of the disputes and the governing effect of the previous Tribunal ruling. The decision was based on the established legal position regarding interconnected undertakings and related persons under the Central Excise Act and Valuation Rules.

6. Ultimately, the Tribunal upheld the Commissioner (Appeals)' decision, ruling that the demand of central excise duty was not sustainable in law due to the entities' status as interconnected undertakings but not related persons, as per the provisions of the Act and Valuation Rules. Consequently, the appeal filed by the department was dismissed based on the precedent set by the earlier Tribunal decision on similar issues.