TaxTMI 
TaxTMI 
2018 (10) TMI 532
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....n short M/s Malkoh). The case of the Revenue is that both the appellants are related to each other, therefore, valuation of the goods cleared to M/s Malkoh is to be determined in terms of Rule 9 of the Central Excise Valuation Rules, 2000. In these set of facts, charge of under valuation has been alleged against M/s Hindustan and consequently, duty was demanded from M/s Hindustan on the ground that M/s Hindustan and M/s Malkoh are related person and valuation is to be arrived in terms of Rule 9 of Central Excise Valuation Rules, 2000. Consequently, duty was demanded along with interest and penalty on both the appellants were imposed. Against the said orders, the appellants are before us. 4. The ld. Counsel appearing on behalf of the appellant submits that the appellant namely M/s Hindustan was partnership firm during the relevant time and M/s Malkoh was a Private Limited Company. The constitution of both the appellants is as under: M/s Hindustan having the partners as under: (i) Shri. Vijay Kohli S/o Shri. M.L. Kohli (ii) Shri. Vinay Kohli S/o Shri. M.L. Kohli (iii) Shri. Rajiv Malhotra S/o Shri. P.R. Malhotra (iv) Shri. Anil Malhotra S/....
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..... He further submits that the price at which M/s Hindustan was selling the goods to M/s Malkoh was purely on commercial considerations and also a principle to principle basis. There is no evidence that there was any financial flow back from M/s Malkoh to M/s Hindustan or vice versa. There is no evidence on record to show that the price at which M/s Hindustan has sold the goods to M/s Malkoh were not at arm's length or were influenced by the purported relationship between the two parties. Therefore, M/s Hindustan has discharged their duty correctly. it is also submitted that merely two partner of M/s Hindustan were directors in M/s Malkoh and were holding shareholding to the extent of 15% each, the same could not be a ground to hold that they were related person. Further, merely because the father of both Shri. Vijay Kohli and Shri. Vinay Kohli was a director in M/s Malkoh and was holding 35% shareholding can also not be a ground to treat them as a related person. Similarly, in the case, Shri. Rajiv Malhotra and Shri. Anil Malhotra who are the sons of Shri. P.R. Malhotra who is also holding 35% shareholder in M/s Malkoh. It is submits that the relationship is defined under Com....
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....ated person, as a person can be treated as related person of another in terms of prevalent legal provisions. Further, the payment of Rs. 65 Lacs as franchise charges by M/s Malkoh to M/s Hindustan was purely based on commercial considerations and were entered in the books of accounts of both the parties. In fact, the department has demanded service tax on the same as per the show cause notice dated 14.02.2007 and the demand of Service Tax was confirmed on the said amount, therefore, it cannot be said that they are related person. Further, advertisement expenses incurred by M/s Malkoh were only for selling the submersible pumps to the dealers were approximately 3% to 7% increase prices over purchase prices. He submits that in view of the above submissions, the impugned orders are not sustainable. 7. On the other hand, the ld. AR reiterated the findings of the impugned order. 8. Heard the parties and considered the submissions. 9. We find that in this case the facts of the case are not dispute that M/s Hindustan is a partnership firm and M/s Malkoh is a Private Limited Company, therefore, it has been alleged that they are related person to each other and valuation to b....
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....r in the manner as given in Schedule IA. Relationship as indicated in Schedule IA are: 1. Father 2. Mother, 3. Son (Including step son), 4. Son‟s wife, 5. Daughter (Including step daughter) 6. Daughter‟s Husband, 7. Father‟s Father, 8. Father‟s Mother, 9. Mother‟s Father, 10.Mother‟s Mother, 11. Son‟s Son, 12. Son‟s son‟s wife, 13. Son‟s Daughter, 14.Son‟s daughter‟s husband, 15.Daughter‟s son, 16.Daughter‟s son‟s wife, 17. Daughter‟s daughter, 18. Daughter‟s daughter‟s husband, 19.Brother (including step brother), 20.Brother‟s wife, 21.Sister (including step sister), 22.Sister‟s husband." 11. On going through the above provisions, we find that in terms of section 4(3)(b)(ii), if the person is relative then he should be relative in terms of Section 2(41) of Companies Act, 1956, which defines that relative means with reference to any person who is related to ....