C.C.E., Jalandhar (Hq. At Chandigarh) vs M/S International Engineers Limited

(Arising out of OIA No. 24/CE/JAL/2006 dated 31.01.2006 passed by Commissioner (Appeals-I) Central Excise, Jalandhar (Hqrs. at Chandigarh)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

C.C.E., Jalandhar (Hq. at Chandigarh) Appellant

Vs.

M/s International Engineers Limited Respondent

Appearance:

Present for the Appellant: Shri Ranjan Khanna, DR

Present for the Respondent: None

Coram: Honble Shri Ashok Jindal, Member (Judicial),

Honble Shri B. Ravichandran, Member (Technical)

Final Order No.52330/2015

Per: B. Ravichandran

Revenue is in appeal in this case against Order-in-Appeal dated 31/01/2006 passed by the ld. Commissioner (Appeals). The brief facts of the case are that the Respondent are engaged in the manufacturer of Tractor Parts and the entire production is sold to M/s International Tractor Ltd. (M/s ITL) who use the same for manufacture of tractors.

2. The transactions between these two were scrutinised for Central Excise valuation purpose and demand was confirmed against the respondent by the original authority on the ground that the transactions are to be treated as between related person resulting in under valuation. On appeal the ld. Commissioner (Appeals) set-aside the order. The ld. Commissioner (Appeals) also held that extended period of limitation is not invokable in the present case. The Revenue is before us against this impugned order. The Revenue pleaded that the ld. Commissioner (Appeals) erred by holding that percentage of share holding by the partners of respondent firm in the buying company and the facts of 100% sale to the buyer was not enough proof of mutuality of interest. It was pleaded that the case law relied on by the lower authority is not applicable to the present case. The respondent and ITL are interconnected undertaking and hence related persons. The respondent is a partnership firm, two of the partners are directors of ITL holding 50% of the total shares holding. They exercise control directly or indirectly over the functioning of ITL. On the question of limitation the Revenue contended that the declaration filed by the respondent under Rule 173C did not disclose the full details as mutuality of interest could be established only on ascertaining share holding pattern. During the hearing the ld. AR relied on the Honble Supreme Court decision in the case of M/s I.T.E.C. Pvt. Ltd. reported as 2002 (145) E.L.T. 280 (S.C.). He reiterated the grounds of appeal filed by the Revenue. None appeared for the respondent.

3. The point for decision is whether there was short payment of duty in the clearance of the goods by respondent to M/s ITL due to the reason both of them is having mutuality of interest and are related persons. The correctness of demand for extended period is also to be decided. It is relevant to note that the allegation of Show Cause Notice says since the noticee also exclusively sold their entire production of excisable goods to their related M/s ITL, the assessable value of the said excisable goods is required to be determined in terms of the provisions of Section 4(3)(b)(iv) Central Excise Act, 1944 read with Rule 6(c)(ii) and Rule 6(b)(ii) of the Valuation Rules, 1975 upto 1.7.2000 and as per amended Section 4(i)(b) read with Rule 8, 9 and 10 of the valuation Rules 2000 w.e.f. 1.7.2000.

4. This allegation is examined in detail by the ld. Commissioner (Appeals). He observed that only holding of share of 50% and selling of entire production by the appellants to M/s ITL is not enough to prove the mutuality of interest in the business of each other. He relied on the decision of this Tribunal in the case of M/s Marc Pharmaceuticals  2005 (183) E.L.T. 145 (Tri.- Delhi). He observed that evidences of certain extra commercial consideration is required to be brought on records and held that the department has not established such mutuality of interest affecting the valuation of excisable goods. In the appeal revenue stated that against the case law relied on by the ld. Commissioner (Appeals) the department has filed SLP in Apex Court.

5. On careful examination we find that the detailed examination and categorical finding of the ld. Commissioner (Appeals) in respect of both limitation and on merits could not be faulted and we find no reason to interfere of the order of the ld. Commissioner (Appeals). We also find that the Apex Court decision in the case of M/s I.T.E.C. Pvt. Ltd. (supra) relied on by the ld. AR is on different set of facts. As in the present case respondent in a partnership firm and the buyer, ITL is a Limited Company. We find no merits in the present appeal. The same is dismissed.

(Dictated and pronounced in open court)

(ASHOK JINDAL)

Member (Judicial)

(B. RAVICHANDRAN)

MEMBER (TECHNICAL)

K. Gupta

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