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TMI Blog2002 (9) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... objective of manufacturing OTR tyres and Radial tyres exclusively for CEAT and Goodyear under their brand names. The promoters namely Goodyear, USA and Goodyear India on one side whereas RPG and CEAT on the other side were holding 50:50 equity each and were sole exclusive buyers of the goods manufactured by M/s. SATL. This joint venture agreement had predetermined the principles and policies for the operation and management of M/s. SATL even before its formation. As agreed in the joint venture agreement, M/s. SATL had received unsecured interest free loan of Rs. 85.66 crores from CEAT and Goodyear and some moulds and other equipments worth Rs. 10 crores free of cost on loan basis. The selling price of M/s. SATL had been determined in terms of off take agreement signed by M/s. SATL with CEAT and Goodyear separately. The cost elements as regards this interest free loan and moulds on loan basis were not considered while arriving at the cost of production. The selling price was determined by adding a fixed percentage of 1.5% as profit in the cost of production. M/s. SATL did not have any set up for sales promotion, marketing and distribution of the goods. Half plant capacity was ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice cannot make two alternative proposals to raise the duty demand; that CEAT at no stage held any shares in the appellants-company; that the so called interest free loan was really on account of an agreement to make payment for purchase of certain assets by SATL from CEAT on deferred payment basis and it was agreed in the normal course of business that such deferred payment would be interest free. 3. We have heard the rival submissions, perused the records and the cases cited by both the sides. It is seen from the Order-in-Original that while confirming the duty amount and imposing the penalty and interest, the Commissioner has taken into account the entire aspects of the case and considered and given his detailed findings in the order. While confirming the duty demand of Rs. 8,62,04,576/- and imposing equal amount of penalty under Section 11AC of the Act, the Commissioner has taken into account various deductions such as transport charges, taxes, discounts and interest. The total deductions allowed for CEAT are 2.33% and for Goodyear 4.49%. From the running page No. 150 and the internal page No. 38 of the Order-in-Original in the second para, it is stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine and not a sham or make-believe. The Hon ble Apex Court have inter alia held that the colourable devices are not part of tax planning. The Commissioner in the present case has tried to establish the relationship between the appellant and the buyers. Still, we are of the view that the same has not been adequately done by the Commissioner and the inconsistency between the 3 figures as mentioned above has not been reconciled by the Commissioner in his impugned order. 5. In view of the facts and circumstances of the case, we feel it necessary that the case may be remanded to the Commissioner for de novo adjudication and he may record his correct findings while confirming either of the above 3 figures. The impugned order is set aside and the appeals are allowed by way of remand for de novo adjudication. Sd/-(Krishna Kumar)Member (Judicial) 6. [Order per : Gowri Shankar, Member (T)]. - With respect I regret my inability with the order proposed by my learned colleague. 7. It is not possible for me to agree with the conclusion, contained in the 4th paragraph of that order, that the interest free loan given to the appellant by both Goodyear Industries and RPG Industries it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Ltd. - 1984 (17) E.L.T. 323. The Court held in that judgment that Atic Inds. could not be said to have an interest in the business of Atul Products Ltd. only because the latter was a shareholder to the extent of 50% of the share capital and because it was a wholesale buyer of the product manufactured by it. The same position it appears to me would apply both with regard to RPG Inds. and CEAT. The fact that the directors of the assessee were appointed in equal proportion by RPG Industries and Goodyear, and that these persons while functioning as such directors, continued to be employees of CEAT Tyres or of Goodyear does not materially affect the issue. This will once again underscore the point that these two companies were interested in and exercised control over the affairs of the assessee. It does not show how the assessee was interested in the affairs of the others. The directors of the assessee would no doubt have run its affairs with an eye on the benefit to the companies of which they were employees. But here again, there is absence of interest of assessee in the affairs of each of the other. The position would be different if the assessee-company had any stock holding, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt between CEAT and Goodyear which resulted in the formation of the assessee or offtake of the governing the sales of the tyres that the assessee manufactured. The assessee s contention as to limitation are as follows. The joint venture resulting in the creation of the new company was entered into 1994 when duty on tyres was specific. There was therefore no intention to evade duty. The appellant had sought and received legal opinion that his arrangement was appropriate. The fact of the sales being made to Ceat and Goodyear were clear from the price declaration. Therefore the marketing pattern was not suppressed. 14. As it stood after its amendment on 1-3-94, Rule 173C required in sub-rule (1) an assessee to declare the value under Section 4 of the Act on the goods manufactured or cleared by him in the document such as sales invoice, used by him for sale or removal of goods. The second proviso specified the circumstances in which the assessee is required to file a declaration the duty and other elements constituting the price of the goods along with such other particulars that the board or Commissioner may specify. Clause (1) of this proviso covers cases in which the goods are sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio of the decision of the Tribunal in Upper Doab Sugar Mills v. CCE - 1987 (32) E.L.T. 124 and Vishwa Industrial Works v. CCE - 1987 (31) E.L.T. 976 and other such decisions will apply. 15. Since the demand would not be sustainable on merits, the assessee or its employees are not liable to penalty. 16. The appeals are accordingly allowed and the impugned order set aside. Sd/-Gowri Shankar Member (Technical) In view of the difference in the conclusion of the two members of the Bench, the matter is required to be placed before a third member for his decision on the following question. Whether the appeals are required to be allowed and the impugned order set aside, or whether the matter requires to be remanded to the adjudicating authority ? Sd/-Krishna Kumar Member (Judicial) Sd/-Gowri Shankar Member (Technical) Order No. 2803 - 2806/2002 - WZB/C-II, dated 12-9-2002 17. [Order per : Ms. Jyoti Balasundaram, Member (J)]. - The following difference of opinion between the Members of the Bench who heard the above appeals has been placed before me for resolution :- Whether the appeals are required to be allowed and the impugned order set aside, or whether the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. I find that ld. M(J) has held in paragraph 3 of his order that the Commissioner has taken into account the entire aspects of the case and considered and given his detailed findings in the order . However, in paragraph 4 of his order he has come to the conclusion that establishing of the relationship between the appellant and its buyers has not been adequately done by the Commissioner. I have carefully perused the impugned order and find that the Commissioner has dealt with all the charges levelled against the appellant in the show cause notice. Paragraph 4 of the show cause notice which sets out the factors for alleging that the appellant and its buyers were interested in the business of each other and Paragraph 5 of the show cause notice which sets out the factors based on which it is alleged that the appellant was interested in the business of its buyers, have been considered in great detail by the Commissioner in the impugned order and this fact is also recognised by the ld. M (J). Ld. M (T) has given his detailed reasonings based on facts of the case and on application of relevant case law, for arriving at the conclusion that the appellant cannot be said to be rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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