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TMI Blog2018 (10) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants have been imposed by way of impugned orders. 2. As the issue involved in all the appeals is common, therefore, all the appeals are disposed of by a common order. 3. M/s Hindustan is engaged in the manufacture of Submersible pumps. From 01.04.2003, they started selling their goods except Government supply and export sales through a marketing firm, namely M/s Malkoh Marketing Pvt. Ltd. (in short M/s Malkoh). The case of the Revenue is that both the appellants are related to each other, therefore, valuation of the goods cleared to M/s Malkoh is to be determined in terms of Rule 9 of the Central Excise Valuation Rules, 2000. In these set of facts, charge of under valuation has been alleged against M/s Hindustan and consequently, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri. Vinay Kohli and Shri. Rajiv Malhotra, who are the most active partners of M/s Hindustan. It was, therefore, assumed that both the firms i.e. M/s Malkoh and M/s Hindustan are 'related' as per Schedule 1-A to the clause (c) of Section 6 of the Companies Act, 1956 and as per Section 4(3)(b) of the Central Excise Act, 1944 therefore, it was alleged that the partners/directors of these above two firms belongs to the same two families who are having mutuality of interest in the business of each other and it was also alleged that payment of Rs. 65 Lacs was made by M/s Malkoh to the manufacturing firm M/s Hindustan in the guise of franchisee charges, retention of security deposits of dealers by the manufacturing firm M/s Hindustan and Rs. 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o submitted that merely two partner of M/s Hindustan were directors in M/s Malkoh and were holding shareholding to the extent of 15% each, the same could not be a ground to hold that they were related person. Further, merely because the father of both Shri. Vijay Kohli and Shri. Vinay Kohli was a director in M/s Malkoh and was holding 35% shareholding can also not be a ground to treat them as a related person. Similarly, in the case, Shri. Rajiv Malhotra and Shri. Anil Malhotra who are the sons of Shri. P.R. Malhotra who is also holding 35% shareholder in M/s Malkoh. It is submits that the relationship is defined under Companies Act, 1956 which has been adopted in Central Excise Act and is applicable to natural person only and not to imper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated manner specified in either of sub clauses (ii), (iii) or (iv) of clause (b) of sub section (3) of section (4) of the Act, the value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal, to buyers or where such goods are not sold to such buyers, to buyers who sells such goods in retail. In the present case, it is admitted in the show cause notice M/s Hindustan was supplying goods to Government department and also for exports. To support this contention, he relied on the decision of this Tribunal in the case of Phillips Electronic India Ltd. reported in 2015 (328) ELT 600 (Tri. Del.). He further submits that the retention of security deposit by M/s Hindustan also could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dquo;assesee‟ means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) Persons shall 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 that they have interest, directly or indirectly, in the business of each other. Explanation-in this clause- (i) "inter connected undertakings" shall have the meaning assigned toit in clause (g) of Section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) "relative" shall have the meaning assigned to it in clause (41) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 7. Father‟s Father, 8. Father‟s Mother, 9. Mother‟s Father, 10.Mother‟s Mother, 11. Son‟s Son, 12. Son‟s son‟s wife, 13. Son‟s Daughter, 14.Son‟s daughter‟s husband, 15.Daughter‟s son, 16.Daughter‟s son‟s wife, 17. Daughter‟s daughter, 18. Daughter‟s daughter‟s husband, 19.Brother (including step brother), 20.Brother‟s wife, 21.Sister (including step sister), 22.Sister‟s husband." 11. On going through the above provisions, we find that in terms of section 4(3)(b)(ii), if the person is relative then he should be relative in terms of Section 2(41) of Companies Act, 1956, which defines that relative mea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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