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TMI Blog1998 (11) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of PCPL, and a penalty of Rs. 50,000/- on Smt. P.P. Kharwadkar, Director of PCPL. The period of demand is July 1989 to January 1995. 2. The facts of the case are that PCPL is engaged in the manufacture of `Plus' brand detergent cake and powder while CCCL is engaged in the manufacture of `Plus' brand detergent cake only. CCCL was paying duty at full rate while PCPL was paying duty on full rate on `Plus' brand detergent cake at a concessional rate of duty in terms of Notification No. 175/86 as amended on `Plus' brand detergent powder on the basis that CCCL is the brand name owner of Plus detergent cake while PCPL is the owner of Plus brand detergent powder and is a small scale industrial unit registered with the Directorate of Industries. 3. Investigations conducted by the Department revealed that PCPL was the brand name owner of Plus detergent cake and powder, and that if the production and clearance figure of both the items are added together, PCPL had crossed the ceiling limit of Rs. 200 lakhs stipulated under Notification 175/86 and was therefore, not entitled to avail of the benefit of concessional rate of duty available therein. It also appeared that PCPL sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be adopted as the price for the goods manufactured by PCPL and sold to CCCL. He accordingly confirmed the duty demand on this score and imposed penalties as indicated in the opening paragraph of this order. Hence these appeals. 4. We have heard Shri M. Chandrasekharan, learned Senior Counsel who mainly contends that none of the factors based on which the Revenue has held that CCCL is a favoured buyer of PCPL are sufficient, either individually, or cumulatively to support such conclusion and Shri K. Srivastava, learned DR who in addition to reiterating the findings of the Adjudicating authority, relies upon the Tribunal's decision in the case of Pratibha Chemicals (Final order 1367-71/98-A, dated 9-10-1998 [1999 (106) E.L.T. 119 (Tribunal)]) wherein the Tribunal has upheld the charge of CCCL being a favoured buyer of Pratibha Chemicals on identical grounds, and upon the decision of the Hon'ble Supreme Court in the case of Calcutta Chromotype Ltd. v. Collector reported in - 1998 (99) E.L.T. 202 (S.C.) = 1998 (25) RLT 866 (S.C.). 5. We have considered the rival submissions and perused the records. The facts based on which CCCL has been held to be a favoured buyer of PCPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed Director of PCPL on 25-11-1987 and resigned on 21-1-1988) while Mrs. P.P. Kharwadkar resigned as Director of CCCL on 1-1-1992 (She was appointed Director on 25-1-1984). Factors (b, c & d) : It has been held by the Adjudicating authority that the giving of unsecured loans of Rs. 3 lakhs free of interest by CCCL to PCPL and giving of unsecured loan by Shri & Smt. P.A. Kharwadkar HUF and also interest free loan to PCPL by Carona Investments (which is also controlled by Kharwadkar family) is a financial arrangement evidencing pecuniary interest in the business of each other. We however, hold that giving of interest free loan by CCCL or its group of companies to PCPL does not make them related persons unless they are independently shown to be having interest in the business of each other, following the ratio of the Tribunal's order in the case of International Computer India Manufacturing Company Ltd. v. Collector of Central Excise [1989 (41) E.L.T. 287]. Factor (e) : The appellants claim that CCCL were not the only suppliers of acid slurry to PCPL and that other manufacturers of acid slurry were supplying the same to PCPL and similarly CCCL was supplying acid slurry to other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sales promotion expenses would not make a wholesaler a related person, and as long as the transaction is at a commercial price, it is that price which must be treated as the wholesale cash price. The ratio of these two judgments is squarely applicable in the present case and applying such ratio, we hold that the incurring of all sales promotion and advertisement expenses by CCCL does not make it a favoured buyer or related person of PCPL. Factor (i) : No finding has been recorded on this point. Factor (j) : This point has been dropped by accepting the appellants contention that CCCL was the holder of the brand name 'Plus'. 6. The Adjudicating authority has also relied upon the fact that an application for getting registration under the Copy Right Act 1957 was signed by Shri P.A. Kharwadkar as Managing Director of PCPL and that the Deputy Registrar of Copy Rights has addressed a communication to Shri P.A. Kharwadkar as Managing Director of PCPL, even when he was not the Managing Director of the Company, to conclude that this could only happen because Shri P.A. Kharwadkar was looking after the day to day affairs of PCPL and exercising overall control over its activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors are not identical. The factor of mutual share holding in the business of each other by M/s. Pratibha Chemicals and CCCL is conspicuously absent in the present case. We agree with the contention of the learned Senior Counsel that mutual share holding in the business of each other was itself sufficient for the Tribunal to come to the conclusion that Pratibha Chemicals and CCCL were related persons in terms of Section 4(4)(c) of the Act, as held by the Tribunal in the case of Alembic Glass Ltd. [1994 (73) E.L.T 579] and M/s Escorts Tractors Ltd. [1998 (103) E.L.T. 533 (Tribunal) = 1998 (25) RLT 678]. We note that while arguing the appeal of M/s Pratibha Chemicals the learned DR had specifically relied upon the judgment of M/s Alembic Glass Industry (supra) in support of his contention that holding of shares of one company by another and holding of shares of the latter company by the former, and common Chairman, and three Directors of both the Companies implied that both the companies were managed by the same management and one was the related person of the other. In Para 8 of the order of the Pratibha Chemicals case, the Tribunal has held that the fact that two companies had the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise authorities had not treated Ganga Saran & Sons, the sole distributor, as a related person as well as the reason that the matter pertained to the year 1978 and therefore, no purpose would be served by enquiry into the share holding of the assessee and its sole distributor, as directed by the Tribunal. 10. From the above, it is clear that the entire case proceeded on the basis that the shares of M/s. Calcutta Chromotype and its sole distributor were held by the members of the Sharma family i.e. persons who were related to each other and both the companies were having common Managing Director and further the appellant therein was selling goods with the brand name of its distributor namely M/s. Ganga Saran & Sons Pvt Ltd. The present case does not proceed on that basis. Although there was an allegation in the show cause notice that Mrs. & Mr. P.A. Kharwadkar were promoter directors, the same has not been relied on as one of the reasons for holding that there is a mutuality of interest between CCCL and PCPL. There was an allegation in the show cause notice that both the companies were having common directors and the entire sale was made by PCPL to CCCL. This factor has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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