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TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 455
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....espondent s sales transaction with various units of Ballarpur Industries Ltd. are sales to related persons which includes interconnected undertaking as defined in the Monopolies & Restrictive Trade Practice Act, 1969 and explanation I to IV thereto and the same is evident from the statements given by the Deputy Manager (Commercial) and authorized signatory of the assessee recorded under Section 14 of the Central Excise Act, 1944. It was also contended that the appellant and M/s.Ballarpur Industries Ltd. are under the same management. Therefore, it was proposed that the goods supplied by the appellant to M/s.Ballarpur Industries Ltd. shall be valued on 115% of the cost of production in terms of Rule 8 of the Central Excise Valuation Rules, 2....
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....r (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. As per Rule 9 of Central Excise Valuation Rules, 2000, the sales made through an interconnected undertaking as mentioned against sub-clause (i) of clause (b) of sub-clause (iii) of Section 4, it cannot be treated as sales made through the related persons. Therefore, even though the appellant is an interconnected undertaking but for the purpose of Central Excise Valuation Rules, 2000. The sale to or through an interconnected undertaking cannot be treated as sales made through related persons. Therefore, the entire foundation of allegation stands demolished. Considering the provisions, the learned Commissioner (Appeals) has given elab....
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....observed as under: "Related person" - Meaning of expression "a person who is so associated with the assessee that they have interest directly or indirectly to the business of each other" - One Company holding shares in another and also buying goods from such a Company whether related person - Shareholder is not a related person - Section 4(4)(c) of the Central Excises & Salt Act, 1944. - If the transactions between the manufacturer and his customer were on principal to principal basis and the wholesale price charged by the assessee to the customer was the sole consideration for the sale and no extra commercial considerations entered in the determination of such a price, the customer cannot be held to be a related person me....
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....id that the manufacturing Company has any interest direct or indirect, in the business carried on by one of its shareholders even though the shareholding of such shareholders may be 50%. In the absence of mutuality of interest in the business of each other, the customer Company holding shares in the manufacturing Company cannot be treated to be a 'related person'. In another decision of the Hon'ble Supreme Court appearing in 2002 (143) ELT 244 (SC) in the case of Alembic Glass Industries Ltd., Vs. CCE, it has been held that the fact being a common Director do not establish the mutuality of interest. The relevant portion of para 7 is reproduced below: "7. In our view, this is the heart of the matter. The shareholders of a....
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.... or indirectly in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, directly or indirectly, in the business of each other. This test, as laid down the Supreme Court, is not satisfied in the present case. The mere fact that the entire production is sold by the assessee to M/s. Marc Lab is not sufficient to show that both of them have interest in the business of each other. Similarly, the fact that Marc Group of Companies are controlled by Shri Prem Kishore who is a partner in the assessee firm and managing director in Marc Lab does not go to prove mutuality of interest of both of them in the busines....
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....by the Revenue that there are other partners in the assessee firm as well as there are other directors in M/s. Marc Lab. Thus, one common person will not make a partnership firm related person of a company. There is also no force in the findings in the impugned Order that M/s. Marc Lab sold the goods at a price higher than the price charged by the assessee from M/s. Marc Lab. This is expected in the normal course of business and nothing is unusual. Thus, we hold that M/s. Marc Lab is not the related person of the assessee and the duty has to be discharged by them on the price at which goods are sold by them to M/s. Marc Lab. We, thus, allow the appeal filed by M/s. Marc Pharmaceuticals. Keeping in view the above referred decision i....