1999 (2) TMI 222 - AT - Central Excise

Summary

Issues:
- Appeals filed by the department against the decision of the Collector, Customs & Excise, Aurangabad.
- Allegation of selling goods to a related person at a lower price than the actual selling price.
- Discrepancy in pricing declared by the assessees and the actual selling price by the buyer company.
- Interpretation of related person in the context of the transaction.
- Applicability of mutuality concept in determining related party transactions.
- Review of previous judgments, including the Supreme Court's decision in Calcutta Chromotype Ltd.

Analysis:
1. The appeals were filed by the department against the decision of the Collector, Customs & Excise, Aurangabad, regarding the pricing of goods sold to a related person. The assessees, manufacturers of Audio system tape recorders, had an agreement with Videocon International Ltd. (VIL) for selling goods at declared prices. However, it was found that the goods were sold to customers at substantially higher prices by VIL. The department alleged that the assessees did not reveal the correct price, leading to a show cause notice being issued.

2. The investigation revealed that R.N. Dhoot, holding shares in both the assessee company and VIL, was involved in the transactions. The department argued that the selling price to VIL should have been considered the assessable value for duty payment. However, the adjudicating authority found that VIL was not a holding or subsidiary company of the assessee, and the common director's shareholding was minimal. Therefore, the proceedings were dropped based on lack of substantial evidence.

3. The department contended that the adjudicating authority erred in his findings, citing relevant cases. In a review of previous judgments, including the Supreme Court's decision in Calcutta Chromotype Ltd., the Tribunal referred to a previous case involving P.N. Dhoot Pvt. Ltd. where similar contentions were raised. The Tribunal disagreed with the department's arguments, distinguishing the Calcutta Chromotype case. Consequently, following their previous judgment, the Tribunal accepted the assessees' contentions and dismissed the appeals filed by the department.

In conclusion, the Tribunal upheld the decision to drop the proceedings against the assessees, emphasizing the lack of substantial evidence to prove related party transactions and the applicability of the mutuality concept in determining such transactions. The review of relevant judgments, including the Supreme Court's ruling, played a crucial role in the Tribunal's final decision to dismiss the appeals filed by the department.