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TMI Blog2018 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... gation that WDPL have been put in place only with an intention to depress or suppress the value is not tenable. Once there is no ground for rejection of transaction value, recourse to re-determination of the value in terms of Central Excise Valuation Rules, is not warranted. Time limitation - Held that:- The appellants have given a clear declaration that they will be clearing their entire goods to WDPL who are their sole distributors. The appellants were audited by the departmental officers in 2000 and 2002 and there was no positive act of suppression shown to have been done by the appellants with an intent to evade payment of duty - the department is not free to invoke the extended period for issue of show-cause notice - the issue is barred by limitation. Penalty not leviable either on the appellant or their Director. Appeal allowed - decided in favor of appellant. - E/886/2007-DB & E/887/2007-DB - 21027-21028/2018 - Dated:- 27-7-2018 - HON'BLE MR. S.S GARG, JUDICIAL MEMBER And HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER MR. M.S. NAGARAJA, ADVOCATE FOR THE APPELLANT DR. J. HARISH, AR FOR THE RESPONDENT ORDER Per : P. Anjani Kumar M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have interest directly or indirectly in the business of each other; there was nothing in the records to show that there was any financial flow back from WDPL to the appellant; it cannot be argued that WDPL was created for evasion of duty. The learned Commissioner (A) has neither disputed nor controverted the findings on facts by the Additional Commissioner. The show-cause notice only alleges that the appellant and WDPL are related persons but it does not refer to any specific clause under which such a conclusion can be arrived at. Both the original adjudicating authority and the Commissioner (A) have given a clear finding that there is no flow of money in the form of additional consideration from WDPL to the appellant. The Commissioner (A) has simply reiterated the wordings in the show-cause notice that WDPL has no apparent function in the transaction between the appellant and the KSPL and their role was only to raise invoices on KSPL for higher prices. 2.2 The learned counsel submitted that it is an admitted fact that WDPL have paid the price for the goods sold as per invoices raised by the appellant. The learned Commissioner (A) has not appreciated the legal position that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls Ltd. vs. CCE, Lucknow: 2005 (183) ELT 263 (T) viii. Chloride Industries Ltd. vs. CCE, Pune: 1999 (113) ELT 956 (T) maintained by Hon ble Supreme Court in 1999 (114) ELT A227 (SC). 2.4 The learned counsel has also submitted that the issue is barred by limitation. Appellants have filed a declaration showing the pattern of sale in terms of sub-rule (3A) of Rule 173C of Central Excise Act, 1944 on 12.6.2000 showing that the entire goods were sold to WDPL who were the wholesale distributors. The internal audit party has also audited the accounts of the appellants on two occasions i.e., on 20/21.09.2000 and 19.10.2002 and no adverse observations were reported. Therefore, the department had the knowledge of nature of sale transactions by the appellant to WDPL way back in 2000 itself. Therefore, making the allegations after October 2002 when the officers visited the premises is not tenable. The facts were completely disclosed and were specifically in the knowledge of the Department and therefore, the extended period is not invokable. They relied upon the following case laws: i. CCE, Bangalore vs. Pragathi Concrete Products (P) Ltd.: 2015 (322) ELT 819 (SC) ii. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time from KSPL. There was no mention of WDPL. 4. Heard both sides and perused the records. The brief issue to be decided in this case is whether the appellant and WDPL are related persons within the ambit of Section 4(4)(c)/4(3)(b) of Central Excise Act, 1944 so as to necessitate the rejection of the transaction value under Section 4(1)(a) and to re-determine the value in terms of Rule 6 of Central Excise Valuation (Determination of the Price of Excisable Goods) Rules, 2000 and as to whether Rule 9 and Rule 10 of Valuation Rules are invokable. The Department s allegations mainly were: All the goods manufactured are sold to WDPL who sold it at a higher price to KSPL who are the brand owners. WDPL is not functioning at the declared premises but were operating only from the premises of the appellants. Some employees of the appellant have also claimed to be working for WDPL. Cheques issued by KSPL and intended for WDPL were invariably addressed to the address of the appellant. None of the employees of the appellant could confirm the existence or otherwise of WDPL and have not seen any person belonging to WDPL. 4.1 We find that on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WDPL and the appellant are related and there was mutuality of interest and there was any flow-back between the appellant and WDPL. 4.3 We find that CBEC vide Circular MF (DR) F. No.354/81/2000-TRU dated 30.6.2000 has clarified at para No.22 that in case where price is not the sole consideration for sale, but the other requirements of Clause (a) of sub-section (1) of Section 4 of the Central Excise Act are satisfied, the value shall be determined in accordance with the provisions of Rule 6 of the Valuation Rules. This provides for adding, to the transaction value the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. Such additional consideration would include the money value of goods and services provided free or at reduced cost by or on behalf of the buyer to the assessee. And in para 24, it was further clarified that .However, a provisions has been made in the new Valuation rules that even if the assessee and the buyer are inter-connected undertakings, the transaction value will be rejected only when they are related in the sense of any of Clauses (ii), (iii) or (iv) of sub-section 4(3)(b) or the buyer is a hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h fulfill the arguments of the appellant. We are not going into the individual case laws as the same is squarely settled issued now. We find that the ratio of the judgments cited by the appellant is squarely applicable to the instant case. 4.6 Coming to the issue of limitation, the learned counsel for the appellant has made a strong case in favour of the appellant as far as limitation is concerned and the facts were not controverted by the department. The appellants have given a clear declaration that they will be clearing their entire goods to WDPL who are their sole distributors. The appellants were audited by the departmental officers in 2000 and 2002 and there was no positive act of suppression shown to have been done by the appellants with an intent to evade payment of duty. Therefore, going by the ratio of the judgments in the cases cited by the learned counsel for the appellants, we find that the department is not free to invoke the extended period for issue of show-cause notice. Therefore, we find that the issue is barred by limitation. 4.7 Having found that the issue is not sustainable on merits, we do not intent to discuss the issue of levy of penalty either on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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