9911796707
TMI Blog1999 (6) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... s 21199353/- 21199353/- 895/98-A Dabur India Ltd. - 1 Crore 896/98-A Sh. G.C. Burman - 1000000/- 897/98-A Sh. Anand Burman - 1000000/- 898/98-A Sh. Amit Roy - 1000000/- 899/98-A Sh. Vishwanath Vij - 1000000/- 1246/98-A British Health Products 2142760/- 2142760/- 1248/98-A Dabur India Ltd. - 1000000/- 1250/98-A Sh. G.C. Burman - 100000/- 1249/98-A Sh. Anand Burman - 100000/- 1251/98-A Sh. Amit Roy - 100000/- 1247/98-A Sh. Vishwanath Vij - 100000/- 3. The appellants M/s. British Health Products India Ltd. are engaged in the manufacture of P or P medicines and food products. During the material period the entire production has been sold by the appellants to M/s. Dabur India Ltd. According to the department, appellants M/s. British Health Products India Ltd. (BHPL) and M/s. Dabur India Ltd. (DIL) are related persons under Section 4(4)(c) of the Act and accordingly Dabur's sale price to its customer should be the assessable value. The Commissioner who adjudicated the proceedings held that duty was payable by the appellants on the goods manufactured and cleared by them at the price at which M/s. Dabur sold the goods to their customers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. DIL irrespective of the fact that M/s. BHPL sold some medicines below the cost of product, obviously with a view to compensate M/s. DIL for the techno managerial and financial inputs provided by them to M/s. BHPL. In fact, the very survival of M/s. BHPL was solely dependent on M/s. DIL. The argument, therefore, that while M/s. DIL were interested in the business of M/s. BHPL while that latter had no interest in the business of the former fails to convince. It defies logic and credibility that a firm will not be interested in the business of the firm who buys all its products. Thus, both M/s. DIL and M/s. BHPL were interested in the business of each other. Elaborate arguments have been advanced to prove that M/s. BHPL is not a subsidiary of M/s. DIL and that the latter is not the former's holding company. Even if these are accepted, the mutuality of their interest in the business of each other is beyond doubt which brings them within the meaning of 'related persons' under the Central Excise Act." 4. The Commissioner has also denied the benefit of the small-scale exemption Notification Nos. 175/86 and 1/93 observing that since the label of the seven P or P medicines ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of Dabur. These are branded goods and hence same cannot be taken into account while computing the agreegate value of clearances for determining the entitlement to the benefit of Notification No. 175/86 in respect of food products manufactured and cleared by the assessee. In this context, he referred to the decision of the Tribunal in the case of M/s. Thio Pharma v. CCE [1992 (60) E.L.T. 395 (T)] wherein it was held by majority that the patent or proprietory medicines bearing the trade name/brand name 'Brosmin' of the manufacturer and further bearing the sole distributor's emblem/brand name/trade name 'synthiko' in a stylised manner enclosed in a rectangle and since the product by brand name 'Synthiko' of the buyer, be and it of Notification No. 175/86 was not available. He submitted that in any case, in the case of Dabcilin and Damoxy, since these names are registered under the trade and merchandise marks Act in favour of Dabur, these are to be excluded. He said that even if the value of the clearances of these two products are excluded in computing the agreegate value of clearances, the value of clearances would be within the permissible limit of Rs. 2 crores and Rs. 3 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icines are owned by the appellants and since they are branded goods value of clearances are to be taken into account while computing the agreegate value of clearances in determining the entitlement of benefit of exemption in terms of Notification No. 175/86. 9. Shri V. Sridharan, learned Advocate replied that it is not correct to say that management of the appellants was in the hands of Dabur and infact there is a clear finding by the adjudicating authority that appellants and Dabur are separate legal entities and Dabur is not a holding company of the appellants. He said that it is true that M/s. Dabur have become shareholder of the appellant company during the period in question owning 23.89% shares in the company as can be seen from the show cause notice but in no way the appellants were interested in the business affairs of Dabur. 10. We have carefully considered the matter. Whether M/s. Dabur can be considered as a related person in terms of Section 4(4)(c) of the Act in view of the observations and findings given by the Commissioner is an issue to be considered in the instant case. It is not the case of the department that M/s. Dabur was a holding company and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This means a two-way business interest or mutuality of interest. Interest in the business of each other, as contemplated in Section 4(4)(c) is something more definite and tangible interest in the assessee's business. The observation made by the Tribunal with reference to Section 4(4)(c) of the Central Excise Act, 1944 in the case of Kersons Mfg. Co. of India Ltd. [1998 (100) E.L.T. 194 (T)], is relevant in this context and Para 3 of the said decision is reproduced as under :- 'The Assistant Collector relied on four circumstances in proof of relationship under Section 4(4)(c) of the Central Excise Act, 1944. Respondent was a sick unit and according to the Assistant Collector, "taken over" by Cromption. What transpired was that Cromption contributed to equity shares to the extent of 47.85% in the respondent, thereby providing capital for the operations of the respondent. The services of an employee of Cromption were lent to the respondent to function as Company Secretary. Employees of Cromption were working as Managers under the respondent. The entire production of the respondent was being sold to Cromption. Collector (Appeals) found that it was not true that the employees of Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not at arms length. A mere commercial contract between two independent parties for purchase and, sale of goods manufactured by one party cannot ipso facto lead to the conclusion that the two of them are so associated as to have interest in the business of each other. In order to be regarded as a related person both the ingredients have to be satisfied, viz., two have to be associated with each other. This interest has essentially to be financial or managerial interest. In the facts and circumstances and in view of the ratio laid down by the aforesaid cases, the department was not justified in treating the price at which M/s. Dabur sells the items should be taken as basis in determining the assessable value at the hands of the assessee. The appellants succeed on this issue. 13. As regards small-scale exemption, we find that the seven P or P medicines are manufactured by the appellants and supplied to Dabur. Admittedly except the two names, Dabcilin and Damoxy, the name of five medicines are registered under Drug & Cosmetic Act for manufactured by BHPL, the appellant. Only Damoxy and Dabcilin are registered by Dabur under the Trade and Merchandise Marks Act. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
