2015 (1) TMI 1213 - AT - Central Excise

Duty demand - Suppression of value of goods - respondent M/s. TIPL and brand name owner M/s. PCTL are related person inasmuch as the respondent was supplying the branded goods at lower rate to brand name owner i.e. M/s. PCTL and said related person subsequently sell excisable goods manufactured by respondent on higher price - Held that - Suppression of fact or any other ingredients of proviso to 11A is not established therefore the demand is time bar. As regard the contention of the Revenue that the respondent has not disclosed mutuality of interest, share holding pattern and sale price of M/s. PCTL to their customer, we observe that, it is admitted fact, that the respondent submitted the unit profile to the Superintendent Central Excise in charge of the unit. The respondent s records had been audited in the year 1996-97, the respondent also submitted RT-12 returns regularly alongwith duty paying documents. From these documents and information the constitution of the company and valuation of the goods and shareholding patter can be clearly revealed from the profile of the company, dutiable documents and RT-12 returns - department has not made out case or produce any evidence that there is any financial flow back from each other company ie. M/s. TIPL to M/s. PCTL and vise-versa. The show cause notice for the period of Apr 1996 -Mar 2000 was issued on 1/5/2001 and Second Show cause notice for the period of Apr 2000-march 2001 was issued on 8/3/2002. In both the case the show cause notices were issued after one year form the completion of the each period. Therefore both the show cause notices are clearly time bar. However as regard confirmation of demand of ₹ 3,241/- and ₹ 31,927/-, since the same is not under challenge the same stand maintained - Decided partly against Revenue.

Summary

Issues:
1. Whether the relationship between two companies establishes them as related persons for the purpose of excise duty?
2. Whether the demand for excise duty is time-barred or not?

Analysis:

Issue 1: Relationship between the Companies
The case involves two companies, M/s. Terraco India Pvt. Ltd (TIPL) and M/s. Pagel Concrete Technologies Limited (PCTL), where TIPL is engaged in manufacturing Cement Paints and grouts under the brand name PAGEL owned by PCTL. The Revenue alleged that both companies are related persons due to common shareholding, control, and transfer of technology and brand name. The demand for excise duty was based on the difference in sale prices between the two companies. The adjudication confirmed the demand, but the Commissioner (Appeals) allowed the appeal of TIPL. The Revenue argued that the relationship is established through common directors, shareholding, and pricing differences. However, the Tribunal found that the companies had disclosed necessary information, and the demand was not supported by evidence of financial flow between the companies. The Tribunal upheld the Commissioner's decision on the ground of time bar, maintaining the demand for confirmed amounts but dismissing the Revenue's appeals.

Issue 2: Time Bar for Demand of Excise Duty
The Commissioner (Appeals) allowed the appeal of TIPL on the basis of time bar for the demands raised by the Revenue. The Commissioner noted that the demands for differential duty were proposed for specific periods, and the show cause notices were issued after the completion of those periods. TIPL had submitted its unit profile, undergone audits, and regularly filed returns, indicating no willful withholding of information. The Commissioner cited relevant case laws and found that the extended time period clause could not be invoked due to lack of evidence of suppression of facts. The Tribunal concurred with the Commissioner's findings, emphasizing that the demands were time-barred as the Revenue failed to establish any deliberate withholding of information by TIPL. The Tribunal upheld the decision on the ground of time bar, emphasizing the lack of evidence to support the Revenue's claims and dismissing the appeals.

In conclusion, the Tribunal dismissed the Revenue's appeals, maintaining the demand for confirmed amounts while upholding the Commissioner's decision on the time bar issue. The judgment highlights the importance of establishing clear evidence to support allegations of related party transactions and the significance of timely issuance of show cause notices in excise duty cases.