9911796707
TMI Blog2000 (2) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... (AML for short). The notice says that ULM was a sham company only existing on paper and says that it is a separate juristic entity. Different stands are taken at different places in the notice. It alleges that the subsidiary was formed in order to evade duty; ULM after the AML was formed reduced the assessable value of the luggage sold to AML which thereafter sold it to dealers at substantially higher prices. There was a supporting allegation made in the notice that advertising expenses were hived off to AML from ULM; staff in both companies were same; trading pattern of ULM so as to increase the sale from AML. The notice was based on some sales of goods manufactured by ULM to AML and hence the price at which AML sold the goods to be the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been extended to M/s. AML, which is a subsidiary concern of M/s. UML; further the sales effected to CSD, Exports, DGS D are covered within the meaning of Section 4(1)(a) as discussed hereinbefore." He was of the view that in any event the sales to CSD and Director General Supplies and Disposal (DGS D for short) of the Government of India are sales within the meaning of Section 4(1)(a) of the Act and are to be taken into consideration in the term "pattern of sales". He made some observation as to the juristic independence of AML. He therefore vacated the show cause notice. This is being challenged in this appeal by the Collector. 4.The appeal continues the contradictions with regard to the nature of the AML which we have found existed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the two) from UML to AML. 6.We accept these submissions. As we have seen, the notice itself suffers from a significant contradictions. It is first alleged that AML is not in existence, and only shows to exist on paper. At the same time at various places, had specifically alleged that AML is a separate company. The following observations are illustrative: "On the whole, it therefore appears that the company carries out its normal wholesale trade through their subsidiary company." (page 10 of the notice). "The fact that M/s. AML incurs advertisement expenses for the product of M/s. UML shows the mutual interest between the two companies". (page 13 of the notice). "This shows that M/s. UML have deliberately reduced the assessable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Disposal of the Government of India and exports are not to be taken into account in computing the general pattern of sales. The argument is that the CSD and DGS D are different class of buyers, as are the persons to buy the goods exported. The price at which the goods are sold to them is not a normal price within the meaning of Section 4(1)(a). 10.Clause (i) to the proviso to Section 4(1)(a) provides that where, in accordance with the normal practice, goods are sold by the assessee at different classes of buyers is such price, shall be deemed to be the normal price of such goods in relation to each classes of buyers. In other words, it provides for a situation in which there can be more than one assessable value for a commodity, if s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that a manufacturer does not escape from paying the duty that would be payable by so arranging his affairs that he sells the goods at lower prices to or through a related person who would in turn sell them at the real value. In the face of the relationship between the two it would be difficult or impossible to establish financial flowback from the buyer of the goods to their manufacturer. The use of the term "generally" in the Explanation underlines this point that a manufacturer should not get away by creating a nominal market at the factory gate at which the goods are sold at their true value to escape the provisions of this proviso. 12.The judgment of the Bombay High Court in Cosmos India Rubber Works v. Union of India 1988 (38) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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