ORDER
M. Veeraiyan, Member (T)
1. This is an appeal by the Department against the order of the Commissioner(Appeals) No. Commr.(A)/293/VDR/2003 dt.27/6/2003.
Heard ld. Jt. CDR. None appeared for the respondent.
2. The relevant facts, in brief, are as follows:
a. The respondents were selling their product at factory gate as well as through their depots. They have adopted lower prices for clearance to their various depots for the same goods compared to the prices at which they were available at the factory gate. Sixteen show cause notices were issued proposing differential duty of Rs. 2,76,43,950/-; the demands related to the period from November 1994 to September 1999 and were proposed by adopting the highest price available at factory gate during the month/quarter for the relevant period.
b. The Original Authority held that the buyers who purchased at factory gate were those who entered into agreements/contracts with the assessee and constituted a separate class of buyers and therefore the contract price entered into with these buyers cannot be made applicable to sale through depots. He held that the prices were fixed/determined purely on the basis of commercial considerations. He held that the goods have been sold from their depots only at the declared prices. Accordingly, vide his order dt.19/2/1999, he dropped the demand of Rs. 2,76,43,950/-
c. On appeal by the Department, Commissioner(Appeals) vide his order dt. 6/2/2001 remanded the matter to the Original Authority. However, on appeal by the assessee against the said order of the Commissioner(Appeals), CEGAT vide their order dt.30/10/2001 set aside the order of the Commissioner(Appeals) and ordered for de-novo proceedings.
d. Commissioner(Appeals) passed the impugned order dated 27-6-2003 in his de-novo proceedings. He held that for the period from 28/9/1996, depot was also a place of removal, and hence the normal price has to considered separately for the period prior to 28/9/1996 and separately for the period from 28/9/1996, he held that normal price at the factory gate, if available, has to be treated as a normal price with respect to the goods sold from the depot for the period the period prior to 28/9/1996. However, for the period from 28/9/1996, he held that the demand of duty in respect of goods cleared by the respondent is no correct. Accordingly, he remanded the matter to the Original Authority to re-work the demand in respect of the goods sold from the depots prior to 28/9/1996, at which the goods have been sold to the customers under contract as normal price.
e. The Department is in appeal against the said order.
3. Ld. Jt. CDR relies on the judgments of the Hon’ble Supreme Court in the case of CCE, Allahabad v. Somaiya Organics India Ltd. 2007-TIOL-198-SC-CX and in the case of Ashok Leyland Ltd. v. CCE, Madras .
4. It was submitted that for the period prior to 28/9/1996, the assessment of goods on inter unit transfer are required to be carried out in a similar fashion as held for depots when the concept of normal price with reference to a particular class of buyer was invoked. In other words, the principle adopted by the Commissioner(Appeals) in respect of goods sold from depots prior to 28/9/1996 should have been applied to assessment of goods transferred to the units of their group. It was also submitted that after 28/9/1996, even though the place of removal in case of transfer of goods to their group units remained as factory gate, the normal price available at factory gate should be adopted for assessment of such goods.
5. We have carefully considered the submissions and perused the records. The relevant portion of the findings of the Commissioner(Appeals) is reproduced below:
Now, I will deal with the removal of goods to other units of the same group and dispute of valuation in this regard. It is seen that the goods have been sold to other units of the group at lower price, at the factory gate vis-a-vis the price charge from the customers under contract. There is no allegation by the department that there is any mutuality of interest between the respondents and the unit of the group who has purchased goods from them. The Department has no where contended that the respondents and their unit who has purchased the goods from them are related persons in terms of Section 4 of C.Ex. Act, 1944. Merely because they have sold the goods at lower price to other unit, does not mean that the said price is not correct or the same is not the sole consideration for the sale of such goods. In this regard, there is no change in the concept of sale of goods at the factory gate and the normal price thereof prior to 28/9/1996 or subsequent to this date. Therefore, in my view the demand with respect to duty in respect of goods cleared by the appellant to other units is not correct and the OIO in this regard is set aside. In this regard, Hon’ble Supreme Court has also made a similar observation in case of Ashok Leyland Ltd. v. Collr. of C. Ex., Madras reported at .
6. For the period prior to 28/9/1996, the valuation requires to be done on the basis of price at factory gate as depot has not been specified as a place of removal. Admittedly at the factory gate there have been sales to independent buyers under contract. The term inter unit transfer in respect of transaction between the assessee and the other units in their group is misleading. The transaction is one of sale. When there is a sale, the sale price can be ignored only under circumstances like the relationship between seller and buyers, receiving additional consideration. The Commissioner(Appeals) have held that in respect of group companies, there have been sales under contract at the factory gate. In the absence of relationship established between the assessee and their buyers who are stated to be group companies and in the absence of evidence of additional consideration flowing back, he has accepted the sale price. We do not find anything wrong with the reasoning adopted by the Commissioner(Appeals). No valid grounds have been adduced to interfere with the above decision of the Commissioner(Appeals).
7. Therefore appeal by the Department is rejected.
(Pronounced in Court on 3/1/08)