TaxTMI 
TaxTMI 
2015 (8) TMI 1237
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.... goods directly through their depots, they started selling the entire production to a company named, M/s. Adonis (India) Limited (hereinafter referred to as AIL). AIL is a company belonging to Onida Group and from the records, it appears that though it had been floated with share capital of Rs. 70/-, it had been financed by extending loans by the other group companies, namely, M/s. Onida Savak Limited (hereinafter referred to as OSL), M/s. Monica, Electronics Limited (hereinafter referred to as MEL) and M/s. Onida Saka Limited (OSL). The department's contention is that the appellant and M/s. AIL are related persons, and therefore, during the period of dispute, i.e., period from June, 1994 to August, 1996, the assessable value of the goods manufactured and cleared by the appellant would be the price at which the same goods were sold by M/s. AIL to their dealers. Besides this, there was another dispute regarding admissibility of trade discounts extended by M/s. AIL. Accordingly, a show cause notice dated 4/6/1999 was issued to the appellant for demand of duty of Rs. 35,63,925/- on the basis that the assessable value of the goods manufactured and cleared by the appellant would be ....
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....nd Rule 173Q (1), the appellant company filed an appeal before the Tribunal. The Tribunal vide final order no. 181-184/001A dated 4/05/2001 set aside the Commissioner's order and remanded the matter to the Commissioner for fresh adjudication for certain directions. The matter was adjudicated de-novo by the Commissioner vide order-in-original no. 05/06 dated 16/1/2006 by which the Commissioner besides confirming the duty demand of Rs. 35,63,928/- on the basis that the allegation that the appellant company and M/s. AIL are related persons, also confirmed the duty demand of Rs. 28,05,170/- which was not the subject matter of the appeal and which had earlier been set aside by the Commissioner's order dated 22/12/2000 and the matter of whose refund is still pending before the Assistant Commissioner. The Commissioner, however, in this order did not impose penalty under section 11AC but imposed penalty of only Rs. 5 lakh on the appellant company under section 173Q and besides this, imposed penalty under Rule 209A of Central Excise Rules, 1944 of Rs. 2 lakh, Rs. 1 lakh and Rs. 1 lakh on M/s. AIL, Shri Lokesh Khanna and Shri Ashok Chawla respectively. 1.5 Against this order of the ....
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....y, it cannot be concluded that there was mutuality of interests in the business of each other. Shri Santhanam, emphasized that there is absolutely no evidence produced by the department to establish mutuality of interest between the appellant company and M/s. AIL and since the two cannot be treated as related persons, the duty demand of Rs. 35,63,928/- confirmed against the appellant company and also penalty on the appellant company and other noticee is not sustainable. Shri Santhanam cited the following judgments of the Supreme Court and Tribunal in support of his plea that M/s. Onida Saka Limited and M/s. Adonis (India) Limited are not related persons: (1). CCE Vs. Xerographic Ltd. reported in 2010 (257) ELT 11 (SC) (2). CCE Vs. Kwality Ice-cream Company reported in 2010 (260) ELT 327 (SC.) (3). Union of India Vs. Kira District Co-operative Milk Procedures reported in 2012 (146) ELT 502 SC (4). Alembic Glass Industries Ltd. Vs. CCE reported in 2002 (143) ELT 244 (S.C.) (5). CCE Vs. Amar Sinhji Stationery Indus Ltd., reported in 2005 (184) ELT 186 (Tri.-Del) (6). Samtel Electron Devices Ltd. Vs. CCE, 2000 (118) ELT 262 (Tribunal-LB) (7). Basudev Garg Vs. CCE reported in 201....
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....ent of Shri Viajy Joshi, Vice-president of the Onida Group and other employees of the Appellant show that M/s. AIL had been created for marketing of the products of Onida group. Besides this, it is also seen that while M/s. Adonis (India) Limited had been flouted with share capital of only Rs. 70/-, its entire working capital had been provided by extending loan totalling about Rs. 50 crores by the appellant company - M/s. Onida Saka Limited and other group companies- M/s. Onida Savak Limited and M/s. Monica Electronics. (3) While earlier M/s. Onida Saka Limited were charging security amount from their dealers but no security was being taken from M/s. AIL. (4) Once, the marketing functions were taken over by M/s. AIL, it is M/s. AIL who were incurring the expenses on marketing and advertisement of the goods manufactured by the appellant company and it is M/s. AIL who took on rent, the premises earlier rented by the appellant company for using the same as sales depots. However, the premises taken on rent by M/s. AIL were also being used by the employees of Appellant company as Branch Office of M/s. Onida Saka Limited and no rent or telephone charges were being paid by the Appellant....
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....ssioner, the appellant had filed a refund claim for an amount of Rs. 28,35,170/- before the Assistant Commissioner as this amount had already been paid by them. While the Assistant Commissioner rejected the refund claim, on appeal being filed to Commissioner (appeals), the Commissioner (appeals) set aside the Assistant Commissioner's order and ordered the refund. On appeal being filed by the Revenue against the Commissioner (appeals)'s order dated 18/12/2003 Tribunal vide final order no. 974/2004B dated 16/12/2004 remanded the matter to the Original Adjudicating Authority for deciding the refund claim after examining the applicability of principle of unjust enrichment. The Tribunal in this order had observed that since the Commissioner (appeals) has not gone into the unjust enrichment, the refund can be allowed to the assessee only if the same is not hit by the principle of unjust enrichment. Both the sides agree that in pursuance of the Tribunal's order dated 16/12/2004, the matter of refund of Rs. 28,35,170/- is still pending before the Assistant Commissioner. The appellant company along with other noticee - M/s. M/s. Adonis (India) Limited, Shri Ashok Chawla, and Shr....
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....en from M/s. AIL while during period prior to 1/3/1994, the appellant were charging security amount from their dealers. (4) The appellant company along with two other group companies- M/s. Monica Electronics and M/s. Onida Savak Limited had extended loan of about Rs. 50 crores to M/s. AIL. (5) The depots of M/s. Adonis (India) Limited whose rent was being paid by M/s. AIL was also raised by the employees of the appellant company as their branch office butno rent, telephone, electricity charges were being paid. 10. In our view, just because the entire production of goods of the appellant company was being sold to M/s. AIL who were selling the same at a higher price or that M/s. AIL were incurring the expenses or marketing and advertisement of the goods produced by the appellant company, the two cannot be treated as related persons in the sense that there was mutuality of interest in the business of each other. Similarly, just because the appellant company along with two other group companies, had extended loan of about Rs. 50 crore to M/s. AIL, it cannot be said that the transactions between the appellant company and M/s. AIL was not on principal to principal basis, as it is not ....