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TMI Blog2017 (12) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... e was issued to the appellant by arriving at the assessable value as under: Section 4 of the Central Excise Act, 1944 {hereinafter referred to as the Act } prescribes the manner and method for determination of value of the excisable goods by the manufacturer. As per Section 4(1) (a) of the Act, where sales are made to independent buyers at a time and place of removal, the transaction value charged for each removal shall be the value for the purpose of charging excise duty. However, when the sales are made to related persons, the assessable value has to be determined as per the provision of Section 4(1) (b) read with Central Excise Valuation Determination of Price of Excisable Goods) Rules, 2000 {hereinafter referred to as the Valuation Rules 2000 ). Rule 9 and Rule 10 of the Valuation Rules 2000 provides for valuation of excisable goods only in circumstances when the sales of excisable goods are only through the related person/inter-connected undertakings [and no sale is made to independent buyer]. In cases, where the goods are partly sold to related persons an partly to independent buyers, no specific Rule in this regard is available in the statute book and the valuation in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied vide Circular dated 25.04.2015 that the valuation of samples distributed free as a part of market strategy has to be done as per Rule 4 of the Valuation Rules. He further submits that the decision of this Tribunal in the case of Aquamall Water Solutions Ltd. (supra) is not applicable to the facts of present case, as the facts of the said case are totally different from this case. 5. He further submits that as this is the issue of interpretation of Rule and how the value is to be to arrived, therefore, the extended period of limitation cannot invoked on mere allegation of the suppression of facts unless intent to evade duty is established. To support this contention, he relied upon in the case of Choudhary Yatra Co.Pvt.Ltd. Vs. CCE, Nashik-2013 (29) STR 240, Singh Brothers Vs. CCE, Indore-2009 (14) STR 552 and Uniworth Textiles Ltd. Vs. CCE-2013 (288) ELT 161. Therefore, he prayed that the impugned order is to be set aside. 6. On the other hand, learned AR opposed the contention of the learned Counsel and submits that it is admitted fact that Rule 11 of the Valuation Rules is applicable to the facts of the case as the appellant is selling the goods to independent buyers as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section,- (a) assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) persons shall be deemed to be related if - (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. Explanation. In this clause - (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of Section 2 of the Monopolies and Restricted Trade Practices Act, 1969 (54 of 1969) and (ii) relative shall have the meaning assigned to it in the clause (41) of section 2 of the Companies Act, 1956 (1 of 1956): (c) place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without [payment of duty;] (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion; and (ii) in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing. Explanation 2. - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable goods.] RULE 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. Explanation 1 - For removal of doubts, it is hereby clarified that the value, apportioned as appropriate, of the following goods and services, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. RULE 8. Where whole or part of the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. RULE 9. Where whole or part of the excisable goods are sold by the assessee to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of such goods shall be the normal transaction value] at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail : Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutandis apply for determination of the value of the excisable goods : Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods. Explanation. - For the purposes of this rule, job-worker means a person engaged in the manufacture or production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him.] RULE 11. If the value of any excisable goods cannot be determined under the foregoing rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act. 12. On going through the above provisions, there is no dispute that there is no specific provisions for valuation of the goods cleared to independent buyers as well as to related person to arrive at the assessable value for the goods cleared to the related person. Therefore, Rule 11 is applicable to the facts of the case which has not been disputed by both sides. 13. As per Rule 11, valuation of excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated person and part of production is sold to non-related person, Rule 9 as such may not apply for valuing goods sold to related person. Still the value cannot be determined under Section 4(1)(a), as that section does not apply to sales to related person. Therefore, circular provides that such sales to related person would be assessed under Rule 11 read with Rule 9. 17. Therefore, the valuation to the related person in this case is required to be arrived as per Rule 11 read with Rule 9 of the Valuation Rules whereas in the impugned order the valuation has to be resorted through Rule 11 read with section 4(1) (a) of the Act and Rule 4 of the Valuation Rules which is not correct view. 18. Further, the adjudicating authority has relied on the decision of this Tribunal in the case of Aquamall Water Solutions Ltd. (supra), the facts of the case are not similar to the facts o the case in hand, as facts in the said case are as under: The appellant admittedly is a subsidiary company of M/s. Eureka Forbes Ltd. (hereinafter referred to as EFL) are inter alia engaged in the manufacture of water filter-cum-purifier with accessories of various models as also water cooler-cum-purifier. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rule 11 of Valuation Rules, 2000 using means consistent with the principles and provisions of Rules 9 and 10(a) of Valuation Rules, 2000." 5. The appellants filed a detailed reply dated 24-10-2001 and an additional written submissions dated 14-2-2002 resisting the contention of the department. The appellants contented that since the relationship had not influenced the price the valuation is to be based on Section 4(1)(a) only. Alternatively, the appellants had submitted that if Rule 4 and Rule 7 of the Valuation Rules, 2000 is applied and the price at which the goods have been sold to the dealers is taken as the basis the assessable value would work out to be the one on which duty was paid by the appellants. 19. In the case of Aquamall Water Solutions Ltd. (supra) there was no sale at factory gate and all the brands stock transferred to depots and from depots the goods were transferred to the related persons as well as independent buyers and thereafter sold to independent buyers. All goods were sold to related person in that case who directly sold the goods to independent customers. Therefore, in that case, the appellant was not clearing the goods to independent as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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