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TMI Blog2006 (4) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... uty at that time when the agreement was entered into was at a specific rate and not on ad valorem basis. Excise duty on dissolved acetylene gas became ad-valorem w.e.f. 1-4-1994 only. 3. During August, 1997 an intelligence was gathered by the department that the assessee was not discharging duty liability correctly on their product dissolved acetylene gas inasmuch as they were clearing the entire quantity of the said product to M/s. Geldhof, who in turn were selling the same in the market at a much higher price than the value at which the assessee paid the duty. Accordingly office and factory premises of the appellants were searched from where various documents were seized and statements of the officers of both companies were recorded. From statement and the scrutiny of the records, it was revealed that all the directors in the two companies were common and these directors held 81.91% shares in the appellants company and 99.98 in M/s Geldhof. They were sharing the same office premises and these directors stood as personal guarantors for availing banking facilities for both the units. There was no genuine sale of dissolved acetylene gas from appellants to its distributors M/s. Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of the Central Excise Act which define the term related persons. Merely because the Board of Director consist of the same person does not mean that two companies are interested in the business of each other as has been held by the Tribunal in the case of International Computer India Mfg. Co. Ltd. v. Collector of C. Ex. - 1989 (41) E.L.T. 287 (Tribunal), Mahalaxmi Glass Works v. Collector of Central Excise - 1991 (53) E.L.T. 120. 5. Fact that some of the share holders are common does not mean that the appellants and M/s. Geldhof are related person within the meaning 4(4)(c) inasmuch as M/s. Geldhof has no share in the appellant-company while appellants company has only one share in Geldhof and therefore the mutuality of interest is not at all established. 6. It was submitted that the Commissioner, reliance on the Apex Court decision in the case of Telco v State of Bihar - 1964 6 SCR 885, McDowel and Company Ltd. v. Commercial Tax Officer - (1985) 3 SCC 230 and Calcutta Chromotype Ltd. v. Collector of C. Ex., Calcutta - 1998 (99) E.L.T. 202 (S.C.) and Mohanlal Maganlal Bhavsar v. U.O.I. - 1998 (99) E.L.T. 202 (S.C.) and Mohanlal Maganlal Bhavsar v. U.O.I. - 1986 (23) E.L.T. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a specific rate and there could not have been any intention to suppress the real price in order to evade duty when the duty was not ad valorem at all. 8. In view of above, their facts were fully covered by those referred to in the Apex Court decision in the Alembic case, and same decision has been followed by the Tribunal disregarding the decision in Calcutta Chromotype case in the case of Commissioner of Cus. C. Ex. Rajkot v. Amar Sinhji Stationery Indus. Ltd. - 2005 (184) E.L.T. 186 (Tri.-Del.), Commissioner of C. Ex. Bangalore v. BPL Sanyo Utilities Appliances Ltd. - 2003 (153) E.L.T. 398 (Tri.-Bang.). 9. In the last it was submitted that for holding a person to be related within the meaning of Section 4 it is necessary that both the buyer and seller should have interest in the business of each other. Both M/s. Sanghi Organization Geldhof were two limited companies which were different and distinct legal entities having no interest in the business of each other. The contract between them was on a principal to principal basis. Reference was also invited to Supreme Court decision in the case of Union of India and Others v. Atic Industries Ltd. - 1984 (17) E.L.T. 323 (S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice charges and charges for delay in return of cylinder etc. were not payable to the appellants. (xi) The sale price between the appellants and M/s. Geldhof was determined on the basis of cost construction method which was not a normal method. (xii) Since the Board directors of the two companies are common, the policy decision are taken to benefit each other in terms of financial matters etc. 11. In view of above, it was submitted that sales between the two companies cannot be considered as independent and the two were related person. Reliance in this regard was placed on the Tribunal decision in the case of H.T. Bhavnani Chemicals (P) Ltd. v. Collector of C. Ex., Baroda - 1997 (92) E.L.T. 502 (Tribunal) and Supreme Court decision in Mohanlal Bhavsar v. U.O.I, where mutuality of interest was held to be established once the two companies were having common directors and being run by the same management. Reliance in particular was placed on the Supreme Court decision in the case of Calcutta Chromotype wherein it was held that principle that a company under the Companies Act is a separate entity and therefore, where the manufacturer and buyer are two separate companies., th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the monthly return and maintained Central Excise records. Therefore, it was incumbent on the proper officer while approving the price list to make such enquiry as they considered necessary to find out if the two companies were under same management. Therefore the question of disclosure of the word same management is not positive inaction on the part of appellants so as to attract extended provision of Section 11A of the Central Excise Act. The agreement with the Geldhof was submitted in the year 1992 to the department and it was for the department to make any enquiry whatsoever. The learned S.D.R. on the other hand submitted that in this case the appellants were under the same management as that of M/s. Geldhof as both the companies were controlled by the same H.U.F. and were having same directors. These facts should have been declared as they have a direct bearing on determination of the price by the proper officer. 14. We have carefully considered the submissions. We find that a great reliance has been placed by the department on the Apex Court decision in the case of Calcutta Chromotype and Mohanlal Maganlal Bhavsar which was followed by the Tribunal in the case of H.T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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