2016 (6) TMI 717 - AT - Central Excise

Valuation - Mutuality of interest - duty demand, interest and penalty on the observation that all the companies and firms have interest in the business of each other as the key persons of all the units are members of a family and are related persons - Held that - Merely because the shareholders of the two companies are relatives (the directors here), or the director of the private limited company and partners of the firm are relatives or the directors of the private limited company and the proprietor are relatives can it be said that the two limited companies are also related to each other. That it is not so has been so held in various pronouncements of the Courts and the Tribunal The Department has not been able to adduce any evidence to establish mutuality of interest in the above units. The observations of the Commissioner (Appeals) that merely because the key persons of all units are related or are members of a HUF it cannot be said that they are related persons under the Excise law is correct. We do not find any infirmity in the impugned order - Decided in favour of assessee

Summary

Issues: Revenue's appeal against setting aside duty demand, interest, and penalty.

Analysis:
1. Background: The case involves the Revenue appealing against an order setting aside duty demand, interest, and penalty imposed on manufacturers of Iron and Steel products for allegedly suppressing facts on goods cleared to related persons to evade duty payment.

2. Allegations and Adjudication: The respondents were accused of suppressing facts on goods cleared to related persons, leading to duty demand, interest, and penalty. The Commissioner (Appeals) set aside these charges, prompting the Revenue's appeal before the Tribunal.

3. Revenue's Argument: The Revenue argued that the key persons of all units were related, establishing mutuality of interest, and leading to the flow of profits within the same family.

4. Respondent's Defense: The respondents contended that they also sold goods to independent buyers, and the prices charged to them were undisputed. They emphasized being a private limited company.

5. Tribunal's Decision: The Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing that there was no evidence of flow back of money between the related parties. It highlighted that the Companies Act's definition of "related" needed to be considered, and mere familial relationships among shareholders or directors did not establish relatedness between companies.

6. Absence of Evidence: The Department failed to provide evidence of mutuality of interest among the related units. The Tribunal agreed with the Commissioner (Appeals) that familial ties did not automatically imply relatedness under Excise law.

7. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals)'s decision to set aside the duty demand, interest, and penalty. The order was sustained due to the lack of evidence establishing relatedness and mutuality of interest among the parties involved.