Case Law Details
Commissioner of Central Excise Vs Merino Panel Product Ltd (Supreme Court of India)
The Supreme Court of India (“the Supreme Court”) in the case of Commissioner of Central Excise & Service Tax v. Merino Panel Product Ltd [Civil Appeal No. 6891 OF 2018 dated December 5, 2022] held that the Circular No. 643/34/2002-CX (“Circular”) dated July 1, 2002, issued by the Central Board of Excise and Customs (“CBEC”) clarifying the doubts regarding Valuation Rules with respect to goods when sold partly to related persons and partly to independent buyers, is not violative of the Central Excise Act 1994 (“CEA”) and the Central Excise Valuation Rules 2000 (“CEVR”).
Facts:
The Merino Panel Product Ltd (“the Respondent”) is a manufacturer of decorative laminates and other like materials (“the Goods”) which falls under the chapter 48 of the Central Excise Tariff Act, 1985 (“CETA”). Since the goods were excisable goods, the value at which the Respondent was selling them, would be the determinant for the amount of tax recoverable by the Revenue department (“the Appellant”).
The goods were sold to both independent parties and to related parties . Some discrepancies were found in the prices at which they were sold to independent parties and related parties as defined under Section 4 (3)(b)(i) of the CEA read with Section 2 (g) of Monopolies and Restrictive Trade Practices Act, 1969 (“the MRTP Act”). The goods sold to the related parties were undervalued in comparison to the goods sold to non related parties. The lower valuation of the goods lead to the shortfall in collection of excise duty.
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