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TMI Blog1991 (7) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... o as M/s. International) or to other buyers. M/s. International, however, are their major buyers. When the appellants sell the goods directly to other buyers, invoices are issued by the appellants charging the prices at which M/s. International sell the said excisable goods to such independent buyers. However, for such direct sale to other buyers the appellants issue Credit Notes to the extent of price differential between their selling price to M/s. International and the invoice price charged by the appellants from such other buyers. The prices at which M/s. International sell the goods to such other buyers (independent buyers) are the prices at which they receive the goods from the appellants plus the element of Central Excise duty and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly by them from independent buyers (i.e. including the element of excise duty) should not be charged from them when they were not paying Central Excise duty at all in view of the benefit of Notification 71/78 being availed of by them at the relevant time and (ii) as to why a penalty should not be imposed on them under the provisions of Rule 173Q of the Central Excise Rules. 1.5 On adjudication, the adjudicating authority has found that the appellants herein and M/s. International have common directors, namely, Dinesh B. Adalja and Dalip A. Parekh. Apart from the common directors, the other directors are relatives of one and another in the two companies. He has thus held that both the companies appear to be family concerns and are benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the larger time-limit of 5 years was applicable. 2. Shri K.K. Kapoor, learned Consultant for the appellants, has urged that the finding of the adjudicating authority that the appellants and M/s. International are related is incorrect in law. He has submitted that the appellant company and M/s. International are two Private Limited Companies and are therefore, separate entities. They cannot, therefore, be treated as related persons at all. He relies in his support on 1989 (41) E.L.T. 287 [ICIAM]. He has further urged that there is no evidence of flow back of any benefit to the appellants. Neither is there any evidence that M/s. International or the appellants have interest in the business of each other. 2.1 Rebutting the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the ICL were subsidiaries of the same holding company and there was no common share holding between the buyers and the seller. In the instant case, however, we have the finding of the adjudicating authority that there are not only common directors in the buyers and the seller but also that the other directors in the two companies are relatives of one and another. This finding has not been rebutted by the appellants. It has also been held by the adjudicating authority that both the companies are family concerns and are beneficiaries of their ventures and that the benefit of both the concerns are shared by members of one and the same family. The question that arises for consideration is whether in the aforesaid facts and circumstances the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal, that by itself would not be a sufficient ground for holding that the appellants and M/s. International are related persons. No evidence regarding mutuality of interest has been brought on record except the evidence of sale of goods by the appellants to or through M/s. International. While this fact of sale may create a one way interest of M/s. International in the business of the appellants, it is not indicative of the interest of the appellants in the business of M/s. International. Once the goods are sold by the appellants to M/s. International, they are not concerned whether the goods are further sold by M/s. International or not. Hence we hold that even in the given circumstances M/s. International and the appellants cannot be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment, therefore, in the first instance ought not to have approved the price after deduction of the element of excise duty, as claimed by the appellants in their price lists when the appellants were not paying any duty in terms of Notification 71/78. The larger time-limit of 5 years cannot be invoked by the department in this case. Accordingly, the demand of duty made in terms of the impugned order would be barred by time, inasmuch as the show cause notice was issued on 13-4-1982 for the period 11-4-1978 to 29-9-1979. Demand of duty is, therefore, set aside. 4. Another issue raised by the learned Consultant was that the Notification 71/78 did not envisage that the benefit of exemption must necessarily be passed by the manufacturers to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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