TMI Blog2007 (6) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissioner after elaborately discussing the facts has come to the conclusion that the noticee No.1 is a "related person" to Noticees 2 and 3 in the eyes of excise law and as a consequence, valuation has to be resorted to at 110% (or 115%) of the cost of production as per Rule 8 read with Rules 9 and 10 of Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Since the appellants were aware of the practice, they were held to be liable for penalty as well. The Commissioner has placed his reliance on declaration filed by the appellant/Noticee I under sub-rule (3A) of Rule 173C for the financial year 2000-01. His observations in this regard under para 34 of the impugned order are reproduced below :- "34. I also find that the Noticee in his declaration for the period 2001-02 under Rule 173-C of the erstwhile Rules, 1944 have given contradictory declaration to misled the department. For example, under column ii(d) of Annexure A declaration under sub-rule 3A of Rule 173-C under the head marketing agencies, the Noticee has declared that their marketing is directly to the industrial Consumer (Option-C) and not through related persons (Option-f). It is already e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be termed as "inter-connected undertaking", there was no interest flowing in the business of each other unearthed by the Department. In view of the above arguments, the learned counsel further contended that, all demands raised after 19-9-2002 should be treated as time-barred because the Department had in its possession the information of their sale pattern by that date, through the statement made by the Director of Noticee 1. It was further contended that, whatever duty paid by the buyers in this case - whether high or low - would have been absorbed as a credit in their respective units and hence it cannot be said that the Revenue had incurred any loss due to practice adopted by the appellants. 5. The appellants had a whinge about Notification No. 56/2002 dated 14-11-2002, as amended (which relates to exemption to excisable goods produced in Jammu Kashmir by units located in specified industrial areas). According to them, the said Notification has in any case extended the benefit of excise duty paid under account current for the Noticee 1 for the period covered under the second show cause notice. It was, therefore, argued that demands have been made superfluously. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor. Explanation - In this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the Companies Act, 1956 (1 of 1956);" NEW DEFINITION: (After amendment dated 1-7-2000 ) "(3) For the purpose of this section, - (a) .. (b) person 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 assessee, 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. Explanation. - In this clause - (i)"inter-connected undertakings" shall have the meaning assigned to it in clause (g) of Section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1%9); and (ii) "relative" shall have the meaning assigned to it in clause (41) of Section 2 of the Companies Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies is also a partner in the partnership firm. The remaining two partners in the partnership firm are the wives of the two Directors in both the companies. We find that the judgments relied upon by the appellants cannot help them in view of the changed position in law relating to "related person". It may not be music to their ears if the current position cannot subscribe to any such interpretation as once the noticees are found related by the department, there is no need for the Department to indulge in fishing enquiries so as to unearth the type or degree of interest in the transactions, as contended before us. The same thing applies to situations where the par ties are inter-connected undertakings. 10. The Commissioner in the impugned order has made a reference to the declaration filed by the Noticee 1. A perusal of the declaration made on marketing pattern certain anomalies and inconsistencies do exist as pointed out in the impugned order. Appellant/Noticee 1 has declared the marketing pattern as "at factory gate" and also as at "captive consumption". It was, however, explained that while what was declared as "at factory gate" would refer to ingots sold by them and wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years for the entire period covered thereunder. As regards the second show cause notice dated 15-9-2005 which covered the period from 1- 10-2004 to 31-8-2005, there is no such dispute. At this juncture, we cannot pussy foot around the argument that had the exemption under of Notification No. 56/2002 been extended to the appellant Noticee 1, nothing would remain pay able to the Revenue. This argument which appears to us very much as an "argument of convenience" was never made before the lower authorities and not even whispered in their reply. Admittedly, it entails a detailed examination of facts as elaborated in the procedure laid down vide paragraph 2 and 2A of the said Notification. As mentioned before us, the benefits under this Notification are being claimed by the appellants before the concerned authorities and hence it does not call for a fresh expedition by us at this juncture. The theory of 'revenue neutrality', advanced by the appellants appears to us to be a highly hypothetical concept, cut off from the ground-level realities. The appellants have not been able to demonstrate with facts and figures before the lower authorities (nor before us) as to how the theory can be m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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