TaxTMI 
TaxTMI 
2020 (9) TMI 78
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....the appellants have availed the benefit of exemption provided under Notification No.6/2006-CE. 3. Learned Counsel stated that during investigation, statement of various persons including Shri. Chandramowli Srinivasan was recorded u/s. 14 of the Central Excise Act, 1944. The statement of Shri. Chandramowli Srinivasan is not relied upon by the department. The similar facts were recorded in the statement of Shri. Vijendra Patwari which was relied upon by the department. 4. Shri. Chandramowli Srinivasan in his statement has in Q.No.5 & 6 enumerated the method of fixing the price by the appellant. The same is reproduced below: Q.5 "How are the prices fixed of the above mentioned types of bearing? Ans. With respect to the price at which the goods are sold by M/s. SKF Technology India Pvt. Ltd. And M/s SKF India Ltd. I state that the prices at which the goods are sold by SKF Tech to SKf India depend up on the segment in which such goods are sold by SKF India to the end customer. The same is elaborated as under:- Wind customer:- The price at which goods are sold by SKF Tech depends up on the end customer price of SKF India. In wind segment generally SKF Tech, Ahmedabad unit sells....
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....Order also imposes penalty under Rule 26(1) on M/s. SKF India Ltd. and on Shri Chandramowli Srinivasan. 7. Learned Counsel submitted that the "related person" has been defined in section 4(3)(b) of the Central Excise Act, 1944. It is submitted that mutuality of interest must be substantiated in order to consider M/s. SKF India Ltd. as related person. The definition or "related person" is reproduced below: (b) "persons shall be deemed to be "related" if- (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assesee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other." Only clause (iv) can apply in present facts. 7.1. Learned Counsel submitted that since there is no mutuality of interest, M/s SKF India Ltd. cannot be considered as "related person". The appellants made this submission and referred to various judgments before the authority. There is no finding given by the Commissioner to substantiate the mutuality of interest between the appellants and M/s SKF India Ltd. 7.2. Learned Co....
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....able compared to the efforts involved. Therefore, it is submitted that the price has not been influenced by the relationship. Hence, the price cannot be rejected. 7.6 Learned Counsel submitted that the Tribunal in the case of M/s Themis Medicare reported in 2012-276-ELT-539 has held that the margin of 7% to 8% is quite reasonable. Therefore, it is submitted that the price at which the goods have been sold to M/s SKF India Ltd. should be accepted. The appellants also rely upon the following Judgment: M/s. Nagpal Petro-Chem Ltd. 1979-(4)-ELT-117 (Mad.) M/s. Power Tech Internationl 2001-(431)-ELT-401 (Tri.-Mum) M/s. Christo George 2006-(227)-ELT-410(Tri.-Bang.) Hind Lamps Ltd. 1981-(8)-ELT-11(Del.) M/s. Hind Lamps Ltd 1998-(98)ELT A208 (SC) 7.7 The royalty agreement between appellant & M/s. AB SKF (Sweden) was submitted in response to query from the bench.In para 11 of the agreement for the period 2008 to 2012 it is stated that the appellant cannot use the know-how given by & M/s. AB SKF to design, produce, assemble or market any product which is in competition with the product of & M/s. AB SKF. He submitted that this is a standard clause in most of the royalty agreem....
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....ch of the companies. These details have been audited by the departments under various acts namely Income Tax Act, Service Tax, Excise Etc. and no query has been raised by them. 7.13 Learned Counsel submitted that the appellant (M/s SKF Technologies India Pvt. Ltd) has factories at Ahmedabad & Mysore and depots (sales units) at various location. The Ahmedabad factory has its own departments like purchase, human resource, maintenance, product & process Engineering, production, quality assurance, supply chain & planning etc. The persons are employed by appellant on their payroll for carrying out the day to day functions in various departments. However, in order to bring the uniformity in functioning, the policy matters are advised by employees of M/s. SKF India Ltd. For example, the employees of human resource department employed by appellant carries out the functions of compliance of various statutory provisions like provident fund, employees state insurance corporation and other labour laws etc. However, the central human resource department of M/s. SKF India Ltd. advises on employees" Wages/salaries, training and other policy matters. He argued that there is no mutuality of intere....
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.... controller, main shaft, special bearings." The ball bearings are used in these items only. Therefore, following the ratio of these judgments, the benefit of the notification shall be allowed. 8.3 Learned Counsel submitted that the Show cause Notice has been served on 19/09/2014. The demand for the period 2009-2010 to 2013-2014 has been raised. It is submitted that the demand for the period beyond one year is time barred. Therefore, the demand for the period prior to August-2013 is time barred as there was no malafide intention in non-payment of duty, due to the following reasons: (i) The bearings are used in the rotor shops and are also used in various places of the wing mill i.e nacelle part of the wing mill i.e. rotor shaft, gearbox (step-up gear), generator, yaw gearbox (reduction) yaw slewing table, blade pitch revolving seat and hydraulic pump. Therefore, there was a bonafide belied that these are components of wing operated electricity generator. This belief has been vindicated by the judgment of the Supreme court in the case of M/s. M/s. Hyundai Unitech Electrical Transmission Ltd. reported in 2015-(323)- ELT-220 (SC) as well as circular No.1008/15/2015- CX dated 20/10....
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....logies and M/s. SKF India. These facts lead to the inevitable conclusion that both, M/s. SKF Technologies and M/s. SKF India are under the same management. 9.2 Learned AR submitted that the fact that M/s. AB SKF, Sweden is holding company of both M/s. SKF Technologies and M/s. SKF India has been admitted by SKTF in their written reply dated 04.12.2014 at Para No. 6, whereby they submitted that Cost sharing agreement for charging on the basis of turnover is very common wherein group companies are involved. Moreover, Shri Anil Raskar, Manager Excise and Service tax with SKF India, Pune, who is responsible for handling all matters related to Central Excise and Service Tax for whole of India pertaining to SKF India, including SKF Technologies has also categorically stated in his statement dated 23.04.2012 that all the actions and directions undertaken by the SKF India and SKF Technologies were within the purview of the cost sharing agreement. Further, they have common Umbrella ERP package for all the units of SKF in India, developed by AB SKF, Sweden, such as I.T. cost was shared and paid independently by both the units i.e. SKF India and SKF Technologies of AB SKF, Sweden. 9.3 Learn....
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....ods in market and they use the manpower, know-how and proficiency of M/s. SKF India for getting orders for manufacture product. Likewise, M/s. SKF India doesn"t have manufacturing facility and they are solely engaged in the marketing of products manufactured by M/s. SKF Technologies. Thus, the entire business of M/s. SKF Technologies and M/s. SKF India is inter-dependent in as much as M/s. SKF Technologies is entirely dependent on M/s. SKF India for marketing of the Bearings manufactured by them and M/s. SKF India is entirely dependent on the supply of bearing from M/s. SKF Technologies for its marketing activity. Learned AR submitted that M/s. SKF Technologies manufactures goods under the technical guidance of M/s. SKF India and also sells the entire quantity to M/s. SKF India. By way of this arrangement M/s. SKF Technologies gets the stable market and M/s. SKF India secures the technical know-how from their competitors. Learned AR Submitted that M/s. SKF Technologies in not at a liberty to decide the price of their goods as per cost valuation / cost manufacture basis. Rather, the price is decided by applying the backward calculation method of 8% to 15% of the order rate accepted ....
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....cified manners which include (i) if one owns or controls the other (ii) if one body corporate manages the other and (iii) if the bodies corporates are under the same management are satisfied. We are of the opinion that UPL and UTL are under the same management in view of clause (ii) of Explanation 1 to Section 2 ibid, that is to say, if the managing director or manager of one such body corporate is the managing director or manager of the other or clause (iii), that is to say, if one such body corporate holds not less than one third of the equity shares in the other or..........We find that Shri Sanjay Bahadur is the managing director of UPL and simultaneously is the director of UTL. Further, Shri Ramesh Chandra, is director in both UPL and UTL. They are no mere managers. Hence, the condition of clause (ii) referred to above is satisfied. We find that UTL holds 40% shares of UPL i.e., more than 33 1/3% which means that UPL and UTL are under the same management and hence both are inter-connected undertakings within the meaning of Section 2(g) of the MRTP Act, 1969. The roles played by Shri Sanjay Bahadur in his dual capacity is pivotal because he executed the policies of both the uni....
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....is not extended to each and every non-conventional energy devise or system. The scope of exemption has been restricted only to such devices or systems which have been specified in List 5. Further, it is evident that while some entries is List 5 above refer to individual items or devices, some other entries include systems as a whole or a combination of an equipment and the corresponding systems. In this background each of the entries in list 5 would have to be constructed strictly as per the text of the entry itself without expanding the scope merely because group heading in entry 84 of the table refer to systems. 9.15 Learned AR submitted that, adj. authority has examine history of exemption given to non conventional energy devices/ system. Earlier such exemption was governed under the provisions of notification No.5/1999 dated. 28.02.1999. Under SI. No. 265 " Non- conventional energy devices / systems specified in list 4" falling under " any chapter" of the said first schedule were exempted from the whole of the duty leviable thereon without any condition serial No. (13) of list 4 in respect of the said entry reads as follows: "Windmills, parts of windmills and any special desi....
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....We find that there are two issues which are needed to be decided. Firstly, if M/s SKF India Ltd. and M/s SKF Technologies India Pvt. Ltd. are related persons in terms of the Central Excise Act, 1944. Secondly, to see if the benefit of notification no. 06/2006 can be extended to the bearings manufactured by the SKFTIL and supplied for use in the wind operated electricity generators. 10.1 It has been asserted by Revenue that M/s SKFIL and M/s SKFTIL are related as both of them are controlled by their holding company, namely M/s AB SKF, Sweden. It has been asserted by Revenue that M/s SKFTIL in their balance-sheet have reiterated under the heading "related parties transactions" with SKFIL. It has also been asserted that there is a loan agreement dated 08/12/2008 between M/s SKFIL and M/s SKFTIL under which M/s SKFIL has extended significant amount of loan to M/s SKFTIL. It has also been asserted by Revenue that SKFTIL does not have any backup for selling goods in the market and the entire marketing is looked after by the SKFIL. Similarly, M/s SKFIL does not have manufacturing capabilities and they are dependent on M/s SKFTIL for manufacturing of goods. On the basis of assertions, Rev....
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....se Act and treatment given by the appellant in their balance sheet has no relevance in the facts of this case. 10.4 We find that no such evidence has been produced by Revenue and in these circumstances they cannot be treated as related parties. Since the two cannot be treated as related parties, the transaction value between SKFIL and SKFTIL has to be accepted for the purpose of assessment. The appeal on this count is allowed. 11. The next issue related to the admissibility of notifications of 06/2006 to the bearings manufactured by the M/s SKFTL and ultimately sold for use in the wind operated electricity generators as parts. Revenue has sought to deny the benefit of this notification by asserting that the earlier notification no. 05/99 dated 28/02/1999 exempted the following in serial no. 13 of list 4: "Windmills parts of windmills and any special designed devises which run on windmills" Revenue has asserted that the description was changed from "windmills, parts of windmills and any special designed devises which run on windmills" to "wind operator electricity generator, its components and parts thereof including rotor and wind turbine controller." 11.1 It has been argued ....