1987 (11) TMI 197 - AT - Central Excise

Summary

Issues Involved:
1. Whether Crompton Greaves Ltd. was a "related person" of the assessee u/s 4(4)(c) of the Central Excises and Salt Act, 1944.
2. Determination of assessable value and the applicability of Rule 5 of the Central Excise (Valuation) Rules, 1975.
3. Time bar for consequential refunds.
4. Deduction of equalised octroi from the assessable value.

Summary:

Issue 1: Related Person
The main controversy was whether Crompton Greaves Ltd. (Crompton) was a "related person" of the assessee u/s 4(4)(c) of the Central Excises and Salt Act, 1944. The Collector (Appeals) held that Crompton was not a related person of the assessee prior to 25-3-1982. The Tribunal agreed, stating that Crompton's control over the assessee did not constitute mutuality of interest as required by Section 4(4)(c). The Tribunal emphasized that "interest, directly or indirectly, in the business of each other" was necessary, which was not present in this case.

Issue 2: Assessable Value and Rule 5
The department argued that the assessee's sale price to Crompton was not the sole consideration and required loading under Rule 5 of the Central Excise (Valuation) Rules, 1975. The Tribunal found that while the security deposit and marketing expenses did not constitute additional consideration, the salaries of the Chief Executive and Works Manager paid by Crompton did. These salaries were to be added to the assessable value of the goods.

Issue 3: Time Bar for Refunds
The Tribunal held that since the assessments were provisional under Rule 9B of the Central Excise Rules, 1944, they were provisional for all purposes. Consequently, the time bar of six months for refunds applied by the Collector (Appeals) was removed. Refunds would accrue to the assessee without the time bar of six months.

Issue 4: Deduction of Equalised Octroi
For the period from 25-3-1982 onwards, the Tribunal clarified, in line with the Kerala High Court order, that equalised octroi should be excluded from the assessable value, subject to verification of the amounts by the Assistant Collector.

Orders:
1. Prior to 25-3-1982, Crompton was not a related person of the assessee, but the salaries of the Chief Executive and Works Manager would be added to the assessable value.
2. Consequential refunds on re-determination of the assessable value by the Assistant Collector would accrue to the assessee without the time bar of six months.
3. From 25-3-1982, equalised octroi would be excluded while determining the assessable value of the goods.

The 15 appeals were disposed of in these terms.