TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 839
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....under the provisions of the Companies Act, 1956. W.e.f. 01.04.2006,, SRBSL merged with JBSL and was designated as Unit-IV of JBSL. Thereafter, JBSL was renamed as Jai Balaji Industries Ltd. (JBIL). At no point of time, did the appellant company hold any shares in either JBSL or SRBSL. Further, Mr.Aditya Jajodia, Managing Director of the Appellant company, was also the Managing Director of SRBSL and JBSL during the relevant period. Furthermore, Mr. Rajiv Jajodia was a director in all the three companies. Mr.Aditya Jojodia and Mr.Rajiv Jajodia's shareholding in the appellant company, SRBSL and JBSL is limited to the extent, as detailed in the table below:- JAI BALAJI JYOTI STEEL LTD. NAME OF SHAREHOLDERS 2006-07 2007-08 2008-09 % % % ADITYA JAJODIA 4.08 4.08 3.74 RAJIV JAJODIA 0.01 0.01 0.01 SRBSL/JBIL NAME OF SHAREHOLDERS 2006-07 2007-08 2008-09 % % % ADITYA JAJODIA 8.14 6.01 6.01 RAJIV JAJODIA 3.31 3.33 3.33 2. Pursuant to EA-2000 audit undertaken by the Central Excise officers of the Bhubaneswar-II Commissionerate, the Commissioner of Central Excise & Customs, Bhubaneswar-II Commissionerate issued a show cause ....
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....other two sister units, namely, M/s.Jai Balaji Sponge Ltd., Ranigunj and Sri Ramrupai Balaji Steel Ltd., Durgapur, at a price as mentioned in the contract dated 14.06.2006 with the later unit. It is the claim of the learned Advocate that these two units are even though inter-connected undertaking of the appellant, but are not to be assessed under Rule 10(i) of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, as they do not have mutuality of interest and accordingly, the circumstances mentioned in Clauses (ii), (iii) and (iv) as laid down under the definition of "related persons" under Sub-section (3) (b) of Section 4 of Central Excise Act, 1944, are not satisfied. It is his submission that the learned Commissioner's finding that because the appellant and other two units have common Directors, common Head Office and also in the balance shown as "related persons", therefore, these units be considered as "related persons", is erroneous. It is his submission that these facts are not sufficient to establish mutuality of interest, in absence of free flow of interest in both the directions, hence, for the purpose of determination of assessable value, even ....
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....r manager is a member or director; (v) a public company in which a director or manager is a director or holds along with his relatives, more than two per cent of its paid-up share capital; (vi) anybody corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director of manager; (vii) any person on whose advice, directions or instructions a director or manager is accustomed to act: Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity; (viii) any company which is - (A) a holding, subsidiary or an associate company of such company; or (B) a subsidiary of a holding company to which it is also a subsidiary; (ix) such other person as may be prescribed;" It is under the Companies Act that the appellant company was statutorily required to declare "related party transactions" in its Annual Report under Schedule R. Whereas, the concept of "related party" under section 4(3)(b) of the Central Excise Act is narrower and reads as follows:- "Section 4(b) persons shall be deemed to be "related....
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....er never exceeded approximately 17%. Apart from two common directors on the Board of Directors of the said three companies, no company exercised managerial or financial control over the other companies. 9. It is settled law that there has to be extra commercial consideration or flow back of money and free flow of money from one company to another, cumulatively, for indicating interdependence of the units with each other. In the instant case, there has been no free flow of money from one company to another nor has there been any money given by the two companies to the appellant company. In view of the aforesaid, the allegation of mutuality of interest fails. 10. Further, there is nothing on record to show that the price charged by the appellant company from the said two buyer companies i.e. JBIL and SRBSL, had been influenced by either the common directors on the Board of the companies involved or due to the shareholding of the promoter group in the appellant and the said two buyer companies. The price agreed by the appellant company to the said two buyer companies at the time of entering into contracts were for bulk quantities to be supplied over the next twelve months. Suc....