TaxTMI 
TaxTMI 
2006 (3) TMI 511
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....ra lnnopharm Pvt. Ltd. [for short, SMIL - appellants in Appeal No. E/629/2003] under Section 11A(2) of the Central Excise Act and imposed on them penalty of equal amount under Section 11AC of the Act. She also imposed penalties of Rs. 50.00 lakhs, Rs. 5.00 crores and Rs. 2.00 crores on (i) Shri V.S. Raaman [appellant in E/628/2003], Chairman & Managing Director, Sai Mirra Group of Companies (ii) Dr. Reddy's Laboratories Ltd., [for short, M/s. DRL - appellants in E/627/2003] and (iii) M/s. American Remedies Ltd. [for short, M/s. ARL - appellants in E/627/2003], respectively, all these penalties under Rule 209A of the Central Excise Rules, 1944 / Rule 26 of the Central Excise (No. 2) Rules, 2001. Some of the present applications are by the sa....
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....turer of medicines in the country, acquired control over M/s. ARL by the end of 1999 by purchasing the shares of the four directors and their family members @ Rs. 175/- per share as also by purchasing shares from the market. Eventually, the two companies were amalgamated by the duty process of law. Another company by name M/s. Soft Caps (P) Ltd. [for short, SCPL] had two units at Keelkattalai, Chennai - 117, manufacturing P or P medicines and marketing the goods through M/s. ARL. The subscribed capital of SCPL was held by ten shareholders who were close relatives of the erstwhile four directors of ARL. M/s. ARL acquired the entire shareholding of SCPL for a total consideration of Rs. 27.45 crores, whereby the latter became a 100% subsidy of....
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....en, materials and machinery transferred by ARL], M/s. SMIL paid duty on each product on the basis of assessable value lower than the pre - 15-4-2000 assessable value of the same goods. M/s. SMPL's factories at Keelkattalai also did likewise. This was noticed by the department and investigations ensued, which culminated in the show-cause notices, which eventually came to be adjudicated upon by the two Commissioners. 5. After examining the records and hearing both sides, we find that the learned Commissioners found 'mutuality of interest' between SMIL/SMPL and DRL and accordingly refused to adopt the price contracted between them as basis for determining the assessable value of the goods manufactured by SMIL/SMPL and sold to DRL from ....
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....ned counsel for the appellants also pleaded financial hardships of his clients in support of the applications for waiver and pre-deposit. 7. After giving careful consideration to the submissions, we find that the 'non-compete fee' of Rs. 2.00 crores paid by ARL/DRL to Shri V.S. Raaman has been taken into account by learned Commissioners as a factor indicating financial flowback from buyer to seller of the subject goods. But, it appears from the records that such fee had been paid to all directors of the company in terms of a "non-compete agreement". This agreement contains nothing to indicate that the non-compete fee had anything to do with the prices of the goods sold by SMIL/SMPL to ARL/DRL. Shri V. S. Raaman and his family member....
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....ected "transfer price" as submitted by learned senior counsel for the department. However, a similar plea raised by him with reference to non-compete fee is not appealing to us inasmuch as, in a similar case, this Tribunal held that the price of the goods was not affected by payment of lion-compete fee and hence such fee was not to be added to the assessable value of the goods vide Agri More Ltd. v. CCE - 2004 (64) RLT 762 (CESTAT-Del.). The Tribunal's decision in Kwality Ice Cream Co. v. CCE - 2002 (145) E.L.T. 584 (Tri. Del.) is also in support of the appellants on the point. As in the present case, the assessee in that case also had entered into a "supply agreement" with their buyer for supply of the entire quantity manufactured by them.....