COMMISSIONER OF CENTAL EXCISE AND SERVICE TAX ROHTAK vs. M/S. MERINO PANEL PRODUCT LTD

C.A. No.-006891 - 2018Supreme Court2022 INSC 125305 December 2022Bench: HON'BLE THE CHIEF JUSTICE30 pages
For Petitioner: B. KRISHNA PRASAD
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What did the Supreme Court hold?

The Supreme Court held that the transaction value of sales to independent parties can be used as a benchmark for related party transactions when readily available. However, this transposition must be done reasonably and with due application of mind.

What were the facts?

The assessee sold excisable goods to both independent and related parties at different prices. The Revenue sought to determine the assessable value of goods sold to related parties by transposing the transaction value from sales to independent parties.

What were the issues?

Whether the transaction value of sales to independent parties can be used to determine the assessable value of goods sold to related parties, and the applicability of various valuation rules.

Which sections of the Income-tax Act were involved?

Section 4(1)(a),Section 4(1)(b)

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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURI ICTION CIVIL APPEAL NO. 6891 OF 2018 Commissioner of Central Excise & Service Tax, Rohtak ..... Appellant

VERSUS Merino Panel Product Ltd. ..... Respondent JUDGEMENT Surya Kant, J:

1.

The present Civil Appeal originates from the impugned order dated 30.11.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, Chandigarh (“CESTAT”). The CESTAT set aside the show cause notice issued by the Appellant-Revenue to the Assessee- Respondent, on the ground that it had invoked an incorrect method of valuing related party transactions. A. FACTUAL BACKGROUND

2.

The Assessee is involved in the manufacture of decorative laminates and other like materials, which fall under Chapter 48 of the Central Excise Tariff Act, 1985. As excisable goods, the value at which the Respondent was selling these goods would be the determinant for the amount of tax recoverable by the Appellant. Following an audit conducted on the Assessee’s operations for FY 2009-10 an

The order continues below.

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