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TMI Blog2018 (8) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... ntuality, it is M/s VPIPL who have to make arrangement for the transportation of the rejected goods from the premises of M/s L. G. to their own factory. The order passed by the Commissioner of Central Excise, Noida, does not provide any evidence which could nullify the Terms of the Agreement, referred to above. The Terms of the Agreement goes on to establish that such terms could only be where the Transactions between the Buyer & Seller are on Principle-to-Principle basis. - There is not an iota of evidence which could establish about M/s L. G./M/s Onida having any Managerial, Administrative and Financial control on M/s VPIPL or vice-versa. M/s VPIPL has Share-Holding of the members of Batra family M/s L.G/ M/s Onida being Multi-National-Companies. In no way they can be considered under the Term “Related” as per Section- 4 (3) (b) of Central Excise Act. The Transactions between M/s VPIPL with M/s L.G/M/s Onida are on Principal-to-Principal basis and the price charged for sale of Plastic-Molded-Components to M/s LG/M/s Onida is the sole consideration of the Sale. They are not covered also by the expression “Related” as defined under Section – 4 (3) (b) of the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod 2001 02 to 31/12/2005 invoking the extended period of limitation, as it appeared to Revenue that M/s VPIPL is related parties as respect M/s L. G. M/s Onida, and accordingly, although for the supply of moulds free of cost on returnable basis by the other two appellants to M/s VPIPL, and M/s VPIPL have amortized the cost of moulds while valuing their goods for clearance as required under Rule 6 of the Central Excise Valuation Rules, 2000 but being related parties, the goods cleared by M/s VPIPL to the other two appellants have to be revalued under the provisions of Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000. Accordingly, the transaction value was rejected and revalued by applying 115%/110% of the cost of manufacture by M/s VPIPL and accordingly differential duty of ₹ 1,42,40,047/- was demanded from M/s VPIPL along with proposal for penalty and further penalty was also proposed on the other two appellants under Rule 26 of the Central Excise Rules, 2001/2002 read with Rule 209A of the Central Excise Rules, 1944. Further penalty of ₹ 50 lakhs each have been imposed on the other appellants namely; M/s L. G. M/s Onida under Rule 26 of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or making use of the same towards manufacture of Plastic Moulded Components. Supply of Moulds by the customer is a normal commercial practice. All such moulds are accompanied by the Challans/Invoices, which also declare the value of the mould being supplied to M/s VPIPL. 5.5 Keeping in view the provisions of Rule 6 of the Valuation Rules and also the decision of the Larger Bench in the case of M/s Mutual Industries Ltd vs CCE, Mumbai, 2000 (117) ELT 578 (Tri), VPIPL worked out the Amortizing Cost of the moulds and added the same to the price settled between M/s VPIPL and their customers for working out the Transaction Value of the Plastic Moulded Components supplied to the respective customers. It is on such Transaction Value that the Excise Duty had been paid. 5.6 In this connection, the Agreements between VPIPL and LG have been made and the copies of such Agreements have been filed by M/s VPIPL in the present proceedings. The Agreements, through specific mention of the Articles therein, make it clear that the same are between two independent parties and nothing therein shall be construed to imply an Employer-Employee relationship or to imply that the supplier is connected w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPL. 5.11 During the course of investigation, various statements of the representatives of LG, Onida and VPIPL were recorded. The statement of Sh Sanjay Bhatt of VPIPL confirmed that while selling the Plastic Component to any other customer, they were working out the Transaction Value by adding Amortizing Cost to the PRICE AGREED between VPIPL and the customer and it is on such added price that Excise Duty was being paid by M/s VPIPL. The Central Excise Invoices issued by VPIPL demonstrates and confirms such position on facts. 5.12 The statements of the representatives of LG confirmed that at times, if LG sold the raw materials/Plastic Dana to M/s VPIPL, it was at the Landed Cost of LG, which was cleared to VPIPL on payment of appropriate Duty. However, it is on a very rare occasion that raw materials were sold by LG. 5.13 In respect of the raw materials sold by Onida, it was at the price prevalent on the date of sale. This position was also explained by Sh Satish Batra, Director, VPIPL, while tendering his statement. He also explained that prices for sale of Plastic Components by M/s VPIPL to any of their customers were invariably settled between them and the customer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Central Excise, Noida, vide Order in Original No 09/CONN/Noida/2009 dated 27.02.2009. He also imposed penalty of ₹ 50 lacs each on M/s LG and M/s Onida. 5.18 Challenging the Order of the Commissioner, M/s VPIPL maintained that the provisions of Section 4(1)(b) of the Central Excise Act and Section 4(3)(b)(iv) of Central Excise Act have been arbitrarily invoked. Narrating the facts, briefly referred above, they maintained that their transactions with any of their customers are on Principal-to-Principal basis. In the present case, since moulds had been supplied by M/s LG and M/s Onida free of cost like others, M/s VPIPL, added therein the Amortizing Cost of the moulds while working out the Transaction Value in terms of the provisions of the Valuation Rules. 5.19 During the course of hearing, they also drew the attention of the Bench to the agreements of M/s VPIPL with M/s LG and reading there from the various articles of such agreement, they maintained that their transactions were purely on Principal-to-Principal basis and the Agreement, by itself, spelt that the relationship between M/s VPIPL and M/s LG was not of Employer and Employee and further the workers em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) have no application accordingly and the Commissioner erred in invoking and holding so while passing the Order. 5.23 Drawing the attention of the Bench that even the demand in question against M/s VPIPL was mostly barred by limitation, it was submitted by M/s VPIPL that 18.10.2001 was the date on which the Officers of Central Excise visited the premises of M/s VPIPL with alleged prior intelligence about they being a Surrogate Manufacturer and M/s VPIPL allegedly not paying proper duty in respect of supplies affected to M/s LG and M/s Onida. Atleast after 18.10.2001, the Department cannot pretend ignorance and there has neither been any Order for provisional assessment by the proper Officer nor any direction to M/s VPIPL to make their clearances on compliance of Rule 9 of the Valuation of Rules. However, each year M/s VPIPL was directed to supply figures of clearances to M/s LG/M/s Onida and the same was copiously complied by M/s VPIPL. The Extended Period cannot be invoked, as the SCN was issued on 19.05.2006 for the demand period of 01.04.2001 to 31.12.2005. 5.24 While challenging about there being no relation with M/s VPIPL, M/s LG and M/s Onida further maintained about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings in the impugned order, Rule 6 of the Central Excise Valuation Rules, 2000 is rendered otiose which provides for amortization of the cost of Moulds Dies in the cost of goods manufactured and supplied to the supplier of moulds for the purpose of valuation of the goods. The learned Counsel further adopted the arguments of Mr. Mullick, for M/s VPIPL Mr. Atul Gupta for LG. 8. Heard the learned DR who relied on the impugned order. 9. Having considered the rival contentions and on perusal of the facts on record, we find that the learned Commissioner observed that M/s VPIPL owns their factory at Greater Noida and in their factory they installed their own plant machinery by investing about ₹ 14 crores. M/s VPIPL, in this regard have also placed evidence in the shape of the invoices showing purchase of land and machinery installed in their factory. Thus, the learned Commissioner's impugned order confirms that M/s VPIPL were having their own factory, plant machinery, separate workers/labourers and further confirms their own purchase of raw materials and other components required for manufacture of plastic moulded components. The learned Commissioner have also rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a having any Managerial, Administrative and Financial control on M/s VPIPL or vice-versa. M/s VPIPL has Share-Holding of the members of Batra family M/s L.G/ M/s Onida being Multi-National-Companies. In no way they can be considered under the Term Related as per Section- 4 (3) (b) of Central Excise Act. 13. We find that Moulds by M/s L. G. / M/s Onida have been supplied free of cost and on returnable basis to M/s VPIPL to carry out one of the processes for manufacturing of the Plastic Moulded Components by M/s VPIPL. In this connection, we have also gone through the Flow-Chart for carrying out manufacturing of Plastic-Molded-Components. We notice that Manufacture of Plastic-Molded-Components does not only take place by use of Moulds, but also the Raw-Materials used initially are inspected and then mixed in the Machines like Binary- Mixer, Auto-Loader, Oven, Dryer followed by transferring the same to Injection-Molding-Machine installed in the factory, Hot-Runner-Controller, and it is there that the Moulds supplied are used for getting the Shape of the Component required. After such operation, there are further processes to be undertaken like Screen Printing, Assembling Section, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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