TaxTMI 
TaxTMI 
2002 (12) TMI 137
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....e the trade mark belonging to M/s. BPL Ltd., who were holding 11% of the share capital in M/s. BSUA and had been advertising for the said goods being manufacture by M/s. BSUA from April 1994, suggested that M/s. BSUA and M/s. BPL Ltd., had associated themselves in such a way so as to have an indirect interest between them in the business of each other; thereby rendering the transaction between them as not at arms length and the selling price between them as a price not in the normal course of wholesale trade. As it appeared that M/s. BSUA and M/s. BPL Ltd., were related persons in terms of Section 4 of Central Excise Act, 1944, having mutuality of interest in the business of each other, the price at which the goods were sold by M/s. BPL Ltd., to dealers appeared to be the normal price; hence M/s. BSUA were issued with an SCN dated 27-12-96 proposing finalisation of provisional assessment by revising the Assessable value by taking the price at which the goods were sold by M/s. BPL Ltd., to their dealers and demanding of Rs. 10,84,58,075/- as differential duty for the period April 94 to September 96. Four more SCNs were issued to the assessee covering the period upto June 98 which pr....
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....nd proper reasons for not accepting those documents has not been given by the Commissioner (Appeals). 5.The Commissioner (Appeals), vide Order-in-Appeal No. 237/2002 dated 1-5-2002 decided the issue de novo, arising along with other appeals filed by the assessee against O.I.Os No. 98/2000 dated 1-4-2000 and 119/2000 dated 21-9-2000 passed by the Assistant Commissioner of Central Excise, IV Division, Bangalore. The details of the product, period and duty involved in the three appeals are as follows : O.I.O. No. and Date Product Period Amount Rs. 151/98 dated 13-11-98 Washing Machines 4/94 to 6/98 9,10,98,179/- 98/2000 dated 14-8-2000 Washing Machines 7/98 to 2/99 1,80,62,763/- 119/2000 dated 21-9-2000 Vaccum Cleaners and Microwave Ovens 5/97 to 5/98 57,61,744/- TOTAL 11,49,22,686/- 6.Aggrieved by the above O.I.A. passed by the Commissioner (Appeals) present appeal is being filed by Revenue, on the following grounds : (a) The learned Commissioner of Central Excise (Appeals) while passing OIA No. 237/2002 dated 1-5-2002 has erred in holding that the price at which the goods were so....
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....as erred by not examining the observation made by the original authority that, the appellant and M/s. BPL Ltd., had associated themselves in such a way, so as to have an indirect interest between them in the business of each other in so far as the manufacturing and marketing of the said goods were concerned; that the activities of manufacturing and marketing were divided between them by way of an arrangement in which the costs of manufacturing and cost of marketing were also divided and thus the cost of marketing were not included in the Assessable value determined by the appellants, thereby rendering the transaction between them as not at arms length and the selling price between them as a price not in the normal course of wholesale trade; that on the other hand the said goods entered in to the main stream of market in the normal course of wholesale trade when the said goods were sold by M/s. BPL Ltd., to their dealers, thereby making the price at which M/s. BPL Ltd., were selling goods as a normal price in the course of wholesale trade as contemplated in the Act. (d) The learned Commissioner (Appeals), while setting aside the OIOs has ....
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....d distributor are both limited companies having common directors it can be pressured that they have interest directly or indirectly in the business of each other and the Corporate veil should be lifted depending on facts and circumstances." The learned Commissioner (Appeals) has erred by deciding the case not considering the above judgment also. (g) The main contention of the Appellants in the appeal was that the original adjudicating authority had violated the principle of natural justice by relying on the fresh documents not referred in the Show Cause Notice and by not giving a fair and reasonable opportunity to make their submissions on the documents. Under such circumstance, in all fairness, the learned Commissioner (Appeals) should have examined the veracity of such documents or remanded the case for fresh consideration. The learned Commissioner (Appeals) has erred manifestly by going ahead and setting aside the OIO without proper appreciation of various facts of the case evidenced by records. 7.After hearing both sides and considering the material it is found - (a) The Commissioner (A....
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....T.E.C (A) Ltd., [2002 (145) E.L.T. 280 (S.C.) = 2002 (52) RLT 501 (SC)] were different and the case law as laid by the Apex Court in the case of Alembic Glass Industries Ltd., [2002 (143) E.L.T. 244 (S.C.)], by a full Bench of the Supreme Court, would be applicable in the case of Public Limited Companies, as in this case, to determine and uphold the mutuality of interest and relationship. In view of the findings arrived at by the Commissioner (Appeals) of relationship not existing or and proved & applying the law as in the Alembic Glass Industries (supra) which is applicable, we find no cause to upset the findings arrived at by the Commissioner (Appeals) could be formed. (d) Even on merits the case of Revenue is found to be not sustainable for the following reasons. (i) The Assistant Commissioner had relied upon three documents to observe that the internal documents of the Respondents showed that the retail price is being determined by the Respondents. The three documents are letters dated 9-4-94, 2-12-94 and 5-12-94. The Assistant Commissioner had come to the conclusion that the price c....
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....e a 'stock-transfer price' between one Division and the other. The legal consequences flowing from the actual sale of the goods between BSUA and BPL cannot be obliterated by loose reference by one official of a company and that cannot be taken as a legal proof that the sale did not take place. A perusal of these documents show this to be regular and commercial attempt by BPL in obtaining a favourable sale price. It is typical for a buyer to ask for the reduction in the prices and the seller to refuse. That in essence is free market all about. From the endorsement on the documents, it is clear BSUA officials have gone on record to allege that BPL is pressurizing to reduce the sale price and such proposals can not be accepted. These documents only show a distance between BPL and BSUA and not closeness. The transactions are therefore, in fact, at arms length and not the opposite as suggested by the learned Assistant Commissioner in the order-in-original and as being canvassed before use. (ii) The Order-in-Original next refers to letter dated 11-3-94 written by Shri T.P.G. Nambiar to the Chairman & Chief Executive Officer, Sanyo Electric Co.....
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....rs in respect of sales made by the Respondents directly to the dealers prior to 1-4-94. The order of the Assistant Commissioner holding that monitoring of payment from the dealers is being resorted would not apply to clearances made after 1-4-94. Therefore, interest in the business of M/s. BPL Ltd., cannot be upheld on this account. (iv) The order has also relied on a letter dated 18-11-93 regarding integration of the Respondents with Central Marketing Organization (BPL). This letter only shows that the marketing, sales and service of the products of the Respondent company will be integrated with CMO which could mean that the goods are going to be sold to M/s. BPL Ltd., who will be selling the same further in the market. In other words, the entire goods would be sold in wholesale to M/s. BPL Ltd., for further sale by M/s. BPL Ltd. This cannot ipso facto be treated as showing mutuality of business interest in each other in order to treat them as related person under Section 4 (4) (c) for treating the price of M/s. BPL Ltd., as the basis for determination of assessable value. Hence, the aforesaid letter dated 18-11-93 has no bearing on the issue....