1987 (12) TMI 159 - AT - Central Excise

Summary

Issues Involved:
1. Related Persons under Section 4(4)(c) of the Central Excises & Salt Act
2. Eligibility for Concession under Notification No. 120/75-CE
3. Assessment of Differential Duty and Penalty
4. Inclusion of Bought-out Items in Assessable Value
5. Extended Period of Limitation

Summary:

1. Related Persons under Section 4(4)(c) of the Central Excises & Salt Act:
The appellants argued that Diamond Clock Manufacturing Co. Pvt. Ltd. and Anand Traders were not "related persons" u/s 4(4)(c) of the Central Excises & Salt Act. They emphasized the separate legal identities of the two units, despite shared facilities and financial interests. The Tribunal, however, concluded that the financial and operational interconnections, including shared staff, office, and significant financial interests held by Shri U.V. Vaidya and his mother in both entities, established a mutual interest, rendering them related persons.

2. Eligibility for Concession under Notification No. 120/75-CE:
The appellants contended that they were entitled to the concession under Notification No. 120/75-CE. The Tribunal examined the relationship between the appellants and Anand Traders, noting the financial and operational ties. The Tribunal concluded that the relationship between the two entities was influenced by commercial and financial interests beyond mere sales transactions, disqualifying them from the concession.

3. Assessment of Differential Duty and Penalty:
The Collector confirmed the demand for differential duty of Rs. 8,55,457 and imposed a penalty of Rs. 1,45,000 on the appellants. In another proceeding, a recovery of Rs. 2,04,292 and a penalty of Rs. 1,00,000 were ordered. The Tribunal upheld the differential duty but directed a recalculation based on specific deductions. The penalties were reduced to Rs. 1,00,000 and Rs. 50,000 respectively, considering the overlapping demands and legitimate deductions not granted.

4. Inclusion of Bought-out Items in Assessable Value:
The appellants argued that the cost of bought-out items (cable, bracket, and adapters) supplied by Anand Traders should not be included in the assessable value. The Tribunal agreed, provided these items were not manufactured by the appellants and the machines were cleared incomplete from the factory.

5. Extended Period of Limitation:
The appellants argued against the application of the extended period of limitation. The Tribunal found that the appellants had suppressed information regarding the cross-shareholding and financial interests, constituting a deliberate evasion of duty. Therefore, the extended period of limitation was upheld.

Conclusion:
The Tribunal concluded that the appellants and Anand Traders were related persons, disqualifying them from the concession under Notification No. 120/75-CE. The differential duty was to be recalculated with specific deductions, and the penalties were reduced. The extended period of limitation was upheld due to deliberate suppression of facts.