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TMI Blog2015 (7) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... together for disposal. 2. Shri K.S.V. Ravi Shankar (Advocate) and Shri N. Anand (Advocate) appeared on behalf of the appellants. It was argued by Shri K.S.V. Ravi Shankar that both Unit No.I & III of M/s. Goldjyoti Polymers are selling their manufactured goods (HDPE/ PP Bags) to, inter-alia, two Interconnected Undertakings (ICUs) M/s. Goldcoin Polypack Pvt. Limited, established in 1985 and M/s. Canon Laminators Pvt. Limited also established in 1985. That in addition to the sales to these ICUs, appellants are also selling about 30% of their sales to independent customers like M/s. Chambal Fertiliser and Chemicals Limited, M/s. Zuari Industries etc. Learned advocate made the bench go through the partners/ shareholders of the appellants and ICUs which are admitted by the appellants to be related persons as per Section 4 of the Central Excise Act, 1944. That adjudicating authority has examined the provisions of Rule 9, 10 and 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (Valuation Rules for short) and Section 4 of the Central Excise Act, 1944 to hold that even if provisions of Rule 9 and 10 are not strictly applicable, still by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners vs. CCE [2014 (300) ELT 469 (Tri. Che.)] 2.1 It is also the case of the appellants that commonality of Directors/ Partners cannot be the ground to hold that buyer and Seller are related, in view of the following case laws:- (a) Alembic Glass industries Limited vs. CCE [2002 (143) ELT 244 (SC)] (b) CCE vs. Superior Products [2008 (230) ELT 3 (SC).] (c) CCE vs. Besta Cosmetics Limited [2005 (183) ELT 132 (SC)] 2.2 That demands beyond one year are time barred as extended period is not invokable. 3. Shri K. Sivakumar (AR) appearing on behalf of the Revenue argued that adjudicating authority has not held that Rule 10 is applicable but has held that by virtue of Rule 11 of the Valuation Rules, the appropriate Rule applicable, mutatis mutandis, will be Rule 10(a). Learned AR made the Bench go through Para 23.4 of the Order-in-Original No. 01/OA/VAPI/2011 dated 10.01.2011 to drive home the point that appellants are related persons. He also relied upon the judgment of Apex Court in the case of Calcutta Chromotype Limited vs. CCE, Calcutta [1998 (99) ELT 202 (SC)] to argue that courts can lift the corporate veil to find out the true nature of transaction and relationships. He also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takings are owned by bodies corporate,- (I) if one body corporate manages the other body corporate; or (II) if one body corporate is subsidiary of the other body corporate; Or (III) if the bodies corporate are under the same management; or (IV) if one body corporate exercise control over the other body corporate in any other manner; (D) where one undertaking is owned by a body corporate and the other is owned by a firm, if one or more partners of the firm,- (I) hold, directly or indirectly, not less than fifty per cent. Of the shares, whether preference or equity, of the body corporate; or (II) exercise control, directly or indirectly, whether as Director or otherwise, over the body corporate. (E) if one is owned by a body corporate and the other is owned by a firm having bodies corporate as its partners, if such bodies corporate are under the same management; (F) if the undertakings are owned or controlled by the same person or by the same group; (G) if one is connected with the other either directly or through any number of undertakings which are inter-connected undertakings within the meaning of one or more of the foregoing sub-clauses. 4.2 Rule 9, 10 and 11 of the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants relied upon several judgments, including of those of Apex Court to argue that inter-connect undertakings are not relatives. It is observed from the relied upon case laws that law laid down by Apex Court in Alembic Glass Industries Limited vs. Collector of Central Excise & Customs (supra) and UOI and Others vs. Atic Industries Limited (supra) was with respect to related person concept under the old Section 4 of the Central Excise Act, 1944, on the basis of mutuality of interest, when concept of Inter-connected Undertakings as related person was not existing in Section 4. Secondly, mutuality of interest has not been put into service by the Revenue in this case. Thirdly, appellants are not disputing that they are not related person. Fourthly, a Rule like Rule 10 of the Valuation Rules was not required to be interpreted by the Hon ble Apex Court. In the present case, Revenue has made its case on the grounds that the appellants and the other inter-connected undertakings are such that they have become relatives as per Section 4(3)(b)(ii) as mentioned in Rule 10 (a) of the Valuation Rules. The relied upon case laws are, therefore, different on facts and cannot be made applicable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent that buyer is associated with the manufacturer, i.e., the assessee and then regard being had to the common course of natural events, human conduct and public and private business it can be presumed that they have interest, directly or indirectly, in the business of each other (refer Section 114 of the Evidence Act). It is, however, difficult to lay down any broad principle to hold as to when corporate veil should be lifted or if on doing that, could it be said that the assessee and the buyer are related persons. That will depend upon the facts and circumstances of each case and it will have to be seen who is calling the shots in both the assessee and the buyer. When it is the same person the authorities can certainly fall back on the third proviso to clause (a) of Section 4(1) of the Act, to arrive at the value of the excisable goods. It cannot be that when the same person incorporates two companies of which one is the manufacturer of excisable goods and other is the buyer of those goods, the two companies being separate legal entities, the Excise authorities are barred from probing anything further to find out who is the person behind these two companies. It is difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e members of a Hindu undivided family; or (b) they are husband and wife; or (c) the one is related to the other in the manner indicated in Schedule IA. 4.7 It is observed that as per Section 6(c) of the Companies Act, all the possible relations in a family are listed and covered in Schedule IA of the Companies Act, 1956. In spite of this, under Section 6(a) and (b) of the Companies Act, 1956 husband and wife and members of Hindu undivided family (HUF) are again mentioned. Legislature by virtue of its knowledge of the facts is aware of all the judicial pronouncements made by the Courts and has chosen to include sub-section (ii) and (iii) of Section 4(3) (b) and Rule 10(a) of the Valuation Rules. The entire Rule 10 is made for inter-connection undertakings. It is a well accepted legal preposition that legislation does not use any word without assigning a meaning and each word has to be accorded an appropriate meaning by respecting the wisdom of the legislature. By mentioning sub-clause (ii) or (iii) of Section 4(3) (b) of the Central Excise Act, 1944 and in Rule 10(a) of the Valuation Rules, it has to be understood that in the case of inter-connection undertakings also relationshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te would not be considered in such a manner so as to encourage defaulters and discourage those who abide by the law." 4.8 In view of the above observations and settled proposition of law, we do not find any reason to interfere with the orders passed by the lower authorities and the same are upheld on merits. 5. Appellant have also raised the issue of time bar with respect to applicability of extended period in some of the demands and also argued that penalties are not imposable as there is no intention to evade duty. It is observed from the case records that issue involved in these proceedings was a contentious one and appellant had certain judicial pronouncements on the interpretation of Section 4 of the Central Excise Act, 1944 with respect to related persons . Under the existing factual matrix of facts, it can not be held that there was any intention on the part of the appellants to evade payment of duty. Accordingly, extended period is not invokable to the demands and no penalties are imposable upon the appellants. Demands have to be thus limited to the period under Section 11A of the Central Excise Act, 1944 without invoking extended period. 6. Appeals filed by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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