2006 (6) TMI 26

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..../- per kg. But M/s. CPL sell the product at Rs. 12/- per Kg. Further scrutiny of records revealed that the appellants had taken unsecured loans of Rs. 20 lakhs, Rs. 35 lakhs and Rs. 35 lakhs on 31-3-1991, 31-3-92 and 31-3-93 from M/s. CPL no interest was paid by them to M/s. CPL on the unsecured loans. The Head Offices of both the appellants and M/s. CPL were located at 239, Mahalakshmi Layout, Bangalore. The Department proceeded against the appellants on the ground that the appellants and M/s. CPL are related persons. Five Show Cause Notices were issued. The Deputy Commissioner, Central Excise, Kanpur in his Order-in-Original, dated 22-5-2001 confirmed a demand of Rs. 12,86,996/- upon the appellant under Section 11A of the Central Excise A....

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....icating Authority had the corresponding duty to address the question in the light of facts of the case and only thereafter he can come to any conclusion regarding the related person issue. Instead he has arbitrarily held that the appellants and M/s. CPL are related persons. (iii)The commissioner (A) in the impugned order has mechanically without application of mind upheld the Order-in-Original  without even considering the facts of the case brought on record by the appellant and the statement of facts in his appeal dated 20-7-2001 filed before the Commissioner (A). (iv) On merits also it is possible to establish that the appellants and CPL are not related persons within the meaning of Section 4(4)(c) of the Act for the following ....

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....Rs. 26,29,847.50 in 93-94; and Rs. 4,49,280/- in 94-95. Thus out of a total compensation of 1.277 crores, the appellant was paid approximately Rs. 63/- lakhs which is 50% of the compensation. Considering that the appellant had made a capital investment of Rs. 123 lakhs, appellant should have got a compensation of Rs. 92.4 lakhs. The capital advance and compensation transaction between CPL and the appellant was specific to the TISCO project and had nothing to do with the sale of carbon dioxide by the appellant to the CPL. The Adjudicating Authority has ignored this and has proceeded on a erroneous basis. (f) The fact that the buyer company entered into a contract with IFFCO a quasi government organization for purchase of CO2 at the rate o....