No appeal would lie before Supreme Court on factual findings of Tribunal

Koya & Company Construction Pvt. Ltd. (the Assessee) was engaged in the manufacture and selling of PSC pipes. The Assessee cleared the PSC pipes on payment of Excise duty to KCCL, an interconnected undertaking. The duty liability was calculated on Transaction Value in respect of clearance made to an interconnected undertaking.

The Department argued that since there was ‘mutuality of interest’ as the Assessee had received interest-free advance of Rs. 7.2 crores from his inter connected undertaking, therefore the Assessable Value was to be determined as per Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 (the Valuation Rules)

The Assessee filed an appeal before the Hon’ble Tribunal arguing that:

• Interest-free advance was a commercial transaction, which was reduced from Rs. 7.2 crores on March 31, 2003 to Rs. 24 lakhs on March 31, 2004; and
• Since, the Assessee and his inter connect undertaking were not under

Holding and Subsidiary relationship, Rule 10 of the Valuation Rules was also inapplicable

Accordingly, the Hon’ble Tribunal held that:

• The advance had been decreased on account of supply of goods by the Assessee to buyer; therefore, it was a commercial transaction and there was no ‘mutuality of interest’;
• In absence of relationship as defined under Sections 4(3)(b)(ii)/(iii)/(iv) of the Central Excise Act, 1944, Rule 9 of the Valuation Rules or proviso thereto was not applicable;
• Rule 10(b) of the Valuation Rules would not be applicable because there is no Holding – Subsidiary relationship between the Assessee and his buyer of the goods.
• Accordingly, Assessable Value would be determined as per Rule 11 of the Valuation Rules i.e. best judgment and value will be determined just like captive consumption under Rule 8 of the Valuation Rules.

Being aggrieved, the Department filed an appeal before the Hon’ble Apex Court.

The Hon’ble Apex Court after observing that the Tribunal had passed the order on the basis of facts and circumstance of the case, held that since the Tribunal is the final fact finding authority, no appeal would lie before the Supreme Court on such factual findings.