9911796707
TMI Blog1999 (6) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... British Health Products 21199353/- 21199353/- 895/98-A Dabur India Ltd. 1 Crore 896/98-A Sh. G.C. Burman 1000000/- 897/98-A Sh. Anand Burman 1000000/- 898/98-A Sh. Amit Roy 1000000/- 899/98-A Sh. Vishwanath Vij 1000000/- 1246/98-A British Health Products 2142760/- 2142760/- 1248/98-A Dabur India Ltd. 1000000/- 1250/98-A Sh. G.C. Burman 100000/- 1249/98-A Sh. Anand Burman 100000/- 1251/98-A Sh. Amit Roy 100000/- 1247/98-A Sh. Vishwanath Vij 100000/- 3. The appellants M/s. British Health Products India Ltd. are engaged in the manufacture of P or P medicines and food products. During the material period the entire production has been sold by the appellants to M/s. Dabur India Ltd. According to the department, appellants M/s. British Health Products India Ltd. (BHPL) and M/s. Dabur India Ltd. (DIL) are related persons under Section 4(4)(c) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest in the business of each other between M/s. DIL and M/s. BHPL not only indirectly, but also directly is clearly established. In fact, the marketing and distribution agreements prepared by M/s. DIL, were tilted in the favour of M/s. DIL. The agreements provided for flat margins of 25% to M/s. DIL irrespective of the fact that M/s. BHPL sold some medicines below the cost of product, obviously with a view to compensate M/s. DIL for the techno managerial and financial inputs provided by them to M/s. BHPL. In fact, the very survival of M/s. BHPL was solely dependent on M/s. DIL. The argument, therefore, that while M/s. DIL were interested in the business of M/s. BHPL while that latter had no interest in the business of the former fails to convince. It defies logic and credibility that a firm will not be interested in the business of the firm who buys all its products. Thus, both M/s. DIL and M/s. BHPL were interested in the business of each other. Elaborate arguments have been advanced to prove that M/s. BHPL is not a subsidiary of M/s. DIL and that the latter is not the former s holding company. Even if these are accepted, the mutuality of their interest in the business of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption, it was submitted by him that there was no justification in denying the benefit since the branded goods of other person/persons are to be excluded in computing the agreegate value of clearances. He submitted that P or P medicines have been manufactured in the brand name of Dabur. These are branded goods and hence same cannot be taken into account while computing the agreegate value of clearances for determining the entitlement to the benefit of Notification No. 175/86 in respect of food products manufactured and cleared by the assessee. In this context, he referred to the decision of the Tribunal in the case of M/s. Thio Pharma v. CCE [1992 (60) E.L.T. 395 (T)] wherein it was held by majority that the patent or proprietory medicines bearing the trade name/brand name Brosmin of the manufacturer and further bearing the sole distributor s emblem/brand name/trade name synthiko in a stylised manner enclosed in a rectangle and since the product by brand name Synthiko of the buyer, be and it of Notification No. 175/86 was not available. He submitted that in any case, in the case of Dabcilin and Damoxy, since these names are registered under the trade and merchandise mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Calcutta Chromotype Ltd. v. CCE, Calcutta reported in 1998 (99) E.L.T. 202 (S.C.) in support of his contention. As regards small-scale exemption, he submitted that the Commissioner was right in denying the same because of the fact that seven medicines are owned by the appellants and since they are branded goods value of clearances are to be taken into account while computing the agreegate value of clearances in determining the entitlement of benefit of exemption in terms of Notification No. 175/86. 9. Shri V. Sridharan, learned Advocate replied that it is not correct to say that management of the appellants was in the hands of Dabur and infact there is a clear finding by the adjudicating authority that appellants and Dabur are separate legal entities and Dabur is not a holding company of the appellants. He said that it is true that M/s. Dabur have become shareholder of the appellant company during the period in question owning 23.89% shares in the company as can be seen from the show cause notice but in no way the appellants were interested in the business affairs of Dabur. 10. We have carefully considered the matter. Whether M/s. Dabur can be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ochin and Another [1988 (33) E.L.T. 771 (Tribunal)], the Tribunal held that Section 4(4)(c) requires something more than one party controlling the working of the other. The section requires interest, directly or indirectly, in the business of each other . This means a two-way business interest or mutuality of interest. Interest in the business of each other, as contemplated in Section 4(4)(c) is something more definite and tangible interest in the assessee s business. The observation made by the Tribunal with reference to Section 4(4)(c) of the Central Excise Act, 1944 in the case of Kersons Mfg. Co. of India Ltd. [1998 (100) E.L.T. 194 (T)], is relevant in this context and Para 3 of the said decision is reproduced as under :- The Assistant Collector relied on four circumstances in proof of relationship under Section 4(4)(c) of the Central Excise Act, 1944. Respondent was a sick unit and according to the Assistant Collector, taken over by Cromption. What transpired was that Cromption contributed to equity shares to the extent of 47.85% in the respondent, thereby providing capital for the operations of the respondent. The services of an employee of Cromption were lent to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad [1995 (75) E.L.T. 95], that it is not sufficient to hold that buyer is a related person in the absence of direct or indirect interest in the business of each other and even the quantum of sale is not a criteria for determining that transaction was not at arms length. A mere commercial contract between two independent parties for purchase and, sale of goods manufactured by one party cannot ipso facto lead to the conclusion that the two of them are so associated as to have interest in the business of each other. In order to be regarded as a related person both the ingredients have to be satisfied, viz., two have to be associated with each other. This interest has essentially to be financial or managerial interest. In the facts and circumstances and in view of the ratio laid down by the aforesaid cases, the department was not justified in treating the price at which M/s. Dabur sells the items should be taken as basis in determining the assessable value at the hands of the assessee. The appellants succeed on this issue. 13. As regards small-scale exemption, we find that the seven P or P medicines are manufactured by the appellants and supplied to Dabur. Admittedly except t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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