1986 (9) TMI 285 - AT - Central Excise

Tribunal overturns duty demands in mis-declaration case due to lack of evidence on relationship

The Tribunal set aside the duty demands imposed on the appellants for alleged mis-declaration in transactions with M/s. D.M.C. The Tribunal found that ... Valuation Issues:1. Assessment of duty based on relationship between parties.2. Application of comparable price for duty calculation.3. Compliance with natural justice principles in confirming demands.4. Interpretation of 'related person' under the Central Excises and Salt Act.Analysis:1. The case involved the appellants, who had a phosphoric acid plant and a factory producing sulphuric acid and oleum for captive consumption. They submitted price lists based on cost of production plus 20% for duty calculation. A show cause notice was issued alleging mis-declaration due to transactions with M/s. Dharmsi Morarji Chemicals Company Ltd. as related persons.2. The Assistant Collector confirmed demands based on comparable prices of M/s. D.M.C., stating they were related persons due to shared interests. The Collector (Appeals) upheld this decision, citing shared ownership and technical collaboration. The appellants argued for wholesale trade prices at the place of removal for duty calculation.3. The Tribunal noted the Assistant Collector's failure to address the 'related person' ground in the show cause notices, denying natural justice. Referring to the Supreme Court judgment in Union of India v. Atic Industries, the Tribunal found M/s. D.M.C. did not qualify as related persons under the Act, as mutual interest in each other's business was lacking.4. The Tribunal concluded that the appellants and M/s. D.M.C. did not have direct or indirect interest in each other's business, despite shared ownership and collaboration. The absence of evidence showing mutual business interest led to setting aside the impugned order and allowing the appeal.