2004 (8) TMI 185 - AT - Central Excise

Summary

Issues:
1. Whether duty demand and penalty imposed on the appellant are sustainable based on the relationship between the manufacturer and the buyer?

Analysis:
1. The case involved a duty demand of Rs. 5 lakhs and a penalty of Rs. 1.5 lakhs, with part of the duty demand not being contested. The appellant, a partnership, sold goods to a private limited company, and the duty demand was raised treating them as related persons.

2. The appellant argued that a limited company cannot be considered a related person, citing legal precedents. The Revenue, however, referred to different judgments to support their position. The Tribunal considered the submissions and noted that there was no evidence of an artificial arrangement to evade duty.

3. The Tribunal emphasized that a limited company is a separate juridical person from its shareholders and directors, and unless there is evidence of evasion, it cannot be treated as a related person. They relied on previous decisions to support their conclusion.

4. Consequently, the Tribunal held that the duty demand based on treating the manufacturer and the buyer as related persons was not sustainable and set it aside. The uncontested duty amount was confirmed, and since the main demand was not upheld, the penalty was also set aside. The appeal was partly allowed based on these findings.