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TMI Blog1979 (2) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... case to state we may state that since March 13, 1978 Imperial Chemical Industries (India) Private Limited has ceased to be the subsidiary wholly owned by Imperial Chemical Industries Limited, London, and its name has also been changed to Crescent Dyes and Chemicals Limited. 60 per cent of its share capital since March 13, 1978 has been put in the market and has been held by Indian citizens. The remaining 40 per cent of its share capital is held by Imperial Chemical Industries Limited, London. It is the case of the petitioner that transactions between the petitioner-company on the one hand and Atul Products Limited and Imperial Chemical Industries (India) Private Limited now known as Crescent Dyes and Chemicals Limited, the buyers, are on the principal-to-principal basis and that no consideration other than commercial considerations enter into the transactions. On September 15, 1975 the petitioner-company submitted a declaration showing the assessable value of the excisable goods. On October 1, 1975 Section 4 (as amended) of Central Excises and Salt Act, 1944 came into force. On September 19, 1975 the Superintendent of Central Excise demanded certain information from the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany and the Superintendent of Central Excise in regard to the selling prices charged by the buyers. On December 31, 1976 the Superintendent of Central Excise directed the petitioner to pay a sum of Rs. 81,98,087.88 ps. on account of difference in excise duty for the period October 1, 1975 to December 31, 1976. Therefore, on January 7, 1977 the petitioner filed the present petition. After this petition was filed, the Assistant Collector of Central Excise made a fresh demand for an additional sum of Rs. 35,79,650.07 ps. in respect of the goods cleared by the petitioner-company between October 1, 1975 and December 31, 1976 on the ground that five per cent discount which was given by the petitioner's buyers to their customers was not admissible. Therefore, the total amount which the petitioner-company was called upon to pay was Rs. 1,17,77,737.65 ps. On March 8, 1977 the petitioner-company preferred an appeal before the Appellate Collector in which the petitioner raised certain grounds against both the demands made by the Assistant Collector. On August 9, 1978 the Appellate Collector gave the petitioner-company personal hearing. On August 28, 1978 the Appellate Collector rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the price-list submitted by the petitioner-company was reviewed under Section 4 and Rule 173-C(3). Arguments were very vehemently advanced on both the sides on these two contentions. An attempt was also made to show us that the Central Excise authorities do not have inherent power to review the price-list. Since we have struck down the concept of "related person" occurring in Section 4 and since we are holding that the petitioner-company and its two buyers are not "related persons", the petitioner-company succeeds on this ground alone. Nothing, therefore, turns upon the question whether the Central Excise authorities had jurisdiction to review the price-list which they had finally approved earlier or had jurisdiction to do so retrospectively. We, therefore, do not propose to express any opinion on these two contentions. 5. So far as the fourth contention is concerned, the Central Excise authorities have taken the view that the petitioner-company and its two buyers Messrs Atul Products Limited and Messrs Imperial Chemical Industries (India) Private Limited are "related persons" because they are "inter-connected undertakings" under the Monopolies and Restrictive Trade Practices Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has any interest in the business of its two buyers because, if those two buyers do not purchase the products of the petitioner-company, the petitioner-company can as well sell them to other persons. There is no evidence on record to enable us to come to a contrary conclusion. Therefore, within the meaning of the first part of the definition of "related person" given in the Central Excises and Salt Act, 1944, the petitioner-company on the one hand and its two buyers - Messrs Atul Products Limited and Messrs Imperial Chemical Industries (India) Private Limited - on the other hand, are not "related persons". 7. Let us now go to the second part of the definition which states that a "related person" includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor." The explanation to the definition of "related persons" given in the Act states that the expression "holding company", "subsidiary company" and "relative" will have the same meanings as in the Companies Act, 1956. We, therefore, turn to Section 4 of the Companies Act, 1956. Sub-section (1) of Section 4 reads as follows :- "4. (1) For the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited holds 50 per cent of shares of the petitioner-company, and no more. Therefore, Messrs Atul Products Limited, one of the buyers of the petitioner-company cannot be the holding company and the petitioner-company cannot be the subsidiary company of M/s. Atul Products Limited. 10. So far as Imperial Chemical Industries (India) Private Limited is concerned, they hold no shares whatsoever of the petitioner-company. Imperial Chemical Industries Limited, London, is a different company incorporated under the English Companies Act. It holds the remaining 50 per cent shares of the petitioner-company. Therefore, the petitioner-company is not a subsidiary of Imperial Chemical Industries (India) Private Limited nor is Imperial Chemical Industries (India) Private Limited is the holding company in relation to the petitioner-company. 11. Ex-facie, therefore, it is clear that the petitioner-company is not a subsidiary either of Messrs Atul Products Limited or Messrs Imperial Chemical Industries (India) Private Limited. 12. Mr. Vakil has, however, argued that Imperial Chemical Industries (India) Private Limited is the wholly owned subsidiary of Imperial Chemical Industries Limited, Londo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terested in the business of its buyers. In other words, in order to show that there was mutuality of interest between the petitioner-company on the one hand and its two buyers, Messrs Atul Products Limited and Messrs Imperial Chemical Industries (India) Private Limited on the other hand, he tried to show that there was relationship of the owner and the owned between Messrs Atul Products Limited and Imperial Chemical Industries Limited, London, on the one hand and the petitioner-company on the other. We are unable to accede to this argument, firstly, because Imperial Chemical Industries Limited, London, cannot be substituted for Imperial Chemical Industries (India) Private Limited and, secondly, because the two buyers cannot be regarded as collaborators in business. Ordinarily they are supposed to be business competitors because both of them have been buying the products of the petitioner-company and marketing them. It may be stated that there is no allegation of collusion between Messrs Atul Products Limited and Imperial Chemical Industries (India) Private Limited in the context of the petitioner-company nor is there a tripartite agreement between the petitioner-company, Messrs Atu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no jurisdiction to do so. In that view also we must decide the question. 17. Mr. Vakil in support of his contention that we should not decide this contention has referred to the unreported decision of this Court in Special Civil Application No. 662 of 1968 decided on 14/21/22/23/24/27 October, 1969 by P.N. Bhagwati, C J. (as he then was) and N.K. Vakil, J. He has asked us to follow the course which was followed in that case and leave the question to be decided by the Appellate Collector. The unreported decision does not support his contention because in that question what was required to be decided was the rateable value. Ordinarily, fresh rateable value cannot be decided without evidence. Secondly, the question of as to violation of Article 31 was raised in that case. In this case the parties have placed before the Court all material facts. It is nobody's case that full material has not been placed on record. We have, therefore, proceeded to decide this contention and we are of the view that the petitioner-company on the one hand and Messrs Atul Products Limited and Messrs Imperial Chemical Industries (India) Private Limited, its two buyers on other hand, are not "related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 1977-Annexures, "J-1", "J-2", "J-3", "J-4" and "J-5" and the challans issued in that behalf, Annexures "K-1", "K-2", "K-3", "K-4" and "K-5". The rule is made absolute. The respondents shall pay to the petitioners the costs of this petition. 21. In pursuance of the interim order made by this Court in this petition the petitioners furnished the Bank Guarantee in order to secure to the Central Excise authorities the payment of the amount which was demanded of them. Since these demands have been found to be unlawful by us, the respondents are directed to pay to the petitioner the costs incurred by them in connection with the Bank Guarantee which they furnished in pursuance of the interim order of this Court. Within two months of the petitioner-company furnishing the statement of such costs to the respondents, the respondents shall after verification, pay the amount to the petitioner. The Bank Guarantee shall stand vacated with effect from June 30, 1979. 22. Mr. Bhatt who appears on behalf of the petitioner-company states that we must also issue directions to the respondents to refund to the petitioner-company the excess amount recovered by them in light of this judgment after this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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