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TMI Blog2005 (3) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sold to them. SATL also manufactured and sold various types of tyres and tubes etc. to M/s. Ceat India Limited (for short Ceat) under their brand name. During the period after 25-8-1998 and upto 30-6-2000 around 36% of the tyres and tubes (other than for 2/3 wheeler vehicles) were sold to Ceat. 1.2 The prices at which SATL sold the goods to CEAT and Goodyear were agreed between the parties on the basis of off-take agreements entered. According to the terms of the agreement the price of the goods was to be arrived at as cost of production plus 1.5% profit for goods with brand names Ceat /and Goodyear. 1.3 For the period from 1-3-1997 to 16-4-1998, Commissioner of Central Excise, Aurangabad, passed an Order-in-Original dated 11-5-2000 holding that Ceat and Goodyear were related person in terms of Section 4(4)(c) of the Central Excise Act, 1944 and the assessable value of the goods manufactured and sold by SATL to Goodyear and Ceat had to be determined in terms of clause (iii) of the proviso to Section 4(1)(a) based on the price at which Ceat and Goodyear had sold the goods to their wholesale buyers. The appeal No. E/2721 to 2724/00 filed by the SATL and others against the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Central Excise (Appeals). The Commissioner (Appeals) after hearing the appeal passed the impugned Order-in-Appeal dated 19-10-2001 holding that:- (a) Both Ceat and Goodyear were not related person during the period from 17-4-1998 to 25-8-1998. (b) Goodyear and SATL are to be treated as related person after 25-8-1998 since Goodyear, USA had purchased all the shares which were held by Ceat in SATL. Therefore, Goodyear, USA had become holding company of SATL. (c) The transportation charges incurred from the place of sale to the place of delivery and interest on receivable are to be deducted from the price at which Goodyear India Limited had sold the goods in order to arrive at the assessable value. (d) Amortised cost of mould supplied by Goodyear and Ceat should be added to the assessable value. (e) The eligibility to abatement towards interest on receivable had to be established by SATL by presentation of satisfactory evidence to show that interest charges for sale on credit to independent buyers were actually built into price charged by Goodyear from its customers, and the customers were informed of their liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finding of the CEGAT in the case of Flash Laboratories was that the advertisement and sale promotion for the prudent toothpaste were undertaken by the buyers and therefore they are related person. This decision therefore cannot be treated as laying down the ratio that two subsidiary companies of one common holding company are inter se related on the ground of mutuality of business interest between them. Further, in terms of the recent decision of Supreme Court in the case of Alembic Glass Industries Ltd. v. CCE reported in 2002 (143) E.L.T. 244, the shareholders of public limited company do not, by reason of their shareholding, have interest in the business of the company. The Hon ble Supreme Court considered the earlier decision of the Supreme Court in the case of Atic Industries [1984 (17) E.L.T. 323 (S.C.)] and also the decision of Supreme Court in Calcutta Chromotype Ltd. [1998 (99) E.L.T. 202 (S.C.)] and held as under :- 7.7 In our view, this is the heart of the matter. The shareholders of a public limited company do not, by reason only of their shareholding, have an interest in the business of the company. Equally, the fact that two public limited companies have common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale price of SATL to Goodyear India Ltd. This view is fully supported by the following decisions : (a) Ralliwolf Ltd. v. U.O.I. [1992 (59) E.L.T. 220 (Bom)][para31] (b) Xerographers Ltd. v. CCE [1999 (108) E.L.T. 372 (Tribunal)] (c) Samtel Electron Devices Ltd. v. CCE [2000 (118) E.L.T. 262 (T-LB) = 2000 (38) RLT 484 (CEGAT-LB)] (d) Samcor Glass Ltd. v. CCE [2001 (130) E.L.T. 783 (Tri.) = 2000 (36) RLT 854 (CEGAT)] (Department s appeal against this decision was dismissed by Supreme Court. Please see 2002 (146) E.L.T. A220 (S.C.) = 2000 (40) RLT F1) In any case, the entire goods are not sold to Goodyear since the sales are also made to Ceat who is treated as independent buyer and also to other original equipment manufacturers. Hence, the clauses (iii) to proviso to Section 4(1)(a) not applicable. In any case, after 25-8-1998, entire production has not been sold to Goodyear India Ltd., which has been held to be related person since part of the goods manufactured was sold to CEAT who has been held to be not a related person. Clause (iii) of the proviso to Section 4(1)(a) is not applicable as has been held by Bombay High Court in Cosmos (India) Rubber Work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can use the plea that Goodyear brand tyres and Ceat brand tyres are different goods and thus, seek to reject arguments of SATL, these facts have to be established and thereafter findings about non-applicability of clause (iii) of proviso to Section 4(1)(a) arrived. (f) The Revenue appeal has been filed against the portion in the same Order-in-Appeal dated 19-10-2001, by which the Commissioner (Appeals) has held that Ceat and Goodyear were not related person for the period prior to 25-8-1998 (in respect of Goodyear and for the entire period in respect of Ceat). The only ground in the appeal filed by the revenue is that the Commissioner of Central Excise, Aurangabad vide its Order-in-Original dated 11-5-2000 had held that Ceat and Goodyear were related person and therefore that decision would apply. However, the said Order-in-Original passed by Commissioner of Central Excise, Aurangabad had already been set aside on merits by the CEGAT in SATL s own case reported at 2002 (149) E.L.T. 1107 (T) = 2003 (106) ECR 295 (T). Therefore, the entire basis in the appeal filed by the revenue does not exist. In view of the aforesaid order of the CEGAT in SATL s case the appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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