9911796707
TMI Blog2020 (8) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... s applied, no proper reasoning has been given in the impugned orders. The issue needs to go back to the original authority to consider the Rules of valuation and to give clear findings on the conclusions arrived thereof. Moreover, we find that the initial SCN was adjudicated by the Commissioner and the subsequent SCNs were adjudicated by lower authorities. In the interest of Justice, we hold that all the SCNs be adjudicated now by Commissioner who is competent to adjudicate the case involving highest duty. Applicability of the extended period - HELD THAT:- The appellants have taken the plea that earlier provisional assessment was made and was finalised and even under circumstances, Department has invoked extended period. We find that the submissions of the appellant that they have submitted all the details at the time of provisional assessment and the department has gone through their submissions and finalised the assessments - the submissions of the appellants have not been considered in detail in as much as the manner in which the provisional assessments were finalised have not been discussed at all. Whether M/s. HSL and M/s.HWPL are related entities? - HELD THAT:- The impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53,535 Impugned Order 05/2010 07-06-2010 119/2018 8-2 2018 89-91/2018 24-1-2018 89-91/2018 24-01-2018 89-91/2018 24-01 2018 201/2018 27-4-2018 Penalty Rs 2,65,39,968 4,40,000 4,07,248 10,61,053 1,62,727 3,15,354 2. Learned counsel for the appellants submits that in respect of Appeal No. C/1938/2010, the demands of ₹ 2,14,83,610 and ₹ 6,48,250 were confirmed on M/s Himatsingka Seide Ltd and M/s Himatsingka Filati for the period 2003-04 to 2007-08 and demand of ₹ 44,08,108 was confirmed on M/s Himatsingka Seide Ltd for the period 1-4-2008 to 1-1-2009. Rest of the demands is confirmed on M/s HSL. The allegations in the SCN and the grounds taken in the OIO are summarised as follows. * The minutes of the 107th Board meeting indicate that the appellants approved ₹ 18.9 Cr for retail business; M/s HWPL had requested for additional funds to meet the capital and advertisement expenses; mutuality of interest as emphasized in the minutes of meeting of Board of Directors was not disclosed to the Department; * the appellant was not entitled to claim deductions towards Advertising, Publicity expenses, Marketing and Promotional expenses incurred by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accounts and financial position of all the group entities, put together; the very purpose of preparing a consolidated financial statements would be defeated if expenses are booked again separately in such financial statements; it is evident from the standalone financial statements of the Appellant that such marketing/ promotional expenses has no relation, whatsoever, with the standalone Profit & Loss account of the Appellant; it is necessary for the purpose of consolidation, as per the Indian Accounting Standard 110 (Accounting Standard 21) "Consolidated Financial Statements", the expenses, incomes, profits and losses of all group entities are shown in one single financial statement; furthermore, as per the clause 32 of the "Listing Agreement", all the listed companies having subsidiaries must prepare consolidated financial statements and publish such consolidated financial statement in its annual report; the Companies Act, 2013 which is the governing legislation for the companies also vide Section 129(3) has mandated the preparation of consolidated financial statement by the parent companies; consolidated financial statements prepared in accordance with the Generally Accepted Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2016-TIOL-869; Phoenix International Freight Service Pvt Ltd2016-TIOL-2353 and Thermax Instrumentation Ltd 2015-TIOL-2376. 4. Learned Counsel submits that Marketing and Promotional Expenses incurred by HWPL are not to be included in assessable value for purpose of duty; the objective of setting up of brand 'Atmosphere' was with a larger purpose of gaining presence in the local market in retail since the parent company as an EOU was not permitted to participate fully in the local market; HWPL was set up so as to give full attention to the domestic retail market altogether; the clearance are permissible as per Para 6.8 of the Foreign trade Policy. He submits that CESTAT held, in Lakme Ltd 2003 (162) ELT 272 (Tri- Mumbai),that the new company set up by the manufacturer for marketing purpose and expenditure incurred for advertisement and publicity not being part of assessable value under Section 4 of the Central Excise Act, 1944; intention of the parties to be seen for setting up a new factory and it should not be only for avoidance of tax; the facts of the said case are similar to the instant case; the ratio was followed in Sai Mirra Innopharma P Ltd 2007 (215) ELT 561 (Tri.- Chen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable value; English meaning of 'Mutuality' is "a reciprocal relation between interdependent entities"; therefore, for mutuality of interest to exist between two entities, there should necessarily be interdependence; mandatory condition is that one entity should hold interest in another and vice versa; Apex Court held, in the case of Kwality Ice Cream Co 2010 (260) ELT 327 (SC), that what is important is that each of the parties involved should have an interest, whether direct or indirect in the business of each other; what is of importance is certain interdependence and reciprocity beyond the relationship of either a distributor or manufacturer so as to consider as to whether the parties are 'related persons'. 5.3. He submits that the holding company is a listed company and the holding and subsidiary companies are managed by their respective Board of Directors; the brand name "Atmosphere" is registered in the name of the Subsidiary company and part of its assets; therefore the marketing expenses cannot be directed by the holding company to promote a brand not of its own; impugned order holds that since both Appellant and HWPL have the same directors, there exists a mutuality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culation under the deductive method and this was taken in to account while ordering the finalization of assessment vide order dated March 29, 2003; while computing under the deductive method, deductions in the form of additions usually made for profits and general expenses in connection with sales in India of imported goods of the same class or kind is allowed; the indirect marketing expenses were not incurred at the instance of the Appellant; it is an undisputed fact that the two sets of calculations were made available to the assessing authority for finalization of provisional assessment along with the Balance Sheets of the Companies and all other information as detailed in the aforementioned letter; extended period cannot be invoked as the provisional assessment has not been challenged by the Department in any appellate proceedings; on the other side, the same has been finalized by the assessing officer on the set of records and the figures, submitted by the Appellant; it cannot be said that the Appellant had suppressed the amount on which revenue wants to claim the differential duty. He relies upon. (i). Future Techno Designs (P) Ltd 2006 (202) ELT 443 (Tri- Bang) maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially through Rules 5 to 8 of these rules. 11. The impugned orders are silent as to how the appellants claim of valuation under Rule 7 was legally tenable and how Rules preceding the same are not applicable. The respective authorities have only disputed the fact that certain expenses incurred by the subsidiary on account of Marketing and Advertisement were not included and that they are related. We find that Rule 7 of Customs Valuation (Determination of Price of imported goods) Rules, 1988 lay down as follows. 7. Deductive value. - (1) Subject to the provisions of Rule 3 of these rules, if the goods being valued or identical or similar imported goods are sold in India, in the condition as imported at or about the time at which the declaration for determination of value is presented, the value of imported goods shall be based on the unit price at which the imported goods or identical or similar imported goods are sold in the greatest aggregate quantity to persons who are not related to the sellers in India, subject to the following deductions :- i. either the commission usually paid or agreed to be paid or the additions usually made for profits and general expenses in connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985 : Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, -- (i) In a free trade zone and brought to any other place in India; or (ii) By a hundred per cent export-oriented undertaking and allowed to be sold in India; shall be an amount equal to the aggregate of the duties of customs which would be leviable under section 12 of the Customs Act, 1962 (52 of 1962), on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975)." 10. As is clear from the bare reading of the aforesaid proviso, in those cases where excisable goods are produced or manufactured by hundred per cent export oriented unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged off in the financial accounts of HSL as confirmed by the auditor's report. The appellants have taken the plea that earlier provisional assessment was made and was finalised and even under circumstances, Department has invoked extended period. We find that the submissions of the appellant that they have submitted all the details at the time of provisional assessment and the department has gone through their submissions and finalised the assessments. However, we find that in respect of OIO NO.89-91/2018 (appeal No.E/20563/2018, E/20564/2018, E/20566/2018), demand for extended period was dropped. We also find that as an EOU the appellants should have submitted a B17 bond to the jurisdictional authorities. However, these Show Cause Notices have not been issued invoking the conditions of the bond. We find that the submissions of the appellants have not been considered in detail in as much as the manner in which the provisional assessments were finalised have not been discussed at all. 14. Coming to the allegation that M/s. HSL and M/s.HWPL are related entities, we find that the department relied upon the fact that the appellants have given loan to M/s.HWPL as can be seen from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
