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TMI Blog2006 (3) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants in Appeal No. E/629/2003] under Section 11A(2) of the Central Excise Act and imposed on them penalty of equal amount under Section 11AC of the Act. She also imposed penalties of Rs. 50.00 lakhs, Rs. 5.00 crores and Rs. 2.00 crores on (i) Shri V.S. Raaman [appellant in E/628/2003], Chairman & Managing Director, Sai Mirra Group of Companies (ii) Dr. Reddy's Laboratories Ltd., [for short, M/s. DRL - appellants in E/627/2003] and (iii) M/s. American Remedies Ltd. [for short, M/s. ARL - appellants in E/627/2003], respectively, all these penalties under Rule 209A of the Central Excise Rules, 1944 / Rule 26 of the Central Excise (No. 2) Rules, 2001. Some of the present applications are by the said appellants seeking waiver of pre-deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rol over M/s. ARL by the end of 1999 by purchasing the shares of the four directors and their family members @ Rs. 175/- per share as also by purchasing shares from the market. Eventually, the two companies were amalgamated by the duty process of law. Another company by name M/s. Soft Caps (P) Ltd. [for short, SCPL] had two units at Keelkattalai, Chennai - 117, manufacturing P or P medicines and marketing the goods through M/s. ARL. The subscribed capital of SCPL was held by ten shareholders who were close relatives of the erstwhile four directors of ARL. M/s. ARL acquired the entire shareholding of SCPL for a total consideration of Rs. 27.45 crores, whereby the latter became a 100% subsidy of M/s. DRL, who had already become a holding comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. SMIL paid duty on each product on the basis of assessable value lower than the pre - 15-4-2000 assessable value of the same goods. M/s. SMPL's factories at Keelkattalai also did likewise. This was noticed by the department and investigations ensued, which culminated in the show-cause notices, which eventually came to be adjudicated upon by the two Commissioners. 5. After examining the records and hearing both sides, we find that the learned Commissioners found 'mutuality of interest' between SMIL/SMPL and DRL and accordingly refused to adopt the price contracted between them as basis for determining the assessable value of the goods manufactured by SMIL/SMPL and sold to DRL from 15-4-2000 to 31-3-2002. Monetary benefits of varied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hardships of his clients in support of the applications for waiver and pre-deposit. 7. After giving careful consideration to the submissions, we find that the 'non-compete fee' of Rs. 2.00 crores paid by ARL/DRL to Shri V.S. Raaman has been taken into account by learned Commissioners as a factor indicating financial flowback from buyer to seller of the subject goods. But, it appears from the records that such fee had been paid to all directors of the company in terms of a "non-compete agreement". This agreement contains nothing to indicate that the non-compete fee had anything to do with the prices of the goods sold by SMIL/SMPL to ARL/DRL. Shri V. S. Raaman and his family members were found to have received over Rs. 10.00 crores from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the department. However, a similar plea raised by him with reference to non-compete fee is not appealing to us inasmuch as, in a similar case, this Tribunal held that the price of the goods was not affected by payment of lion-compete fee and hence such fee was not to be added to the assessable value of the goods vide Agri More Ltd. v. CCE - 2004 (64) RLT 762 (CESTAT-Del.). The Tribunal's decision in Kwality Ice Cream Co. v. CCE - 2002 (145) E.L.T. 584 (Tri. Del.) is also in support of the appellants on the point. As in the present case, the assessee in that case also had entered into a "supply agreement" with their buyer for supply of the entire quantity manufactured by them. Learned senior counsel for the Revenue also claimed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 9. Considering the fact that the appellants have not made out a strong prima facie case, though they seem to have an arguable case, we are of the view that M/s. SMIL and M/s. SMPL should deposit 10% of the amounts of duty demanded in the impugned orders. They shall deposit this amount within four weeks from the date of receipt of a certified copy of this order. In the event of compliance, there will be waiver of pre-deposit and stay of recovery in respect of the balance amount of duty as well as all the penalties. Report compliance on 24th April 2006. 10. Both sides have desired early disposal of the appeals. We are also inclined to do so. Hence all these appeals will be heard on 26th April 2006, subject to compliance as above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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