2000 (10) TMI 104 - AT - Central Excise

Summary

Issues: Valuation dispute based on related person concept under Section 4(4)(C) of the Act.

In this case, the Revenue filed an appeal concerning the valuation issue, claiming that the appellant, a partnership concern, should be treated as a related person of the buyer company due to the common partners being directors of the buyer company. The Revenue argued that since goods were sold to the buyer using their brand name, the buyer should be considered a sole selling agent. The Revenue relied on a Supreme Court decision to support their contention that a sole selling agent should be treated as a related person.

On the other hand, the respondents argued that the concept of related person should be understood as defined under Section 4(4)(C) of the Act. They highlighted that there was no evidence of mutuality of interest or money flow between the two concerns. Referring to a previous Tribunal decision, they emphasized that in the absence of mutuality of interest, the parties cannot be considered related persons. The Tribunal in the previous case had noted that the relationship between private limited companies cannot be determined based on partnership firm principles and that there was no evidence to establish a relationship between the two private companies.

After considering the submissions, the Tribunal rejected the Revenue's arguments, stating that the mere fact that the partners of the assessee were directors of the buyer company did not establish a related person relationship. They agreed with the respondents that there was no evidence of mutuality of interest or money flow between the parties. The Tribunal also noted that the show cause notice did not allege the buyer as a sole selling agent, and based on the lack of evidence, they dismissed the appeal. The Tribunal found the case law cited by the respondents applicable and concluded that there was no merit in the Revenue's appeal, dismissing it along with the cross objections.