TaxTMI 
TaxTMI 
2012 (1) TMI 123
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.... p 1033 : (1977) 4 SCC 85 : 1979 SCC (Cri) 902 : Mohan Kumar Singhania v. Union of Inida. AIR 1992 SC 1, p. 19 : 1992 Supp (a) SCC 594 : Commissioner of Income Tax v. Hindustan Bulk Carriers, (supra), p. 74 See further Balram Kumawat v. Union of India (2003) 7 SCC 628 pp. 636, 637 : AIR 2003 SC 3268 pp. 3273, 3274. 2. This is an appeal filed by M/s. Transasia Bio-Medicals Ltd., Shri Vijay Parikh, Shri Suresh Vazirani and Shri S.R. Malhotra against the order of Commissioner of Central Excise & Customs, Daman (Order No. 03/MP/DAMAN/2007, dated 28-2-2007). 3. The brief facts of the case are that M/s. Transasia Bio-Medicals Ltd. (TBM) were manufacturing and selling Cell Pack to the customers but it has alleged that they devised a new modus operande and a company called M/s. Sysmex Transasia Bio-Medicals Ltd. (M/s. STBM) was created to show that M/s. TBM manufactured goods on job work basis for M/s. STBM. These goods were shown to have been cleared to M/s. STBM @ Rs. 850/- per pack which was subsequently sold to the trading arm of M/s. TBM @ Rs. 850/- per pack. Subsequently, these goods were sold to independent customers @ 1,800/- to Rs. 2,400/- per pack. The Revenue all....
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.... nil rate of duty under Notification No. 6/2003-C.E. and the product namely diagnostics reagents on the payment of duty during the relevant period. M/s. TBM were having three units situated at the following premises : 47/6, Gelwad Falia, Dabhel, Nani Daman (Unit No. 1) B-11, OIDC, Ringanwada, Daman (Unit No. 2) and SDF-VI, Unit No. 161/162, SEEPZ, Andheri (East), Mumbai-96. M/s. TBM carry on the manufacture of diagnostics reagents at Unit No. 1 and of auto analyzers at Unit No. 2 and also at their unit at SEEPZ. M/s. TBM also carry on trading of diagnostics reagents and auto anailyzers from Unit No. 1. 5.3 There was common independent company known as M/s. Sysmex Transasia Bio-Medicals Ltd. found vide a joint agreement dated 31-3-1998 which entered into an agreement between M/s. Toya Medical Electronics Co. Ltd., Japan with the farmer holding 51% shares and the balance 49% of equity being held by M/s. TBM. 5.3.1 M/s. Sysmex Transasia Bio-Medicals Ltd. was desirous of taking such limited licence with respect to the business centre development by M/s. TBM and both parties entered into a business centre agreement, dated 23-7-1998 by which a limited licen....
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....rrangement, the physical movement of Cell Pack by M/s. TBM and M/s. Sysmex Transasia Bio-Medicals Ltd. it was never envisaged nor considered necessary that the same was obligatory. They were filing regularly the monthly returns and maintaining the various records as required and prescribed under the law. Such records filed by M/s. TBM were also verified, assessed or audited by the department from time to time. 6.1 The Revenue strongly contested the points raised by the assessee. Shri S.K. Mall, learned SDR appearing on behalf of Revenue stated that a company M/s. Sysmex Transasia Bio-Medicals Ltd. was created on paper to show that M/s. TBM manufactured goods on job work basis for M/s. STBM. The goods manufactured by M/s. TBM were shown on paper to have been cleared to M/s. STBM @ Rs. 850/- per pack which subsequently sold the same to the trading arm of M/s. TBM @ Rs. 850/- per pack. M/s. STBM, Daman have shown sale of Cell Packs to M/s. TBM but M/s. STBM was not registered with Sales Tax at Daman. The goods were subsequently sold by M/s. TBM to independent customers at the rate of Rs. l800/- to Rs. 2400/- per pack. There was huge difference between the rate at which duty wa....
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....he diagnostics reagents were meant for use only with auto analyzers which were exempt from payment of duty? 7.5 Whether the provisions of Rule 4 of the Act read with Rule 5 and Rule 7 of the Central Excise Valuation Rules of 2000 would be applicable or assuming the sale of the goods taking place at the factory gate only and the transportation charges in any nature would be includable in the assessable value? 8. We have considered the rival submissions carefully. According to the Revenue the assessee are related in terms of Section 4(3)(b)(j)(iv) of the Act and therefore the valuation has to be done in terms of Section 4(1)(b) of Section 4(1) which reads as under : "Section 4 : Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the t....
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....y the related person at the time of removal, to buyers (not being related person), who sells such goods in retail : Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in Rule 8. RULE 10 : When the assessee so arranges that the excisable goods are not sold by him except to or through an inter-connected undertaking, the value of goods shall be determined in the following manner, namely :- (a) If the undertakings are so connected that they are also related in terms of sub-clause (ii), (iii) or (iv) of Clause (b) of sub-section (3) of Section 4 of the Act or the buyer is a holding company or subsidiary company of the assessee, then the value shall be determined in the manner prescribed in Rule 9. Explanation - In this clause "holding company" and "subsidiary company" shall have the same meanings as in the Companies Act, 1956 (1 of 1956). (b) In any other case, the value shall be determined as if they are not related persons ....
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.... in favour of their subsidiary company known as M/s. Sysmex Singapore Pvt. Ltd. in pursuance of an agreement dated 18-9-1998. M/s. Sysmex Transasia Bio-Medicals Ltd. was found an incorrect as Pvt. Ltd. Company on 23-7-1998 with certificate of incorporation No. 115943 of 1998 issued by the Registrar of Companies, Maharashtra State. Thereafter they were regularly filing annual returns as required under Section 159 of Companies Act, 1956 with the Registrar of Companies. They were also filing income-tax returns and holding a permanent account No. AADCS 1551J. As per the terms of the joint venture agreement and also in terms of the provisions of Section 285 of the Companies Act, 1965, M/s. Sysmex have been holding the meetings of their Board of Directors at least once in a quarter and the minutes of such meetings were recorded in the prescribed minutes register. They also submitted that M/s. Sysmex Transasia Bio-Medicals Ltd. had applied to the Reserve Bank of India for remitting the payment towards royalty on sales to M/s. Sysmex Corporation and the same was granted by the Reserve Bank of India vide their letter dated 8-7-1998 and subsequent communication dated 12-4-2001. The following....
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....ure of Cell Pack on job work basis. On completion of the manufacture of Cell Pack the appellants were returning the same to M/s. Sysmex Transasia Bio-Medicals Ltd. under the cover of central excise invoice. The duty was required to be paid on the basis of cost of raw material + cost of manufacture + manufacturing profit in the light of the principle of law laid dovm by Hon'ble Supreme Court in Ujagar Prints' case and they were paying duty on the basis of the selling price i.e. Rs. 850/- per unit charged by M/s. Sysmex Transasia Bio-Medicals Ltd. and preparing the central excise invoice accordingly. The appellants were ultimately selling the goods from the godown at the prices ranging from Rs. 2100/- per unit to Rs. 3100/- per unit. They were filing regular monthly returns and maintaining records prescribed under the law. The facts being so and supported by several documents as a proof, it can be safely concluded that M/s. STBM cannot be a dummy unit as argued by the Revenue. 15. It is also a fact that during adjudication or later the genuineness of the the documents submitted by the appellants were not challenged. There is nothing on record to show that Cell Pack manufactur....
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....h Court was assailed before us by the learned Attorney General appearing on behalf of the Revenue. He fairly conceded that the only part of the definition of "related person " in clause (c) of sub-section (4) of Section 4 on which he could reply was the first part which defines "related person" to mean "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other". The second part of the definition which adds an inclusive clause was admittedly not applicable, because neither Atul Products Limited nor Crescent Dyes and Chemicals Limited was a holding company or a subsidiary company nor was either of them a relative of the assessee, so as to fall within the second part of the definition. But we do not think that even the limited contention urged by the learned Attorney General on behalf of the Revenue based on the first part of the definition can succeed. What the first part of the definition requires is that the person who is sought to be branded as a "related person " must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other. It is not enough ....
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....d whether Atul Products Limited sells such dyes at a profit or at a loss. It is impossible to contend that the assessee has any direct or indirect interest in the business of a wholesale dealer who purchases dyes from it on principal to principal basis. The same position obtains in regard to Crescent Dyes and Chemicals Limited. Perhaps the position in reard to Crescent Dyes and Chemicals Limited is much stronger than that in regard to Atul Products Limited. Crescent Dyes and Chemicals Limited is not even a shareholder of the assessee and it has, therefore, no interest direct or indirect in the business of the assessee. It is Imperial Chemical Industries Limited, London which holds 50 per cent of the share capital of the assessee and this foreign company also holds 40 per cent of the share capital of Crescent Chemicals and Dyes Limited. Imperial Chemicals Industries Limited, London would admittedly have an interest in the business of the assessee in its capacity as a shareholder, but how can Crescent Dyes and Chemicals Limited of which 40 per cent of the shares are held by Imperial Chemical Industries Limited, London which in its turn is a shareholder of the assessee, can be said to....
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....e is no notification to this effect that diagnostic reagents used with auto analysers are also exempted. The contention of the appellants is that diagnostic reagents were meant for the use only with instruments namely auto analysers sold by them which are exempted from payment of duty. Diagnostic reagents are cleared either by way of free replenishments against the coupons provided to the customers at the time of purchase of the instruments or supplied as free of cost to them which should be considered as a discount in kind and therefore no duty is payable as per provisions of Section 4. They submitted that no payments were collected or received by the appellants there against and invoices were issued only for accounting purpose. Regarding the demokits it is seen that they are not marketable and again supplied along with the instruments to the customers for purpose as demonstration and these kits are distinguishable from the normal kits of diagnostic reagents cleared by the appellants. The cost of such demokits as stated by the appellants is included in the sale price of the instruments which are exempted from payment of duty. In the absence of any evidence to prove otherwise the c....
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....lue of clearances worked out by Revenue includes packing and forwarding charges allegedly recovered in excess from customers, clearances of demokits without payment of duty and overvaluation of Cell Pack. They asserted that they had not collected any amount by way of excise duty from their customers in respect of clearances made by them during the relevant period. They argued that this will be clear from the excise invoice and the corresponding commercial invoice. 21. In view of the above discussions, we are of opinion that unless it is proved otherwise, the value of clearances as contended by the appellants has to be considered. Since there is no evidence to prove otherwise the contention of the Revenue remains unsubstantiated and the SSI exemption is rightly available to the appellants. 22. With regard to the allegation that the extended period is available because of suppression/misstatement of facts with an intend to evade payment of duty the appellant argued that the allegations are baseless and untenable in law. They submitted that the production and clearance of diagnostic reagents demokits were duly recorded by them in their records and had been subjected to....