2008 (9) TMI 676 - AT - Central Excise

Issues:
1. Demand of duty and penalty on the assessee and Deputy General Manager.
2. Allegation of relationship between the assessee and M/s. SSDL.
3. Determination of assessable value of goods based on the price charged by M/s. SSDL.
4. Validity of show-cause notice invoking the larger period of limitation.
5. Confirmation of demand of duty and imposition of penalties by the Commissioner.

Analysis:
1. The case involved a demand of duty and penalty on the assessee and their Deputy General Manager based on the goods cleared to M/s. SSDL. The department alleged that M/s. SSDL, as selling agents of the assessee, were related to the assessee under Section 4(4)(c) of the Central Excise Act. The department contended that the goods were sold at a higher price by M/s. SSDL compared to the price at which the assessee sold them, leading to a demand for differential duty and penalties. The Commissioner confirmed the demand of duty amounting to Rs. 98,851/- against the assessee and imposed penalties on them and their Deputy General Manager.

2. The key issue revolved around the alleged relationship between the assessee and M/s. SSDL. The lower authority considered them as "related persons" under Section 4(4)(c) of the Act, leading to the adoption of the price charged by M/s. SSDL for assessing the duty payable by the assessee. However, the appellate authority in Order-in-Appeal No. 43/99 found that there was no conclusive evidence to establish a relationship between the two companies. The appellate authority highlighted that M/s. Chennai Bottling Co. Ltd. was not a holding company of M/s. SSDL, and there was no mutual interest or substantial shareholding relationship to deem them as related persons under the Central Excise Act.

3. The determination of the assessable value of goods was crucial in this case, as it was based on the price charged by M/s. SSDL. The department's contention that the price at which the assessee cleared the goods was not the normal price under Section 4 of the Act led to the demand for differential duty. However, the appellate tribunal noted that if the finding of relationship between the assessee and M/s. SSDL could not be substantiated, the Commissioner's order would be set aside. The tribunal referenced the unchallenged Order-in-Appeal No. 43/99, which negated the existence of a relationship between the parties, emphasizing the importance of factual findings in such cases.

4. The validity of the show-cause notice invoking the larger period of limitation was also a significant aspect of the case. The notice alleged suppression of facts by the assessee, justifying the invocation of the extended limitation period. However, the tribunal's analysis focused on the factual determination of the relationship between the parties, which ultimately influenced the decision to set aside the impugned order.

5. The Commissioner's confirmation of the demand of duty and imposition of penalties were challenged in the appeals. The tribunal, after considering the submissions and factual findings, concluded that M/s. SSDL were not related to the assessee as per the provisions of Section 4(4)(c) of the Act. Therefore, the impugned order was set aside, and both appeals were allowed in favor of the assessee.

← Previous Next →