TMI Blog2005 (4) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Utkal Steels Ltd. M/s. Utkal Steels Ltd. availed of the benefit of the Cenvat credit and used them in the manufacture of final products, namely, M.S. Rods and Bars falling under Chapter 72 and sold the goods from their factory to their customers on payment of duty. It has been disputed by issue of show cause notice dated 14-3-2002 that M/s. Utkal Steels Ltd. was related to the appellants and since M/s. Utkal Steels Ltd. used the ingots in the manufacture of final products, Rods and Bars, the duty was required to be paid under the provisions of Rules 8 9 of the Central Excise Valuation Rules, 2000. It has been alleged that in terms of Rule 9 of the Valuation Rules, where the related person does not sell the goods but uses or consumes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are 134 shareholders in M/s. Utkal Steels Ltd. Out of 134 shareholders in M/s. Utkal Steels Ltd., most of the shareholders are Private Limited concerns who have got no concern or relation with M/s. Utkal Steels Ltd., the appellants. Only 14 numbers of shareholders of M/s. Utkal Steels Ltd. are from the relatives. In respect of the appellants, most of the shareholders are from outside. Out of 32 shareholders only 4 shareholders are from the relatives. Therefore, he submits that it is futile to allege that M/s. Utkal Steels is related to the appellants. He relies on the following decisions : (1) 1984 (17) E.L.T. 323 (UOI Otrs. v. Atic Industries Ltd.) (2) 2002 (143 ) E.L.T. 244 (S.C.) (M/s. Alembic Glass Industries Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises. Similarly, rents and bills of telephones were also paid separately by the appellants and M/s. Utkal Steels Ltd. Hence, these allegations are not correct. He, therefore, submits that it is not proper and valid that M/s. Utkal Steels Ltd. is related to the appellant Company. The allegations in the show cause notice and the order of the Commissioners are not sustainable. 2.Shri Madhiam submits that in the present case, Shri Pawan Kumar Agarwal, Director of the assessee's unit is also working as Director of M/s. Utkal Steel Ltd. Shri Agarwal exercises his control over both the units and manages the business and administrative affairs of both the units. He also operates the Bank Accounts of both the units and files Income Tax returns u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Act, 1944. The Hon'ble Supreme Court in the case of Union of India Others v. Atic Industries Ltd. reported in 1984 (17) E.L.T. 323 (S.C.) has interpreted the words "related person" as under : "Valuation - "Related Person"- Meaning of expression "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other" - One Company holding shares in another and also buying goods from such a company whether related person - Share-holder is not a related person - Section 4(4)(c) of the Central Excises Salt Act, 1944." 4.The Hon'ble Apex Court has held that the shareholder is not related person. In the present case, some shares are owned by one of the Director, but mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio of Tribunal's Orders [1999 (111) E.L.T. 118 (Tribunal)] and [1999 (112) E.L.T. 393 (Tribunal)], the two companies held to be not related persons for the purpose of valuation - Section 4 of Central Excise Act, 1944 - Revenue Appeal dismissed." Where the assessee-company and the buyer-company not having an interest of mutuality, the allegation of related person not sustainable as held in the case of Commissioner of Central Excise, Aurangabad v. Rajkumar Engg. Pvt. Ltd. reported in 1999 (112) E.L.T. 393 (Tribunal). The present case is squarely covered by the above decision rendered by the Bombay Bench of the Tribunal. Similar view was expressed by the Tribunal in the case of Kwality Ice Cream Co. reported in 2002 (145) E.L.T. 584 (Tri.-D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -company is held by M/s. Utkal Steels Ltd. and vice versa. Under such circumstances, there could be no mutuality of interest between the appellant company and M/s. Utkal Steels Ltd. All the decisions conclusively proved that merely because two of the Directors of the appellant company were common as that of M/s. Utkal Steels Ltd., it cannot be said that they had got mutuality of interests or that M/s. Utkal Steels Ltd. is related to the appellant-company. In order to prove the mutuality of interest, M/s. Utkal Steels Ltd. is to have shares in the appellant-company and the appellant-company should have shares in M/s. Utkal Steels Ltd. But in the present case, none of the Limited or Private Limited Companies have got shares of the other compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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