2008 (10) TMI 556 - AT - Central Excise

Summary

Issues Involved:
1. Whether CBL and M/s. Apex Traders are "related persons" under Section 4(3)(c) of the Central Excise Act.
2. Whether the ROC charge and transport/delivery charge being received by CBL from M/s. Apex Traders are inflated and represent financial flowback.
3. Whether the longer limitation period under proviso to Section 11A(1) of the Act is available to the Department for recovery of short-paid duty.

Issue-wise Detailed Analysis:

1. Related Persons:
The definition of "related person" under Section 4(3)(c) of the Central Excise Act, 1944, includes persons who have a direct or indirect interest in each other's business. The Revenue argued that CBL and M/s. Apex Traders are related due to the control exerted by Shri Ramesh Chauhan and his wife, Mrs. Zainab Chauhan, over both entities. However, the Tribunal found that merely holding 33% shares in AMPL by Mrs. Zainab Chauhan does not establish mutual interest in each other's business. Additionally, the Tribunal noted that sharing office space and adjacent factories does not suffice to prove that the two entities are related. The Tribunal concluded that CBL and M/s. Apex Traders are not related persons as per the statutory definition.

2. ROC and Transport/Delivery Charges:
The ROC (Rent on Canister) and transport/delivery charges were alleged to be inflated by the Revenue, which claimed that the actual charges should be Rs. 44/- and Rs. 28.47/- per canister, respectively. The Tribunal observed that the Commissioner did not provide a basis for these figures and did not address the appellant's contention that the charges were fixed by the Bottler's Association. The Tribunal referenced the Supreme Court's rulings in similar cases, which held that inflated charges could be included in the assessable value if proven. The Tribunal remanded this issue to the Commissioner for de-novo adjudication to determine if the charges were indeed inflated and to re-quantify the duty and penalties accordingly.

3. Longer Limitation Period:
The Tribunal stated that if it is proven that the ROC and transport/delivery charges were inflated to reduce the assessable value, the longer limitation period under proviso to Section 11A(1) would be applicable for recovering the differential duty. Additionally, CBL would be liable to pay interest and penalties under Sections 11AB and 11AC of the Act.

Conclusion:
The Tribunal held that CBL and M/s. Apex Traders are not related persons. However, it remanded the matter to the Commissioner for de-novo adjudication on the issue of inflated ROC and transport/delivery charges. The Commissioner is to re-quantify the duty and penalties if the charges are found to be inflated, following a hearing with the appellants. The appeals were disposed of accordingly.