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TMI Blog2005 (2) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... goods to M/s. Kores India Ltd., the brand name owners. They also sell their products to others at more or less the same price at which they sell their products to M/s. Kores India Ltd. (hereinafter referred to as KIL). Show cause notice was issued to the above three and as well as to their Managing Director, Director and other Officers alleging that the respondents no. 1 and 2 KIL are related persons and therefore, the assessable value of "KORES" brand Carbon Papers and Typewriter Ribbons should be determined on the basis of the price at which KIL sells them to its buyers under proviso (iii) to Section 4(1)(a) of the Central Excise Act, 1944. The charge of relationship was based upon the following : 1. That the employees of noticee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and noticee no. 3 of the other part are not on principal to principal basis. 13. The buyer (noticee no. 3) is associated with the manufacturer (noticee no. 1 and 2) and they have interest directly or indirectly in the business of each other. 2. The notice proposed recovery of duty of Rs. 6,91,35,733/- and Rs. 1,31,32,260/- for the period from March, 1995 to December, 1999 and also proposed imposition of penalty on the three companies and their officers. The respondents replied to the noticees denying the main charge of mutuality of interest and submitted that the same goods were sold to other parties as well at the same price at which they sold to KIL, and that KIL purchased carbon papers and typewriter ribbons from others at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over SASIL and SPPL but there is no allegation corresponding control by SASIL or SPPL over KIL. This would clearly show that there is no mutuality of interest itself between the SASIL and KIL or between SPPL and KIL, as regards the alleged control over maintenance of quality of goods, employment of staff and procurement of raw materials and office expenses. Raw materials are purchased by SASIL and SPPL from independent suppliers. Even if specialised raw materials are supplied by KIL, they are paid for by SASIL or SPPL as the case may be. Packing material is supplied free by KIL; however, it is returned along with the goods manufactured by SASIL and SPPL packaged therein to KIL. There is no material on record to establish any flow back of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. This position has been accepted by the Revenue in its appeals wherein it is stated that 90% and 60% respectively of the sales of SASIL and SPPL have been made to KIL. 5. We also note that the case of the Department is that the persons behind the actual manufacturers, namely, SASIL and SPPL and the buyer i.e. KIL are the same, i.e. Shri A.K. Thirani and his family members and the employees of KIL of which Shri A.K. Thirani is the Joint Managing Director. SASIL and KIL are separate companies - SASIL and KIL are Public Limited Companies, while SPPL is a Private Limited Company and they are separate entities in the eyes of law different from their shareholders and, therefore, it cannot be alleged or found that the buyer Company or the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the Company". 7. The decisions relied upon by the Revenue in the case of P B Pharmaceuticals (Pvt.) Ltd. v. Collector of Central Excise, reported in 1995 (76) E.L.T. 616 (T) and in the case of N.P. Textile Mills v. Collector of Central Excise, Bombay, reported in 1996 (88) E.L.T. 493 (T) have no application to the present case for the reasons that those decisions relate to partnership firms while in the present case, the manufacturers and the buyer are limited companies which are legally, distinct and different from their shareholders. 8. The Revenue also relies upon the fact that unsecured loans were given to SPPL by some of its shareholders. We note that there is no prohibition in the Companies Act against a company taking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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