V.K. Agrawal, Member (T) - (1.)This is an application by M/s. Jagajothi Spinning Mills, for waiver of pre -deposit of central excise duty of Rs. 1,45,700/ - and penalty of Rs. 1,55,700/ -. Shri S. Kandasamy, learned Consultant submitted that out of cotton yarn manufactured by them around 60% has been sold to one Mr. Jayakumar, proprietor of M/s. Jayakumar Fabrics, who is son of one of the partners of M/s. Jagajothi Spinning Mills, that the revenue is treating M/s. Jayakumar Fabrics, as a related person and the duty has been confirmed by determining the assessable value under Rule 8 of the Central Excise Valuation Rules, 2000 i.e. 115% of the cost of the manufacture. He submitted that as they are selling 40% of the goods to others at the same price or some time even at lesser price, the relationship if any is not affecting the valuation of the goods. We also heard Shri Rajaram, learned DR who reiterated the findings as contained in the impugned order.
(2.)We have considered the submissions of both sides. We observe from para 9.2 of the impugned order that the impugned goods have been sold to M/s. Jayakumar Fabrics, supposed to be a related person, at higher price than the price at which the goods were sold to others. Further, Rule 8 of Central Excise Valuation Rules applies in case of captive consumption of goods and not in respect of related person. The applicants have, therefore, made out a strong prima facie case for waiver of duty and penalty. Accordingly, we stay the recovery of the entire amount of duty and penalty during the pendency of the appeal.