9911796707
TMI Blog1986 (9) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... eir Ambarnath plant for manufacture of phosphoric acid. They submitted price lists for sulphuric acid on 23-7-1979, 29-10-1979 and 21-2-1980 declaring the prices at cost of production plus 20% thereof based on the certificate of the Chartered Accountant. Similarly, they also submitted price lists for oleum 20% on 24.7.1979 and 21.2.1980 declaring the price at cost plus 20% on the basis of Chartered Accountant's certificate. These price lists were approved by the Assistant Collector and the appellants paid duty on the basis of those prices. In the mean time, the appellants sent a letter dated 2.5.1979 to the Assistant Collector of Central Excise, Kalyan Division stating that in order to cut down transport charges for transporting sulphuric a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1980 demanding differential duty of Rs. 9,73,115.38 (subsequently amended to Rs. 10,03,215.38 on 15.7.1980) on the ground that they were selling sulphuric acid "to their associated company M/s. Dharmsi Morarji Chemicals Company Ltd." or were "consuming themselves." In both the demand notices, duty was calculated on the basis of the prices at which M/s DMC, Ambarnath, were selling oleum and sulphuric acid in the open market. 4. The appellants replied to both the show cause notices and explained to the Assistant Collector that M/s. DMC were not related persons as contemplated in the Central Excise Act. The prices declared by them on the basis of cost plus 15% thereof were fair. The prices at the time and place of removal, i.e. Roha, shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Assistant Collector to adopt the comparable price of M/s. D.M.C. whose manufacturing plant was at a different place, and (iv) the Assistant Collector had gone beyond the scope of show cause notice. The Collector (Appeals) held that price arrived at by the appellants on the basis of costing, in terms of Rule 6(b)(ii) of Central Excise Rules could be adopted only when the price of comparable goods was not available. In terms of Rule 6(b)(i) read with Rule 8, the comparable price of M/s. D.M.C. adopted by the Assistant Collector was in order. He also held that M/s. D.M.C. had 30% shares in the appellant Company, lent technical know-how to the appellants and participated in the acquisition and erection of plants for the latter, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Appeal. 10. We have carefully considered the submissions and have also perused the records of the case. We find from the show cause notices that the demands for differential duty were issued on the ground that the appellants and M/s. D.M.C. were related persons. While confirming the demands, the Assistant Collector did not specifically deal with this ground, but he confirmed the demands by adopting a different ground, i.e. the comparable price of the other manufacturer at a different place. The Assistant Collector should have given a clear finding as to whether M/s. Dharmsi Morarji Chemicals Company Ltd., to whom the sulphuric acid manufactured by the appellants was supplied, were related persons within the meaning of Section 4(4)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson has an interest, direct or indirect, in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of each other." 12. In this case, there is no material to show that the appellant company had any interest in the business of M/s. Dharmsi Morarji Chemicals Company Ltd., and vice versa. The fact that M/s. D.M.C. held 30% shares in the appellant company and two of the Directors in both the companies were common, will not go to establish that they are related persons. The argument that M/s. D.M.C. participated in the erection of plant and lent technical know-how is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
