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2019 (1) TMI 973 - AT - Central ExciseValuation - related party or not - Rule 9 of Valuation Rules - Whether the appellant i.e. Balmar Marketing Pvt Ltd. and one Aipiai Electric Trading is a partnership firm; and Whether they are related persons and attracting the provisions of Rule 9 of the Valuation Rules? - Held that - As the Appellant company is incorporated under the Companies Act and only for the fact that the partners of the partnership firm, namely, M/s AETC, are related, will not make them relative as defined under Section 2(41) of the Company Act read with Schedule 1A of the Companies Act, as has been held by this Tribunal in case of CCE vs Akash Ispat Pvt Ltd. 2016 (2) TMI 683 - CESTAT NEW DELHI . The appellant and said AITC/firm are not related persons and accordingly the provisions of Rule 9 of the Valuation Rules are not attracted - appeal allowed - decided in favor of appellant.
Issues involved:
1. Whether the appellant and another entity are a partnership firm. 2. Whether the appellant and the other entity are related persons, attracting the provisions of Rule 9 of the Valuation Rules. Analysis: 1. The issue in this appeal is whether the appellant and Aipiai Electric Trading constitute a partnership firm. The Tribunal examined the constitution of the company and the partnership firm. The appellant company is incorporated under the Companies Act, and the partners of the partnership firm, Aipiai Electric Trading, are related. However, the Tribunal held that being related under the Companies Act does not necessarily make them relatives under Section 2(41) of the Companies Act. The Tribunal referred to a previous case where it was held that the mere fact that partners or directors are related does not establish a partnership or related status for the entities. 2. The second issue is whether the appellant and Aipiai Electric Trading are related persons under Rule 9 of the Valuation Rules. The Tribunal considered the total volume of transactions between the entities and compared them with independent parties. The Tribunal analyzed the legal provisions and previous judgments to determine the related status. It was noted that the Revenue's argument that all buyers were inter-connected with the appellant was legally untenable as most buyers were proprietary concerns, and the appellant was a Public Limited Company. The Tribunal emphasized that the concept of "relative" applies to natural persons, not impersonal bodies like corporations. 3. The Tribunal cited precedent judgments to support its decision that the appellant and Aipiai Electric Trading are not related persons. It referenced cases where the courts emphasized the need for direct or indirect interest, interdependence, and reciprocity beyond relationships to establish related persons. The Tribunal concluded that the mere fact that some partners or directors are relatives does not automatically make the entities related. Therefore, the provisions of Rule 9 of the Valuation Rules were deemed inapplicable. 4. In the final decision, the Tribunal set aside the impugned order and allowed the appeal, ruling that the appellant and Aipiai Electric Trading are not related persons. Consequently, the provisions of Rule 9 of the Valuation Rules were not applicable in this case, leading to the appeal being allowed with any consequential relief. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning behind its decision.
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