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TMI Blog2015 (10) TMI 2150X X X X Extracts X X X X X X X X Extracts X X X X ..... utuality of interest and, therefore, supplier on the one hand and the purchaser on the other hand were not related persons. Insofar as the price manipulation is concerned, i.e., sale of the goods by M/s. Haldyn to the aforesaid purchasers at a depressed price, the same has been established on record on the basis of plethora of evidence tendered by the Revenue which has been discussed in detail in the order of the Commissioner - Impugned order is set aside - Decision in the case of Collector of Central Excise, Ahmedabad v. ITEC (P)Ltd., Bombay [2002 (9) TMI 106 - SUPREME COURT OF INDIA] followed - Decided in favour of assessee. - Civil Appeal Nos. 659-663/2006 & C.A. No. 2592/2006 - - - Dated:- 13-8-2015 - Mr. A.K. Sikri And Mr. Rohinton Fali Nariman, JJ For the Petitioner : Mr. Jaideep Gupta, Sr. Adv., Ms. Shirin Khajuria, Adv., Mr. Rupesh Kumar, Adv., Mr. Sanjay Kumar Pathak, Adv., Mr. Jitin Singhal, Adv. And Mr. B. Krishna Prasad, Adv. For the Respondent : Mr. Praveen Kumar, Adv. And Ms. Neeru Vaid, Adv.(NP) ORDER These appeals are preferred by the Commissioner of Central Excise, Mumbai-V (hereinafter referred to as the Revenue) in which there are five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... topped actively in the year 1990: a. A. A. Mehta, Partner b. H. J. Mehta, Partner c. Smt. M. H. Mehta, Partner III. M/s. J. Traders Started activity in the year 1981. Stopped actively in the year 1990. a. H.A. Mehta, HUF, Partner b. J.A. Mehta, HUF, Partner c. Mrs. R. A. Mehta, Partner d. A.A. Mehta, Authorised Signatory It is seen from the above that insofar as the M/s.Travin Trading Investment Pvt. Ltd. (hereinafter referred to as M/s.Travin) is concerned, it was a private limited company in which Shakuntala Shetty and Vinita Shetty, wife and daughter respectively of N.D. Shetty, were Directors. On the other hand, insofar as the other firms are concerned, they belong to Mehta group which are all partnership firms in which family members of Mehta group were the partners. The investigation further revealed that goods were supplied to these firms at much lesser price than the price which was charged from the other buyers. On this basis, the Revenue took the position that the M/s. Haldyn and the aforesaid four purchasers of the goods are related persons with mutual interest in each other and there was price manipulations as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks for several years were trading in glass bottels manufactured by the assessee. In June/July, 1988, Mehta Group joined the assessee company by acquiring 47.74% shares Mr. J. A. Mehta was introduced in assessee company's management in the capacity of whole time Director. The assessee also sold their product directly to certain customers including M/s. Centaur Pharmaceuticals Pvt. Ltd. Ms. FDG Ltd. M/s. Paramount Packaging Inds, M/s. Pharmaceuticals and Chemical Industries, M/s. Swift Chemicals Ltd. Etc. The assessee's products were sold to those customers also through M/s. J Foundation. Assessee sold goods directly to those customers at normal prices whereas to M/s. J. Foundation at lower prices and M/s. J. Foundation sold goods to the said customers at prices substantially higher than both aforesaid prices. To illustrate the assessee sold 32 ml. P.D. Bottles to M/s. FDC Ltd. @ ₹ 365/- per thousand while to M/s. J. Foundation at ₹ 325/- per thousand and M/s. J. Foundation sold the same goods to M/s. FDC Ltd. At ₹ 672/- per thousand. Similarly, assessee sold 200 ml Brute Amber Bottles to M/s. Swift Chemicals Ltd. at ₹ 1200/- per thousand and to M/s. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to reduce prices of glass bottles at the factory of M/s. Haldyn Glass Ltd. and increase prices of those bottles while selling to industrial consumers at the stage of M/s. Tarvin Trading and M/s. J Group of concerns. In view of the above logical conclusion comes that there was flow back to share holders of M/s. Haldyn Glass Ltd. from Profit earned by M/s. Tarvin Trading and M/s. J. Group of concerns as in all the organisation referred to above, beneficiaries were Shri N. D. Shetty family and Shri J. A. Mehta family as there was no outsider. Further, argument put by the noticee that M/s. Haldyn Glass Ltd. was a company, as such, separate legal entity different from its directors is not sustainable as in M/s. Haldyn Glass Ltd. as well as in M/s. Tarvin Trading and J Group of concerns only share holders/ contributions/ beneficiaries were Shri N. D. Shetty Family and Shri J. A. Mehta Family. In turn judgments in the case of M/s. Nagpal Petrochemical Ltd. Madras M/s. Assistant CCE 1979 (4)ELT-J-117 (Mad) and Pudukkotal Oxygen (P) Ltd. v. CCE 2001 (138) ELT-583 (Tri) are not applicable. As explained in para 41.1 above there was sale at reduced price to M/s. Tarvin Trading and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of M/s. Haldyn Glass Ltd. under the provisions of Rule 173Q of Central Excise Rules, 1944 as the penalty imposed on M/s. Haldyn Glass Ltd., in my opinion, will meet the ends of justice. Considering involvement of Shri N. D. Shetty and Shri J. A. Mehta, Managing Director and Whole Time Director of M/s. Haldyn Glass Ltd. and shareholder/partner in M/s. Tarvin Trading and Investment P. Ltd. and M/s. J. Group of concerns the only conclusion comes that they arranged business of M/s. Haldyn Glass Ltd. through M/s. Tarvin Trading Investment P. Ltd. and M/s. J. Group of concerns in such a way that profit to individual beneficiary remained same, when there was undervaluation to determine duty liability and there was evasion of duty at factory gate of M/s. Haldyn Glass Ltd. Hence, it is evident that M/s. Tarvin Trading and Investment P. Ltd., M/s. J Group of concern aided and abated M/s. Haldyn Glass Ltd. in evasion of Central Excise Duty. Hence, M/s. Tarvin Trading and Investment Ltd. M/s. Janata Glass Works, M/s. J Foundation, M/s. 'J' Traders are liable to penalty under the Rule 209A read with Section 38A of Central Excise Act, 1944. However, no confiscation of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered within the definition of 'related person'. Since the order of the Commissioner has been opposed on the aforesaid ground, let us reproduce here the definition of 'related person' which is stated in Section 4(4)(c) of the Act: - 'related person' means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor. Explanation.- In this clause 'holding company', 'subsidiary company' and 'relative' have the same meanings as in the Companies Act, 1956; The ingredients which are to be satisfied to show that the two persons are related persons, have already been laid down in catena of judgments of this Court. However, we need not take stock of these judgments as this very Bench in a recent decision in the case of 'Commissioner of Central Excise, Hyderabad v. Detergents India Limited [2015 (318) ELT 559 (SC)] took note of the existing case law and the formulated the test in the following manner: 12. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest between the two is apparent. We may point out here that the Tribunal's observation, quoted above, that no evidence regarding mutuality of interest has been brought on record, is inconsistent with the acceptance of the finding of the adjudicating authority, referred to above. Once those findings are accepted, the conclusion that there is mutuality of interest between the two concerns is inevitable. In this view of the matter, we set aside the finding of the Tribunal that the respondent and M/s. International are not related persons. We are of the opinion that the aforesaid judgment squarely applies to the facts of the present case as it holds that where the two companies/firms etc., belong to the same group then the test of mutuality is established and satisfied. In a sense, the Court has torn the corporate veil thereby pointing out that such family concerns would be beneficiaries in the affairs of each other. We are, therefore, of the opinion that the CESTAT was not right in holding that there was no mutuality of interest and, therefore, supplier on the one hand and the purchaser on the other hand were not related persons. Insofar as the price manipulation is con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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