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TMI Blog2007 (6) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... ner held that there was mutuality of interest in the business of each other between BSUA and BPL Ltd. and the price of the goods sold to BPL Ltd. was reduced deliberately to shell off the burden of doing advertisement/sale/promotion etc. with the intention to evade duty. Consequently, he confirmed duty demand of Rs. 8,83,77,549.00 and further imposed the following penalties. (i) Rs. 8,83,77,549.00 on M/s. BSUA under Section 11AC. (ii) Personal penalty of Rs. 8,83,77,549.00 on M/s. BPL Ltd. (iii) Personal penalties of Rs. 9 lacks each on (a) Shri Vishwanath Nambiar, Managing Director, BSUA; (b) Shri K.S. Jayanth Kumar, Director-CMO, BPL Ltd.; (c) Shri M. Sasi, Finance Director, BSUA. The appellant strongly challenge the impugned order. 3. Shri G. Shiva Dass, the learned Advocate, appeared on behalf of the appellants and urged the following points: - (i) Even if the appellant and BPL are held to be related persons, the sale price cannot be rejected if the relationship has not affected the price. The total difference between the selling prices of the appellant and BPL Ltd. ranged between 8% to 10%, which comprised of advertisement expenses, marketing overhea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dealing with subsidiary company cannot be invoked. It has been held that the term relative as mentioned in Section 4(4)(c) would not be applicable to impersonal bodies of companies incorporated under the Companies Act, 1956. [M/s. Hind Lamps 1977 (1) E.L.T. J1 affirmed by the Supreme Court in the case of UOI v. Hind Lamps as reported in 1989 (43) E.L.T. 161]. In the present case, the appellants have no share holding in BPL Ltd. at any point of time. Even if BPL Ltd. has shares in the appellant company, that cannot be a reason to hold that the appellants and M/s. BPL Ltd. have interest directly or indirectly in the business of each other. Hence, it cannot be alleged that M/s. BPL Ltd. is a related person. Consequently, proviso (iii) to Section 4(1)(a) cannot be invoked (UOI Others v. Atic Industries - 1984 (17) E.L.T. 323). The Calcutta Chromotype Ltd. v. CCE - 1998 (99) E.L.T. 202 (S.C.) is not applicable as the facts are distinguishable and in the present case, the shares in BPL Ltd. and the appellant company are not entirely held by Shri T.P.G. Nambiar and his family. In fact, the percentage of shareholding of Shri T.P.G. Nambiar and his family wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessable value of the appliances prior to 1-4-1994 and that of after 1-4-1994 to hold that the assessable value of appliances had come down when the appellants had started selling the goods to M/s. BPL Ltd. Prior to 1-4-1994, the appellants were selling the appliances to various dealers throughout the country. However, after 1-4-1994, they started selling to only one dealer viz. M/s. BPL Ltd. Therefore, it was not necessary for the appellants to incur any expenditure on advertisement/publicity/marketing to that extent. Reliance is placed on the following decisions :- (a) CCE C, Aurangabad v. P.N. Dhoot Investment Co. Pvt. Ltd. - 1999 (111) E.L.T. 118 (Tribunal) - affirmation by Supreme Court as reported in 2000 (120) E.L.T. A194 (S.C.) (b) British Health Products India Ltd. Others v. CCE, Jaipur - 2003 (162) E.L.T. 886 (Tri.-Del.) (c) Bharti Telecom Ltd. v. CCE, Chandigarh - 2002 (145) E.L.T. 399 (Tri.-Del.) (d) Kwality Ice-cream Co. v. CCE, Chandigarh - 2002 (145) E.L.T. 584 (Tri.-Del.) (viii) The Show Cause Notice simultaneously invokes Rule 5 of the Central Excise Valuation Rules which deals with additional consideration and also the proposal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest between the two companies and they are not related. He also relied on a large number of case-laws. 6. We have gone through the records of the case carefully. Revenue proceeded against M/s. BPL Sanyo Utilities Appliances Ltd., Bangalore, earlier and the original authority, in his order dated 13-11-1998, held that the assessable value should be based on the price at which M/s. BPL Ltd. sold the goods to their wholesale dealers. In that case, the appellant M/s. BPL Sanyo Utilities Appliances Limited, Bangalore had an agreement with M/s. BPL Ltd. All the goods manufactured by M/s. BPL Sanyo Ltd. were sold to M/s. BPL Ltd. Against the order of the original authority, the appellants appealed to the Commissioner (Appeals). The Commissioner (Appeals), in his order dated 18-1-2001, set aside the order of the lower authority and allowed the appeal of the appellant. Revenue appealed to the CESTAT. This Bench, in its Final Order No. 144/2002 dated 5-2-2002, remanded the matter to the Commissioner (Appeals), in order to examine all the documents referred to in the Show Cause Notice. Consequent to the remand, the Commissioner (Appeals) passed a detailed order dated 1-5-2002 wherein h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered. (b) The Commissioner (Appeals) has given considerable thought and attention to the decision of the Hon ble Supreme Court in the case of Calcutta Chromo Ltd., 1998 (99) E.L.T. 202 (S.C.) and has come to a finding that both the conditions must co-exist so that the price at which the manufactured goods are sold and both the conditions are not met here, there is no challenge of this finding. (c) The ld. Advocate for the Respondents very clearly has brought out that the facts in this case before us that facts in the case before the Apex Court in the case of I.T.E.C (A) Ltd. [2002 (145) E.L.T. 280 (S.C.) = 2002 (52) RLT 501 (S.C.)] were different and the case law as laid by the Apex Court in the case of Alembic Glass Industries Ltd. [2002 (143) E.L.T. 244 (S.C.)], by a full Bench of the Supreme Court, would be applicable in the case of Public Limited Companies, as in this case, to determine and uphold the mutuality of interest and relationship. In view of the findings arrived at by the Commissioner (Appeals) of relationship not existing or and proved and applying the law as in the Alembic Glass Industries (supra) which is applicable, we find no cause to upset the findings ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrespondence relied by the Assistant Commissioner, it is incredible for anybody to suggest/conclude that the transactions are not in the nature of principal to principal sale transactions. If Director-Marketing of BPL loosely mentions the sale price as transfer price , it does not become a stock-transfer price between one Division and the other. The legal consequences flowing from the actual sale of the goods between BSUA and BPL cannot be obliterated by loose reference by one official of a company and that cannot be taken as a legal proof that the sale did not take place. A perusal of these documents show this to be regular and commercial attempt by BPL in obtaining a favourable sale price. It is typical for a buyer to ask for the reduction in the prices and the seller to refuse. That in essence is free market all about. From the endorsement on the documents, it is clear BSUA officials have gone on record to allege that BPL is pressurizing to reduce the sale price and such proposals can not be accepted. These documents only show a distance between BPL and BSUA and not closeness. The transactions are therefore, in fact, at arms length and not the opposite as suggested by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sales made after 1-4-94 which are in dispute in the present case. This position cannot be inferred by the suggestion made in the letters to M/s. BPL Ltd., for collection of arrears of payment from the dealers in respect of sales made by the Respondents directly to the dealers prior to 1-4-94. The order of the Assistant Commissioner holding that monitoring of payment from the dealers is being resorted would not apply to clearances made after 1-4-94. Therefore, interest in the business of M/s. BPL Ltd., cannot be upheld on this account. (iv) The order has also relied on a letter dated 18-11-93 regarding integration of the Respondents with Central Marketing Organization (BPL). This letter only shows that the marketing, sales and service of the products of the Respondent company will be integrated with CMO which could mean that the goods are going to be sold to M/s. BPL Ltd., who will be selling the same further in the market. In other words, the entire goods would be sold in wholesale to M/s. BPL Ltd., for further sale by M/s. BPL Ltd. This cannot ipso facto be treated as showing mutuality of business interest in each other in order to treat them as related person under Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h also had an occasion to deal with a similar issue in the case of CCE, Bangalore v. Dynamic Electronics Ltd. - 2005 (191) E.L.T. 285 (Tri.-Bang.). M/s. Dynamic Electronics Ltd. was manufacturing colour TV sets and used the brand name of M/s. BPL in terms of an Agreement entered into by them with M/s. BPL Ltd. 98% of the goods were sold to M/s. BPL Ltd. and 2% were sold to M/s. BPL Sanyo Technologies Ltd. It was alleged by the Revenue that the transaction between M/s. Dynamic Electronics Ltd. and M/s. BPL M/s. BPL Sanyo Technologies Ltd. was not at arms length and the price was not the sole consideration. One of the grounds of the Revenue was that Shri T.P.G. Nambiar, his family members and other legal entities owned and controlled by them hold atleast 51% of the issued and paid up equity capital of the respondent s company. According to the Revenue, the price at which the goods were sold by BPL had to be adopted for assessment purposes. The original authority dealt with the issue in great depth and came to the conclusion that the appellant and BPL are not related. Thus, he negatived all Revenue s contentions. Revenue came in appeal before this Bench and this Bench, relying on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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