2002 (12) TMI 137 - AT - Central Excise

Summary

Issues Involved:

1. Determination of normal price under Section 4 of the Central Excise Act, 1944.
2. Mutuality of interest between M/s. BSUA and M/s. BPL Ltd.
3. Validity of documents and evidence relied upon by the original authority.
4. Nature of transactions between M/s. BSUA and M/s. BPL Ltd.
5. Provisional nature of assessments under Rule 9B of Central Excise Rules, 1944.

Detailed Analysis:

1. Determination of Normal Price:
The core issue was whether the price at which M/s. BSUA sold goods to M/s. BPL Ltd. could be treated as the normal price under Section 4 of the Central Excise Act, 1944. The Assistant Commissioner initially determined that the price was not normal, citing that M/s. BSUA and M/s. BPL Ltd. had mutual interests and were not dealing at arm's length. The Commissioner (Appeals) later held that the price at which goods were sold by M/s. BSUA to M/s. BPL Ltd. was indeed the normal price, as the transactions were on a principal-to-principal basis.

2. Mutuality of Interest:
The Assistant Commissioner found mutuality of interest between M/s. BSUA and M/s. BPL Ltd., suggesting that their business dealings were not at arm's length. This was based on various internal documents indicating a close relationship. However, the Commissioner (Appeals) found no evidence of mutuality of interest, noting that while BPL had shares in BSUA, there was no direct or indirect interest from BSUA in BPL's business, thus no mutuality of interest existed.

3. Validity of Documents and Evidence:
The original authority relied on several documents to establish the relationship between M/s. BSUA and M/s. BPL Ltd., including letters indicating transfer prices and control by a common chairman. The Commissioner (Appeals) dismissed these documents, stating they did not prove a mutuality of interest or affect the nature of the transactions. The Tribunal upheld this view, finding no substantial evidence in the documents to counter the Commissioner (Appeals)'s findings.

4. Nature of Transactions:
The Assistant Commissioner suggested that the transactions were more akin to internal transfers rather than sales. However, the Commissioner (Appeals) and the Tribunal found that the transactions were genuine sales between two separate legal entities. The Tribunal noted that both companies were public limited companies with independent operations and that the sales were conducted at arm's length.

5. Provisional Nature of Assessments:
The Commissioner (Appeals) concluded that the assessments could not be considered provisional from April 1994 onwards as the conditions under Rule 9B of the Central Excise Rules, 1944, were not met. This issue was not contested during the Tribunal hearing, and thus no further findings were made.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, rejecting the Revenue's appeal. The Tribunal found that the transactions between M/s. BSUA and M/s. BPL Ltd. were at arm's length, there was no mutuality of interest, and the price at which goods were sold by M/s. BSUA to M/s. BPL Ltd. was indeed the normal price under Section 4 of the Central Excise Act, 1944. The appeal by Revenue was dismissed.