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TMI Blog2018 (4) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... ative evidence to substantiate the allegation that advertising charges are borne by respondents 3 & 4 on behalf of Fizikem. Appeal dismissed - decided against Revenue. - E/297/2008, E/483 to 486/2008 - Final Order No. A/30438-30442/2018 - Dated:- 17-4-2018 - Mr. M.V.Ravindran, Member (Judicial) and Mr. Madhu Mohan Damodhar, Member (Technical) Mr. Deepak Bhagath, A.R. for the Appellant. None for the Respondent. ORDER Per : Madhu Mohan Damodhar M/s. Fizikem Laboratories Pvt. Ltd. (hereinafter referred to as Fizikem or Respondent-1 in Appeal E/297/2008 E/483/2008) were manufacturers of P or P medicaments and were availing SSI exemption. Acting on intelligence, department officers conducted search and investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling Healthcare, a proprietary concern owned by Shri Ch. Ashok Kumar (respondent-4); that respondent-4 under oral agreement was meeting all expenses relating to advertisement publicity marketing and selling and was receiving the products at approx. 1/3rd value of the MRP and selling the same at approx. 90% value of MRP. It appeared to the department that Fizikem had control over the dealing of distributing firms; that transaction between Fizikem and their distributing firms were not on principal to principal basis and was also not at arm s length; that the distributor is a related person for the purpose of Section 4 of the Act; that as per Section 4 (1) (a) (iii) valid upto 30.06.2000, the normal price of the goods shall be deemed to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02 41,51,910 4. 96/2004 10.10.2003 01.10.02 to 31.12.02 1,30,928 In addition to the above, in respect of notice mentioned at Sl.No.1, the notice proposed to impose penalties on (1) Sri C.C. Kesava Rao, M.D. of the unit (respondent-2), (2) Smt.C.V. Rajeswari, Proprietrix of M/s.Sterling Remedies, (3) Sri G.N.C. Prasad, Proprietor of M/s.Subhash International (respondent-3) and (4) Sri Ch. Ashok Kumar, Proprietor of M/s.Sterling Health Care (respondent-4) and in respect of the remaining three notices imposition of penalties were contemplated against Sr. C.C. Kesava Rao and Shri Ch. Ashok kumar. 2. All these notices were adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flow back should not co-exist to make price to disqualify as normal price under Section 4 (1) (a) of the Act. When the sub-distributor was meeting all expenses relating to advertisement, selling and marketing of the products, in turn selling the goods at higher price, it can be said that the profits / funds earned / arranged by the assessee Fizikem were utilized for meeting such expenses. It establishes mutuality of interest in the business of each other; (iii) Commissioner (Appeals) should have considered the transactions made by Fizikem with Sterling Health Care for the period 1.7.2000 onwards in the light of transaction defined under Section 4 (3) (d) of the Act. (iv) The correspondence files seized at the time of searches prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnected records. 6. We find that the Commissioner (Appeals) has analysed the contentious issues very thoroughly in his order. He has noted that during 6.12.1998 to 31.3.2000. Fizikem sold the entire production to sole selling distributors, Subhash International and Subhash International by adding profit, sold the goods to Sterling Remedies and in turn Sterling Remedies sold the goods at higher prices to customers; that from 1.4.2000 Fizikem sold the entire production to Sterling Health Care, their sole distributors at 1/3rd value of M.R.P and Sterling Health Care in turn sold the goods to customers at 90% of M.R.P. Lower appellate authority has however found that there are no substantial grounds or evidence for holding that there is mut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposed that he had selected such firm for distribution, which has a marketing network and financial resources to popularize Fizikem products. The distributing firm for its sustenance and continuation in the distribution sector had incurred advertisement charges and not for Fizikem. This view is supported by the ratio of Tribunal s judgment in the case of Mahindra Mahindra Vs. Union of India wherein, it is held that, the fact that an agreement of distributorship contains a clause for providing after sale service and sharing the advertisement expenses, does not effect the sales being at arm s length and on principal to principal basis. Consequently the selling price of the manufacturer is the basis for assessment . 10) Another po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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