Hindustan Engineering Enterprises Vs Commissioner of Central Excise and Service Tax (CESTAT Chandigarh)
The appeals arose from a common order of the Commissioner (Appeals), CGST, Panchkula, which had upheld an Order-in-Original confirming central excise duty demand, interest, and penalties against the appellants. The appellant manufacturer was engaged in the manufacture of submersible pumps and sold its products through a marketing company. During investigation, the Department alleged that the manufacturer had deliberately lowered the price of its products by routing sales through the marketing company, resulting in underpayment of central excise duty. For the period September 2015 to June 2016, an excise duty demand of ₹2,28,348 was computed and confirmed along with interest and penalties.
Before the Tribunal, the appellants contended that the issue had already been decided in their favour in earlier proceedings involving the same parties and similar facts. They argued that the manufacturer and the marketing company were not “related persons” under Section 4(3)(b)(ii) of the Central Excise Act, 1944 read with Section 2(41) of the Companies Act, 1956 and Rule 9 of the Central Excise Valuation Rules, 2000. According to the appellants, the concept of “relative” under the Companies Act applies to natural persons and not to corporate entities. They further submitted that there was neither any allegation nor any finding that the transaction value between the entities was influenced by their relationship. The goods were sold by the marketing company at only a small profit margin and valuation had correctly been adopted on the basis of transaction value.
