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TMI Blog2001 (11) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of time HARD RUBBER BATTERIES. It was felt that due to commercial reasons, the appellants stopped producing the same. In 1984, it floated a subsidiary company called Nachiketa Investment Pvt. Ltd. Standard Batteries had entered into a lease agreement with MIDC for a 10 acre plot at Ahmednagar. On 17-9-1993 the appellants Standard Batteries surrendered their Ahmednagar plot to MIDC and requested MIDC to allot the same plot of land to their subsidiary company Nachiketa Investment Pvt. Ltd. (supra). MIDC allotted the said land to Nachiketa as per the request of the appellants Standard Batteries Ltd. It was thought at that time that Nachiketa would set up a factory at the plot of land referred to above for production of the above said type of batteries. 3. On 2-12-1993 the name of Nachiketa Investment Pvt. Ltd. was changed to Cosepa Fiscal Industries Ltd. appellants assessees before us (Appeal 3179). On 15-3-1994 appellants Standard Batteries sold two shares in the assessee company to Guzdar an employee of Standard Batteries and G. Natarajan, an employee of Williamson Magor Group of Companies. The factory at Ahmednagar owned by the assessee started producing HARD RUBBER BATTERIE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visited the assessee and requested for a copy of Memorandum of Understanding entered into between the appellants the assessee and Standard Batteries, which was submitted on 16-2-1996. The details of prices at which the assessee sold to the Standard Batteries were given to the Excise Department on 6-3-1996. On 26-12-l996 details of invoices since the commencement of manufacture were given. In January 1997, the department was given a copy of the first balance sheet. A Show Cause Notice, dated 10-12-l998 was issued by the Commissioner of Customs and Central Excise, Aurangabad charging the appellants. The assessee inter alia that they sold all excisable goods manufactured by them only to the Standard Batteries and that the assessee and the Standard Batteries were so associated with each other that they were related persons within the meaning of Section 4 of the Central Excise Act for the reason indicated in Annexure A to the Show Cause Notice and the Notice further indicated that the price charged by the assessee on their invoices to the Standard Batteries was not the normal price as per the provisions of the Central Excise Act, but the price at which the goods have been sold by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies have interest in each other's business so as to come within the mischief of Clause (iii) of Section 4(4) of the Act it was stressed. The argument of Shri Shroff is that as early as 1996 the memorandum of understanding which is entered into between Cosepa Fiscal Industries Ltd. and the Standard Batteries Ltd. were given the price list and RT12 Returns have been given and there cannot be by any stretch of imagination of warranting attraction of the suppression as mentioned in Section 11A of the Central Excise Act. He further stated that the plant and machinery which Cosepa fiscal Industries Ltd. purchased from Standard Batteries have been purchased at normal commercial consideration. There cannot be any favouritism shown in either inflating the price or deflating it. There cannot be extra commercial consideration for the sale of the goods to be produced in the form of transfer of the plant. He took us through the various provisions of the agreement to negative the claims made by the department. He therefore states that the conclusion arrived at by the adjudicating authority in the impugned order is without any basis. He further cited several case laws to show as to how there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Will that circumstances force us to come to the conclusion that for the purpose of levy of Excise duty it will come within the third proviso to sub-clause (a) of sub-section (1) of Section 4 of the Act ? The basis of the third proviso supra is that the sale must be to a related person. Here in this case has it happened ? 9. That takes us to the question as to whether who is a related person in this case ? The term "related persons" has been defined in Section 4(4)(c) of the Act, as a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes holding company, a subsidiary company, a relative and a distributor of the assessee and any sub-distributor of such distributor. Here it is not the case that the Standard Batteries Ltd. is a relative and a distributor nor a sub-distributor of Cosepa Fiscal Industries Ltd. "It is not the case that one company is the holding company of the other or that one company is a subsidiary company of the other. Therefore, the question that has to be seen is whether the two companies have interest directly or indirectly in the business of each other. In other words there m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust have a direct or indirect interest in the business of the other. The equality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect. That would not make any difference, so long as each has got some interest, or direct, or indirect, in the business of the other. Now, in the present case, Atul Products Limited has undoubtedly interest in the business of the assessee, since Atul Products Limited holds 50 per cent of the share capital of the assessee and has interest as share holder in the business carried on by the assessee. But it is not possible to say that the assessee has any interest in the business of Atul Products limited. There are two points of view from which the relationship between the assessee and Atul Products Limited may be considered. First, it may be noted that Atul Products Limited is a shareholder of the assessee to the extent of 50 per cent of the share capital. But we fail to see how it can be said that a limited company has any interest, direct or indirect, in the business carried on by o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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