9911796707
TMI Blog2015 (8) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... od involved for the purposes of excise duty is 01.03.1997 to 16.04.1998. The assessee was originally M/s. RPG CEAT Group Company. Later on 'RPG SATL' and 'Goodyear' entered into a Joint Venture Agreement dated 10.09.1993 to form a third company in the name of M/s. SATL (the assessee), which came into existence on 30.09.94. The primary objective of the assessee was to manufacture OTR Tyres and Radial tyres exclusively for CEAT and Goodyear under their brand names. The promoters namely Goodyear USA and Goodyear India on one side and RPG CEAT on the other were holding 50:50 equity each in the assessee, and were exclusive buyers of goods manufactured by the assessee. In the said Joint Venture Agreement, various other stipulations were mentioned showing interest of both Goodyear as well as CEAT in the assessee. As per the said agreement, the assessee also received unsecured interest free loan of Rs. 85.66 crores from CEAT and Goodyear. Some moulds and other equipments worth Rs. 10 crores free of cost, on loan basis, were also given by these two companies to the assessee. This kind of arrangement led to the issuance of show cause notice by the Commissioner of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002, she concurred with the view that the appeals were to be allowed. Accordingly, the order of CEGAT was recorded on 31.07.2002 allowing the appeals. This order of CEGAT is the subject matter of Civil Appeal Nos. 1947-1950 of 2003. Mr. K. Radhakrishnan, learned senior counsel appearing for the Department, has extensively read the contents of the show cause notice as well as the Order of the Commissioner and from there he has pointed out that there is evidence to show deep interest of the Goodyear and CEAT in the assessee company. He thus, submitted that the Commissioner was right in holding that these were 'related persons'. It is not necessary to narrate those features which are pointed out by Mr. Radhakrishnan inasmuch as those features only indicate interest of the two companies, viz., CEAT and Goodyear in the assessee to bring the case within the definition of 'related persons'. What is necessary is to prove mutuality of interest, viz., interest both ways, i.e., of the two companies in the assessee as well as of the assessee in the said two companies. This legal requirement is necessary in view of the definition of related persons contained in clause (c) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each other. It is not enough that the assessee has an interest, direct or indirect, in the business of the person alleged to be a related person nor is it enough that the person alleged to be a related person has an interest, direct or indirect, in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of each other. Each of them must have a direct or indirect interest in the business of the other. The equality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect. That would not make any difference, so long as each has got some interest, direct or indirect, in the business of the other. Now, in the present case, Atul Products Limited has undoubtedly interest in the business of the assessee, since Atul Products Limited holds 50 per cent of the share capital of the assessee and has interest as share holder in the business carried on by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 01.07.2000 to 26.09.2000. It so happened that the joint venture agreement between the parties was terminated and the CEAT transferred its entire shareholding in the Goodyear group of which 97 percent is held by Goodyear USA and 3 per cent is held by Goodyear India Private Limited. Thus, the assessee became the subsidiary of Goodyear USA. On this basis, show cause notice was issued for the aforesaid period treating the assessee and Goodyear as related persons having mutuality of interest. No doubt that the assessee became the fully owned company of Goodyear, the relationship between the two would be that of related persons as they became "inter connected undertaking" and are covered by the provisions of amended Section 4(4)(3)(b) of the Act which provides that the person would be deemed to be "related" if: "i. they are inter-connected undertakings, ii. they are relatives, iii. Amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor, or iv. they are so associated they have interest, directly or indirectly, in the business of each other." This position was not denied even by the assessee. However, their submission was th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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