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2017 (5) TMI 1716 - AT - Central ExciseValuation - related party transaction - the appellant strongly contested that they are a private limited company registered under Companies Act, 1956 and M/s Neminath Tubes Industries is a partnership firm. As such, a private limited company cannot be a relative of a partnership firm - demand of differential duty applying Rule 9 readwith Rule 11 of Central Excise Valuation Rules, 2000 - HELD THAT:- The show cause notice as well as both the lower Authorities proceeded against the appellant to recover differential duty only on the ground that the appellants are “relative” of M/s Neminath in terms of Section 4 (3) (b) (ii). The said provision is applicable only if the parties are “relative” as per Section 2 (41) of the Companies Act, 1956. We note that a juristic person, like a private limited company, cannot be called as a ‘relative’ of a partnership firm. The scope of term “relative” will apparently apply to only natural persons - Reference can be made to the decision of Tribunal in CCE, Raipur vs. Akash Ispat Ltd. [2016 (2) TMI 683 - CESTAT NEW DELHI]. On this ground alone, the proceedings against the appellant are unsustainable. Even if some of the Directors of the appellant are partners of the buying firm, this by itself do not make them related persons. It is a well settled legal position that the relationship between two legal entities are to be established by the facts applicable to each case. The lower Authorities have misdirected themselves in examining the legal provision of Section 4 (3) (b) (ii), and without examining the facts of the present case applied a completely inapplicable provisions of law to decide the valuation issue - Appeal allowed - decided in favor of appellant.
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