TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2150
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter alia, supplied to M/s.J.Founation, M/s. J. Traders and M/s. Janata Glass works and to the fourth respondent M/s. Travin Trading & Investment Pvt. Ltd. M/s. Haldyn is the joint venture of two groups known as Shetty group and Mehta group who were having shareholding of 52 per cent and 48 per cent respectively in M/s.Haldyn. After going through the records, the Revenue found that the aforesaid four firms/companies to which the goods were supplied by M/s. Haldin are the firms of Mehta group and Shetty group respectively. The relationship which was found in this respect is described as under: - "...Smt. Shakuntala Shetty and Smt. Vinita Shetty, wife and daughter, respectively, of Shri N. D. Shetty were Directors of M/s. Tervin Trading and Investment Pvt. Ltd.; Shri N. D. Shetty was holding shares of M/s. Tarvin Trading alongwith his wife and daughter, when he was holding shares of M/s. Tarvin Trading alongwith his wife and daughter, when he was Director of M/s. Haldyn Glass Ltd. and 92% to 95% of total purchases of glass bottles of M/s. Tarvin Trading and Investment was from M/s. Haldyn Glass Ltd. and there was profit margin of 20% to 25% to M/s. Tarvin Trading and M/s. Tarvin wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re the Collector, who allowed the appeal and directed the Adjudicating Authority to look into the nature of relationship between M/s. Haldyn and 'J' Group of concerns. After its remand, fresh show cause notice dated 04.02.1993 was issued in which allegations were made that M/s. Haldyn and the aforesaid purchasers of the goods were related persons and they were sold the goods at depressed prices. Replies were solicited and thereafter, the matter was adjudicated upon and the Commissioner passed Order-in-Original dated 31.03.1995. The proceedings were again dropped by the Commissioner. Revenue approached the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as the CESTAT) and the CESTAT vide its order dated 13.06.2003 allowed the appeal of the Revenue thereby remanding the matter for fresh consideration by the Commissioner. After this remand, the Commissioner passed fresh orders dated 29.04.2004. This time, he confirmed the duty amounting to Rs. 96,54,914.17/- and also imposed penalty amounting to Rs. 25 lakhs on M/s.Haldyn and Rs. 4 lakhs each on the said buyers. The finding which is arrived at by the Commissioner after analysing the evidence on record....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... M/s. FDC Ltd. at Rs. 365/- per thousand, were sold to same M/s. FDC at Rs. 672/- per thousand when those were sold through M/s. J. Foundation. Similarly, 200 ml Brute Amber Bottels, which were earlier directly sold to M/s. Swift Chemicals Ltd. at Rs. 1200/- per thousand, were subsequently sold at Rs. 1550/- per thousand when those were sold through M/s. J. Foundation. It clearly indicates that sale, if it was not effected through M/s. J. Foundation, then duty would have been paid by M/s. Haldyn Glass Ltd. on price Rs. 672/- per thousand of 32 ml P.D. Bottles and price Rs. 1550/- per thousand of 200 ml Brute Amber Bottles instead of Rs. 325/- and Rs. 840/- per thousand bottles. Further,it is on record that all the shares of M/s. Haldyn Glass Ltd. were hold only by Shri N. D. Shetty Family and Shri J. A. Mehta Family, as such, Profit earned by M/s. Haldyn Glass Ltd. was distributed amongst members of those 2 families. Simultaneously entire capital of M/s. Tarvin Trading was held by Shri N. D. Shetty Family and capital of M/s. J Group of concerns was held by Shri J. A. Mehta Family, as such, profit earned by M/s. Tarvin Trading was distributed amongst members of Shri N. D. Shetty Fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicable. As there was no price list in Proforma-1 there was no sale to wholesale buyers and there was no question of trade discount. In turn reliance cannot be plcaed on judgments in the case of M/s. Metal Box India Ltd. v/s CCE 1995(77)ELT-449(SC) and Hognes India Ltd. vs. CCE 2004(163)ELT-507(Tri). Further, M/s. Tarvin Trading and J Group of concerns were not industrial consumers, as such they cannot be called as separate class of buyers. In turn, judgment in the case of CCE vs. Japan Mannequin Co. 1999(108)ELT-136(Tri) is not applicable and as there was sale to related person/favoured buyer judgment in the case of Jay Engineering Works Ltd. and another vs. UOI and others 1981(8) ELT-284(Del) and Viacom Electronics (P) Ltd. v/s. CCE 2002 (145) ELT-563 (Tri) are not applicable. In view of the foregoing discussions conclusion comes that M/s. Tarvin Trading and 'J' Group of concerns were related person and favoured buyers of M/s. Haldyn Glass Ltd.; Central Excise duty was not paid on sale price of those related persons; assessable value can be decided by adding 20% to 25% profit margin of those concerns of assessable value declared by M/s. Haldyn Glass Ltd. in respect of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0/- (Rupees twenty five lakhs only) on M/s. Haldyn Glass Ltd. under the provisions of Rule 173Q of Central Excise Rules, 1944 read with Section 38A of Central Excise Act, 1944; 3. I, order recovery of interest at appropriate rate on delayed payment from M/s. Haldyn Glass Ltd.; 4. I, impose Penalty of Rs. 4,00,000/- (Rupees Four Lakhs only) each, on (1) M/s. Tarvin Trading and Investment Pvt. Ltd., (2) M/s. Janta Glass Works, (3) M/s. 'J' Foundation and (4) M/s. 'J' Traders, under the provisions of Rule 209A of Central Excise Rules, 1944 read with Section 38A of Central Excise Act, 1944." This time, the respondents who felt aggrieved by the aforesaid order of the Commissioner filed their appeals before the CESTAT. The main plea which was taken by the respondents was that they were not related persons on the application of the definition of 'related person' appearing under Section 4 of the Central Excise Act, 1944. This contention of the respondents has been accepted by the CESTAT in its impugned orders dated 17.06.2005. Challenging the said orders, the Revenue has preferred the instant appeals. A perusal of the order of the CESTAT would show that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... including holding and subsidiary companies as defined under the Companies Act, 1956 is to lift the corporate veil in order to get to the economic realities of the transaction." In the present case, what emerges from the record is that as far as M/s. Haldyn is concerned, it is owned by the Shetty group and the Mehta group who subscribe 52 per cent and 48 per cent shares respectively in the said company. On the other hand, M/s. Travin, one of the purchasers, is wholly owned by the Shetty group and other three firms are wholly owned by Mehta group. Thus, from the aforesaid, it is argued by Mr. Jaideep Gupta, learned senior counsel appearing for the Revenue, that since M/s. Haldyn on the one hand and the four purchasers on the other hand belong to same group(s), the mutuality test automatically stands satisfied. In support of this submission, he has relied upon the judgment of this Court in 'Collector of Central Excise, Ahmedabad v. ITEC (P)Ltd., Bombay' [(2002) 7 SCC 473] and has particularly referred to para 9 thereof which makes the following reading: - "9. We may now turn to the findings recorded by the Customs, Excise and Gold (Control) Appellate Tribunal. It was foun....