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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 1999 (6) TMI AT This

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1999 (6) TMI 456 - AT - Central Excise

Issues Involved:
1. Determination of related persons under Section 4(4)(c) of the Central Excise Act, 1944.
2. Denial of small-scale exemption under Notification Nos. 175/86 and 1/93.
3. Invocation of the larger period under proviso to Section 11A of the Act.
4. Imposition of penalties under Section 11AC of the Act and Rule 209A of the Rules.

Detailed Analysis:

1. Determination of Related Persons:
The primary issue was whether M/s. Dabur India Ltd. (DIL) could be considered related to M/s. British Health Products India Ltd. (BHPL) under Section 4(4)(c) of the Central Excise Act, 1944. The Commissioner had concluded that DIL and BHPL were related persons due to mutual interests in each other's business, financial transactions, and managerial inputs provided by DIL to BHPL. However, the Tribunal found that the evidence did not substantiate the claim that DIL managed BHPL's day-to-day affairs. It emphasized that merely holding shares or providing loans does not establish mutual business interests as required under Section 4(4)(c). Citing the Supreme Court's decision in Atic Industries, the Tribunal held that mutuality of interest must be direct and tangible, which was not proven in this case. Thus, the Tribunal concluded that DIL and BHPL were not related persons, and the assessable value should not be based on the price at which DIL sold the goods.

2. Denial of Small-Scale Exemption:
The Commissioner denied the benefit of small-scale exemption under Notification Nos. 175/86 and 1/93, arguing that the value of clearances included branded goods, which should be accounted for in determining the aggregate value of clearances. The Tribunal found that only two products, Damoxy and Dabcilin, were registered under Dabur's trade name, and these should be excluded from the aggregate value of clearances. The Tribunal referred to the decision in Thio Pharma, which supported excluding branded goods of another entity when computing the aggregate value for small-scale exemption. Therefore, the Tribunal held that the value of clearances for Damoxy and Dabcilin should be excluded, allowing BHPL to benefit from the small-scale exemption.

3. Invocation of Larger Period under Section 11A:
The appellants contended that there was no suppression of facts to justify invoking the extended period under Section 11A of the Act. They argued that all necessary details, including price break-ups and marketing expenses, were disclosed to the department. The Tribunal noted that non-disclosure of information not required by law does not amount to suppression, as established in Unique Resin Industries. Consequently, the Tribunal found no justification for invoking the larger period for demand.

4. Imposition of Penalties:
The Commissioner imposed penalties equivalent to the duty amount on BHPL under Section 11AC and on other appellants under Rule 209A. The Tribunal observed that the roles of individuals were not discussed in the order to justify penalties under Rule 209A. Given the Tribunal's conclusions on the main issues, it found no grounds for imposing penalties under Section 11AC or Rule 209A. Thus, all penalties were set aside.

Conclusion:
The Tribunal concluded that:
1. The price at which DIL sells goods should not be the basis for determining the assessable value for BHPL.
2. The value of clearances for Damoxy and Dabcilin should be excluded when computing the aggregate value for small-scale exemption.
3. There was no justification for invoking the larger period under Section 11A.
4. Penalties imposed under Section 11AC and Rule 209A were unwarranted and were therefore set aside.

The twelve appeals were disposed of in these terms.

 

 

 

 

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