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TMI Blog2003 (4) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1) of Section 11A of the C.E. Act, 1944 besides imposing a penalty of Rs. 5,00,000/ under Rule 173Q of C.E. Rules, 1944 on them and also a penalty of Rs. 5,00,000/ on M/s. Shaw Wallace Company under Rule 209A of C.E. Rules, 1944. However, the Commissioner has dropped the proposal to impose penalty under Section 11AC and interest under Section 11AB on M/s. Detergents India Ltd. Ld. Commissioner has also ordered for confiscation of land, buildings, plant machinery used in the manufacture of the dutiable goods under Rule 173Q(2) of C.E. Rules, 1944 belonging to appellant M/s. Detergents India Ltd. However, the appellant was given option to redeem the same in lieu of confiscation on payment of a fine of Rs. 5,00,000/-. 3. Brief facts of the case are that M/s. Detergents India Ltd. are manufacturers of soaps and detergents falling under Chapter 34 of the Central Excise Tariff Act, 1985 and that the goods manufactured by them had been cleared to depots of Shaw Wallace Company at much lower prices compared to the prices at which the said goods were sold to wholesale buyers by Shaw Wallace Company. Investigations carried out by officers attached to the Directorate General of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational audit on finance and administration and other aspects of DIL were carried out by SWC. 4. Based on the scrutiny of records and statements obtained from various persons concerned, the department had issued a show cause notice dated 26-3-97 to Detergents India Ltd. asking as to why - (a) the excess duty amounting to Rs. 1,12,42,499/- should not be paid by them under Rule 9(2) of the CE Rules, 1944 read with proviso to sub-section (1) of Section 11A of CE Act, 1944; (b) penalty should not be imposed upon them under Rules 9(2), 52(A), 173Q of the Rules and Section 11AC of the Act; (c) land, building, plant, machinery used in connection with the manufacture, production, storage, removal or disposal of the said excisable goods should not be confiscated under the provision of Rule 173Q (2) ibid; (d) pay interest @ 20% per annum on the duty mentioned above till the date of payment of the same should not be paid by them under Section 11AB of CE Act read with Notification No. 34/96-C.E. (N.T.), dated 9-10-96; (e) why penalty should not be imposed on M/s. Shaw Wallace Co. under Rule 209 of CE Rules, 1944 for exercising control over the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion were also purchased by SWC from various other independent manufacturers during the relevant period, in addition to purchase from DIL and SWC s own manufacture. Till date the Department had not made any allegation invoking the related person concept on the said other manufacturing units. (ix) That during the relevant years, the assessable value of DIL was higher than other parties and that they were yet to be provided with a copy of letter dated 24-9-94 addressed to Simon George which was referred to in Para 8.2(1) of the Show Cause Notice. Appellant M/s. Shaw Wallace Company Ltd. in their reply dated 15-10-98 contended that as per settled law, a penalty could be imposed under Rule 209 of the CE Rules, 1944 only on a manufacturer. The judgment of Division Bench of Hon ble Madhya Pradesh High Court in the case of Ramchand Sharma v. Collector, Customs Central Excise, [1992 (61) E.L.T. 543 (M.P.)] are very much relevant to their case based on which the proceedings should be dropped. 6. Similarly, Shri M. Murali Mohan Raju, Finance Manager, in his reply to Show cause notice dated 21-10-98 contended that he was only concerned with the day to day activities of the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and the degree of interest can vary or be different. It further laid down that it is not enough that the assessee has an interest, direct or indirect in the business of the person alleged to be related nor is it enough that the person alleged to be related person has an interest, direct or indirect in the business of the assessee. It is essential that the assessee and the person alleged to be a related person must have interest direct or indirect in the business of each other. In the instant case, the department has not adduced any evidence to show that Detergents India Ltd. have direct or indirect interest in the business of each other. They have also drawn our attention to the following three tests evolved by the Hon ble Bombay High Court to construe a transaction as one between related persons as in the case of Ralliwolf Ltd. v. UOI, [1992 (59) E.L.T. 220 (Bom)] :- (i) There should be mutuality of interest; (ii) The price charged should not be normal price but the price lower to the normal price and that extra commercial consideration have reduced the normal price; and (iii) The alleged person should be related to the assessee as defined in Section 4(4)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in this connection they relied on the ratio of the Tribunal judgment rendered in the case of Dasani Electra (P) Ltd. v. CCE, Calcutta-I, [2000 (125) E.L.T. 646 (Tri.)] wherein the Tribunal has held that the adjudicating authority had not discussed any of the findings relating to the question of related person and that the conclusion arrived at on the ground that the appellants have not been able to put on record adequate evidence in the shape of memorandum and articles of association or authenticated statement related to said two firms who is challenging the appellants customers to be related person and when value has been increased on that basis, the onus to put evidence to that effect lies on the department. Failure on the part of the appellants to put negative onus cannot be made the basis to arrive at the adverse finding against the appellants. It is contended that incurring advertisement expenses and sales promotion cannot be added to the assessable value and also cannot be a ground for a related person since it is evident on record that appellants M/s. Detergents India Ltd. are making outright sale of goods to M/s. Shaw Wallace Co. Ltd. and once goods are sold, they beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is extra commercial consideration in the transactions. Each of the factors sought to be relied upon by the Revenue has already been dealt either by Courts or by the Tribunal concluding that they would not constitute the basis to allege related person. There is nothing in the ld. Commissioner s order which suggest that appellant M/s. Detergents India Ltd. has any interest financially or managerially in M/s. Shaw Wallace Co. Ltd. nor the Revenue has proved that appellants M/s. Detergents India Ltd. has ultimately realised extra considerations or flow back of the sale proceeds so as to interfere or disturb the Section 4(1)(a) price adopted at arms length in the course of wholesale trade between appellants M/s. Detergents India Ltd. and Shaw Wallace Co. Ltd. Therefore, they sought for allowing their appeals by setting aside the ld. Commissioner s order both on merits as well as on time bar. 9. Ld. SDR reiterated the order and submitted that Detergents India Ltd. had been clearly evading duty by way of under-valuation as they sold the goods to Shaw Wallace Co. at a lower price than the wholesale price at which such goods were in turn sold by the latter. He further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolling interest over Detergents India Ltd. and that the former and the latter were mutually interested in each other s business like (a) no independent company like Detergents India Ltd. would allow its staff to be rotated to and from other company (Shaw Wallace Co.) unless the other company was in a position to command and control; (b) without mutuality of interest, the holding company would not be bearing the product launching expenses for the products of the subsidiary company or financing the entire cost of many schemes of the subsidiary company; (c) the holding company would not have borne the major expenses towards the advertisement and sales promotion of Detergents India Ltd. s products if they were only mere wholesale dealers/distributor of Detergents India Ltd.; (d) Shaw Wallace Co. would not have taken pains to standardize the packing wrappers of the subsidiary company s products and pay such expenses unless they are interested in the business of the latter. Ld. SDR further submitted that Detergents India Ltd. might have been an independent company at the time of signing the job work agreement with Shaw Wallace Co. But, when it became a subsidiary of Shaw Wallace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace Co. Unsecured loans were given by Shaw Wallace Co. to Detergents India Ltd., the brands of detergent soaps owned by DIL, were taken over by the SWC, on lease by paying certain royalty; the major raw materials were purchased by DIL itself. The finished stock (various varieties of soaps) were transferred to the depots of DIL, on payment of duty and then sold to SWC, (d) DIL charged lesser processing charges from SWC, compared to that received from Hindustan Lever Ltd. (HLL); DIL s production planning was done by SWC. Instructions were given to DIL on the production schedule, quality size and formulation. Suggestions for quality improvement and cost effectiveness of products were given by SWC; supplies were based on SWC s requirements and schedules. 90% of the capacity of DIL was utilised for HLL job-work, and the rest to manufacture their own product. The processing charges were mutually agreed upon between DIL and SWC and periodically revised. Further, all clearances were effected by DIL to SWC only; DIL had a practice of sending monthly newsletter to SWC providing details like despatches, production achievements, problems faced, quality of their product, details of power an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected by the DIL to SWC only. Further, DIL had the practice of sending monthly news letter to SWC providing details like despatches, production achievements, problems faced, quality of their products, details of power, diesel consumption, etc. and based on these monthly reports, SWC used to give comments/suggestions on various points. Had there been no mutual interest between these two companies in the business of each other, there was no need for DIL to send monthly news letter to SWC providing details like despatches, production achievements, problems faced, quality of their products, details of power and diesel consumption etc. and there would not have been any necessity for SWC to give comments/suggestions on various points. Further, DIL did not incur any expenses towards advertisement, sales promotion and marketing of the detergents. All these expenses were incurred by SWC. Here, it is pertinent to mention that no independent wholesale dealer would incur any expenses through advertisement, sales promotion and marketing of the detergents as was done by SWC which was a holding company and DIL was a subsidiary of SWC. DIL had filed price list to the Central Excise Department ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, another subsidiary company of SWC. SWC had given them unsecured loans which no person would give without any collateral security until and unless they have mutual interest in the business of each other. Therefore, there is mutuality of interest between SWC and DIL as a consequence of which there has been under-valuation of the goods manufactured and sold by DIL resulting in short payment of Central Excise duty. 12. It is an admitted fact that SWC is the holding company to which apart from CCCO, DIL is a subsidiary company. Further, the brands manufactured by DIL though owned by DIL, were actually used by SWC on payment of small amount of token royalty. DIL did large volume of job work producing detergents for Hindustan Lever Ltd. (HLL). Even though the job involved was more or less the same, the job charges charged from the group companies was much less compared to that charged from M/s. HLL, a wholesale dealer. This extra commercial consideration between SWC and DIL was relatable to the fact that SWC was the holding company of the DIL. Thus the relationship between DIL and SWC was not a relationship that of principal to principal and was not at an arm s length and the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Central Excise duty. (ii) Whether suppression of facts can be invoked in this case or whether the demand is time barred. (iii) In the event both the issues being confirmed against DIL, whether the differential duty as demanded in the Show Cause Notice has been correctly arrived at, with due consideration of the allowable abatements. Whether SWC and DIL are related persons 12. It is an admitted fact that SWC is the holding company to which apart from CCCO, DIL is a subsidiary company. Employees of the said subsidiaries are managing the affairs of marketing/sales of SWC as well. The employees of one company are transferred to other companies on oral orders. Some senior officers even held positions in two different companies, at the same time. SWC incurred the imprest expenditure of common godown-cum-sales outlets where the godown of SWC, CCCO and DIL are situated. SWC financed entire cost for many schemes of DIL. SWC has also borne the salary of personnel on deputation to DIL. The entire advertisement charges for the products manufactured by DIL were borne by SWC. DIL was sending a monthly report to SWC wherein it gave details of power consumption, production achi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such a sale cannot be taken to be the assessable value. The net effect is that - (i) the goods should be ordinarily sold for delivery at the time and place of removal. (ii) to a whole sale buyer who should not, in any way, be related to the Assessee, and (iii) there should not be any extra consideration (in cash or in kind) other than price for such transaction. 17. In the instant case, the facts clearly reveal that the sale has not been made to a buyer in the course of whole sale trade. It has actually been sold to a related person and price does not appear to be the sole consideration of sale. So, the definition of related person assumes significance. In terms of Section 4(4)(c) of the Central Excise Act, 1944, Related person means a person who is so associated with the Assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the Assessee and any sub-distributor of such distributor. Explanation In this clause holding company a subsidiary company and relative have the same meaning as in the Companies Act, 1956. 18. It may be seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect. That would not make any difference, so long as each has got some interest, direct or indirect, in the business of the other." 22. In this regard, the Investigating Officers have adduced lot of evidences to show that SWC had controlling interest over DIL and that SWC and DIL were mutually interested in each other s business, as given below : (i) No independent company (like DIL) would allow its staff to be rotated to and fro from other company (SWC) unless the other company was in a position to command and control. (ii) Without mutuality of interest, SWC would not be bearing the product launching expenses for the products of DIL or financing the entire cost of many schemes of DIL. (iii) SWC would not have borne major expenses towards the advertisement and sales promotion of DIL s products if they were only mere wholesale dealer/distributor of DIL. (iv) SWC would not have taken pains to standardise the packing wrappers of DIL s products and pay such expenses unless they are interested in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture from the Westminster principle based upon the observations of Lord Tomlin in the case of IRC v. Duke of Westminster [(1936) AC 1] that every assessee is entitled to arrange his affairs as to not attract taxes. The Court said that tax planning may be legitimate provided it is within the framework of resorting to artifice or subterfuge to avoid payment of taxes on what really is income can today no longer be applauded and legitimised as a splendid work by a wise man but has to be condemned and punished with severest of penalties. If we examine the thrust of all the decisions, there is no bar on the authorities to lift the veil of a company, whether a manufacturer or a buyer, to see it was not wearing that mask of not being treated as related person when, in fact, both, the manufacturer and the buyer, are in fact the same persons. Under sub-section (1) of Section 4 of the Act, value of the excisable goods shall not be deemed to be normal price thereof, i.e., the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, if the buyer is a related person, we have to see its definition of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t clearly shows that the Department is not barred from looking beyond the projected relationship to see what was the actual relationship. We have already seen that what was projected by SWC and DIL was wrong and legally incorrect. The transaction between DIL and SWC was, in reality, a case, where the buyer and the seller are one and the same. The so called job work agreement etc., could not be accepted since a holding company and a subsidiary company cannot, by any fiction or imagination, be deemed to have independent negotiable agreements between themselves with the sole aim of making business profits. Contract for use of brands, payment of Royalty, payment of job-charges etc. were all made by SWC just to create a false impression that the transactions between them was on principal to principal basis . In other words, to camouflage the real nature of the relationship between SWC and DIL. 24. Whatever was paid by SWC to DIL as royalty and job charges would, in effect, go back to SWC itself by being the holding company of DIL. In view of the above said relationship, the price adopted by DIL and paid by SWC, would not form the sole consideration for sale, since they are bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not conform to the norms specified in Section 4 of the Central Excise Act, 1944, since they were not based on Section 4(1)(a)(iii) of the Central Excise Act, 1944. (II) Whether there is suppression of facts warranting the invoking of proviso to Section 11A of the Central Excise Act, 1944 28. As regards suppression of facts, I note DIL had not declared to the Department, the following facts : (i) That the excisable goods manufactured by them are sold by SWC. (ii) That SWC and DIL were related to each other as Holding Company and Subsidiary Company. 29. In the questionnaire filed alongwith the price list, they had actually mis-declared that their buyers do not include persons having control over them. Actually DIL ought to have made the declaration about its relationship with SWC in an explicit manner rather than forcing the Department to infer such a meaning in an indirect and circuitous manner. No doubt, they were filing the various returns to the department and the same was assessed. But, all that they filed were statutory returns showing the quality of goods cleared, rate of duty, duty paid particulars, details of consignees and date of removal. 30. It is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d marketing of DIL s goods and also intentionally reduced the transfer price of such goods from DIL with a view to enjoy a higher profit margin and closely associated with and abetted in the above said evasion of Central Excise duty. Accordingly, I find the proposal to impose penalty under Rule 209 of Central Excise Rules, 1944 on SWC as sustainable. 14. From the findings, it has been proved beyond any doubt that DIL had indulged in wilful suppression of facts with an intention to evade payment of duty and evaded payment of duty to the tune of Rs. 1,12,42,499/- thereby violating various provisions of Rules 9(1), 52A, 173C, 173F and 173G of the Central Excise Rules, 1944 and they are also liable to pay penalty under Rule 173Q of C. E. Rules. M/s. SWC, Calcutta are also liable for penalty under Rule 209 of the Central Excise Rules, 1944. It is proved beyond doubt that there existed mutuality of interest between both the parties, i.e. DIL and SWC, and both are having interest direct as well as indirect in the business of each other. Since Revenue has proved mutuality of interest besides the relationship of subsidiary and holding company and the price charged is not the normal price, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y DIL to SWC and therefore, the price charged by SWC shall be the assessable value and no abatement is involved and it cannot be considered as a cum-duty price as duty has not been paid at this price by SWC. What the department has demanded is the differential duty on the price charged by SWC from independent dealers because the price charged by the related person within the meaning of Section 4(1)(a)(iii), that is, the price at which the goods have been sold by SWC, shall be the assessable value and the department has successfully established from the corporate sales and other mutual interest of the whole group that they are related persons within the meaning of Section 4(1)(a)(iii) of the Central Excise Act, 1944. 15. The time bar pleaded by the ld. Advocate is not applicable in the present case. The reason being that during investigation carried out on the units and depots of SWC and its subsidiaries/associates by the officials of Director-General of Anti-Evasion Wing, Hyderabad, on 16-5-95, it was found out that M/s. SWC and its subsidiaries were evading Central Excise duty on detergents and soaps by grossly under-valuing the goods. During investigation, several records were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. The above law has also been applied by this bench in the case of Flowline Engineering Pvt. Ltd. v. CCE, Madras, [2001 (137) E.L.T. 1423 (T)] by Final order Nos. 621 622/01, dated 4-5-2001. The appeals filed by Flowline Engineering (P) Ltd. were rejected and demands for extended period within 5 years were held to be legally valid and sustainable. In the present case, the show cause notice has been issued within a period of less than 2 years whereas the department in a case of suppression of facts had 5 year period available to them for issue of the show cause notice. The contention of the appellants that they had submitted balance sheets for the years 1986-87 to 1990-91 to the department is not relevant because the balance sheets did not disclose the whole modus operandi adopted by the assessees in order to evade payment of duty. Further, these balance sheets might have been given to the jurisdictional Superintendent of Central Excise in a routine manner whereas the search operation has taken place which was based on the specific intelligence about the modus operandi adopted by SWC and their subsidiaries, on which action was taken, only on 16-5-95. From the balance shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed clinches the issue for rejection of the Revenue appeal. They stated that both the original authority as well as the Commissioner (Appeals) have followed the ratio of the Hon ble Supreme Court rendered in the case of Atic Industries Ltd. - 1984 (17) E.L.T. 323 (S.C.) and the Tribunal judgment in the case of CCE, Mumbai-III v. Ralliwolf Ltd. - 1998 (100) E.L.T. 528 (Tri.) to hold that the two companies are not related persons since there was no flow back of money before rejecting the Revenue appeal. They sought for rejection of the Revenue appeal in this case in view of the clear applicability of the citations referred to above. 19. Ld. DR in this case submitted that the orders passed by both the original authority as well as the lower appellate authority did not take into account the evidence adduced by the investigating officers with regard to the related person and mutuality of interest . He further submitted that in the explanation appended to Section 4(4)(c) of CE Act, 1944, it is clarified that holding company and subsidiary company have the same meaning as in the Companies Act, 1956 (1 of 1956). The meaning of holding and subsidiary company as per section 4(1)(b)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related persons in terms of definition of Section 4(4)(c) of the CE Act, 1944 and since M/s. Detergents India Ltd. did not disclose this fact in the price list, such an act amounted to suppression of facts. As the holding and subsidiary companies fall under the inclusive part of the definition of related person as explained above, therefore the aspect of mutuality of interest need not be proved in such cases. The very fact that one company is holding and the other subsidiary, is sufficient enough to prove that companies are related and the flowback of money is not the yardstick in such cases. Hence, in terms of Section 4(4)(c) of CE Act, 1944, the price at which such goods are ordinarily sold by M/s. Shaw Wallace Co. in the course of wholesale trade at the time of removal of their products to independent buyers should be treated as the normal price and not the price at which the Detergents India Ltd. charged to its holding company who are related persons. As the Revenue has proved the related person and mutuality of interest in each other s business, ld. DR sought for allowing the Revenue appeal by setting aside both the Order-in-Original as well as the Order-in-Appeal. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual Commissioners have already been brought out in great detail by my learned brother. The grounds for holding that there is mutuality of interest in the matter for adopting the wholesale price of M/s. Shaw Wallace Co. Ltd. has been briefly brought out by my learned Brother in Para-3 of his order. The same, on perusal, is required to be considered for answering the question as to whether the wholesale price of Shaw Wallace Co. Ltd. can be adopted for demanding duty on the clearance of the goods manufactured by the appellants on job work basis. I have also noticed from the ld. Brother s order the factors which have been delineated by the department in the show cause notice in assessee s appeal. In my humble opinion, the law laid down is very quite clear and there is no ambiguity with the same. In terms of law laid down in the citations which would be referred to infra, the department is required to establish that there is mutuality of interest between two independent companies. Mutuality of Interest means that both the industries mutually get benefited with each other by sharing the profits and losses. The business undertaking of both the units is not only a joint venture but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anagement or in M/s. Shaw Wallace s various business ventures and activities as can be seen from the facts brought out in the reply to the show cause notice. It is the Shaw Wallace, who is getting the work done from the said appellant. Therefore, the ingredients alleged does not show appellant having any independent financial interest of Shaw Wallace Co. Ltd. Even as per the department s case the business undertakings of Shaw Wallace is an independent multinational company. In that circumstance, the alleged factors brought out in Para-3 of my brother s order cannot be considered as a mutuality of interest . As there is no mutual sharing of profits and losses or mutual joint business venture in the matter. The relationship in terms of the agreement is that of principal to principal basis. So long as the relationship is on the principal to principal basis and an entity is not a hired labour, then in such circumstances, it cannot be held that the appellant Detergents India is the unit of Shaw Wallace Co. Ltd. and that each is having mutual interest in the others financial dealings and business affairs. Mere holding shares by an independent entity or person do not give them absolute p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued in the year 1997 with regard to demand period of 1992-95. 24. The issue in the present appeals is also covered in appellants favour as contended by the Counsel, as has been laid down by the Apex Court in the case of U.O.I. v. ATIC Industries Ltd. - [1984 (17) E.L.T. 323 (S.C.)]. In Paras 4 to 5 of the said judgment, identical facts have been brought out, inasmuch as, it has to be seen that transactions between the manufacturer and his customer were on principal to principal basis and the wholesale price charged by the assessee to the customer was sole consideration of same and no extra commercial considerations was entered for determination of such price of customer. Therefore, it was held by the Apex Court that the appellant cannot be considered as a related person merely because, he holds 50% shares in the manufacturing company. In the present case, also no such extra consideration has flown to the appellant or to the Shaw Wallace Co. Ltd. and there is no allegation of suppression of facts of such flow of consideration or under-valuation of the product. Shaw Wallace have got other subsidiaries and they have also independently got manufactured the goods through them and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1998 (100) E.L.T. 528. This aspect of the matter was also discussed by the Hon ble Delhi High Court in the case of Straw Products Ltd. Anr. v. U.O.I. - 1987 (30) E.L.T. 275 (Del.). Reference can also be made to the cases of Burman Laboratories Ltd., v. CCE. - 2000 (122) E.L.T. 52; Xerographers Ltd. v. CCE. - 1999 (108) E.L.T. 372; Transweld Products Pvt. Ltd. - 1996 (88) E.L.T. 257; CCE v. Electro Services (P) Ltd. - 2001 (127) E.L.T. 828. The ratio laid down in these judgments would apply to the case including the judgment of Apex Court rendered in the case of Calcutta Chromotype Ltd. v. CCE. - 1998 (99) E.L.T. 202 (S.C.). 25. In view of these judgments the appellants appeals are allowed by setting aside the impugned order of the Commissioner by granting consequential relief, if any. 26. In respect of departmental appeal, it is seen that both the authorities had allowed assessee s claim and the show cause notice was dropped on the ground that SCN does not allege facts or rely on any evidence of mutuality of interest. It was held that without same having been brought out in the SCN, the revenue s case cannot be considered. I have gone through the order of Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) and M/s. Shaw Wallace Co. Ltd. ( SWCL for short) have relied on the following case law on the meaning of related persons under Section 4 of the Central Excise Act : (i) U.O.I. v. ATIC Industries Ltd. - 1984 (17) E.L.T. 323 (S.C.) (ii) Ralliwolf Limited v. U.O.I. - 1992 (59) E.L.T. 220 (Bom.) (iii) CCE v. Ralliwolf Ltd., 1998 (100) E.L.T. 528 (T) (iv) Chetan Thadani v. U.O.I. - 1987 (30) E.L.T. 287 (Bom.) (v) Kaivan Cosmetics v. CCE - 1999 (108) E.L.T. 188 (T) (vi) Rallis India Ltd. v. CCE - 2000 (118) E.L.T. 780 (T) (vii) Tungabhadra Industries Ltd. v. CCE - 1995 (75) E.L.T. 95 (T) = 1994 (2) R.L.T. 155 (viii) Straw Products Ltd. v. U.O.I. - 1987 (30) E.L.T. 275 (Delhi) (ix) Transweld Products Pvt. Ltd. v. CCE - 1996 (88) E.L.T. 257 (T) (x) Art Rubber Industries Ltd. v. CCE - 1999 (114) E.L.T. 83 (T) (xi) Leecon Chemicals (P) Ltd. v. CCE - 1999 (107) E.L.T. 260 (T) (xii) Plus Cosmetics Pvt. Ltd. v. CCE - 1999 (108) E.L.T. 71 (T) = 1999 (31) R.L.T. 496 Ld. SDR, on the other hand, has relied on the following decisions : (i) Calcutta Chromotype Ltd. v. CCE - 1998 (99) E.L.T. 202 (S.C.) (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not related persons and the wholesale cash price charged by the assessee to Atul Products Ltd. Crescent Dyes Chemicals Limited and not the price at which the latter sold the dyes to the dealers or the consumers, represented the true measure of the value of the dyes for the purpose of chargeability to Excise Duty. This conclusion reached by the High Court was assailed before us by the learned Attorney-General appearing on behalf of the Revenue. He fairly conceded that the only part of the definition of related person in clause (c) of sub-section (4) of Section 4 on which he could reply was the first part which defines related person to mean a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other . The second part of the definition which adds an inclusive clause was admittedly not applicable, because neither Atul Products Limited nor Crescent Dyes and Chemicals Limited was a holding company or a subsidiary company nor was either of them a relative of the assessee, so as to fall within the second part of the definition. But we do not think that even the limited contention urged by the learned Attorney ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any interest, direct or indirect, in the business of Atul Product Limited. Atul Products Limited buys dyes from the assessee in wholesale on principal to principal basis and then sells such dyes in the market. The assence is not concerned whether Atul Products Limited sells or does not sell the dyes purchased by it from the assessee nor is it concerned whether Atul Products Limited sells such dyes at a profit or at a loss. It is impossible to contend that the assessee has any direct or indirect interest in the business of a wholesale dealer who purchases dyes from it on principal to principal basis. The same position obtains in regard to Crescent Dyes and Chemicals Limited. Perhaps the position in regard to Crescent Dyes and Chemicals Limited is much stronger than that in regard to Atul Products Limited. Crescent Dyes and Chemicals Limited is not even a shareholder of the assessee and it has, therefore, no interest direct or indirect in the business of the assessee. It is Imperial Chemical Industries Limited, London which holds 50 per cent of the share capital of the assessee and this foreign company also holds 40 per cent of the share capital of Crescent Chemicals and Dyes Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 4(1)(a) as no mutuality of interest between the two companies has been established in this case. None of the commonalities suggested by the ld. SDR in his bid to set up a relation between the two companies would, individually or collectively, amount to mutuality of interest expounded by the Apex Court. The decisions cited by him are easily distinguishable. On the other hand, the decisions cited by the Counsel are largely supportive of the assessee s stand in this case. I do not think it necessary to elaborate this aspect as a detailed discussion has already been made in this behalf by ld. Member (J). I am in full agreement with him on the issue. 34. As DIL and SWCL have already been found not to be related persons , it cannot be said that the former suppressed (in their price lists filed with the department) any relationship before the department with an intent to evade payment of duty. The fact is that there was no mutuality of interest between DIL and SWCL and hence they were not related persons within the meaning of Section 4(1)(a) of the Act. The fact alleged by the department in the show-cause notice did not exist at all to be suppressed by the notice. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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