TMI Blog2005 (7) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... ed marketing company who in turn sold them as A grade sheets to its dealers. Further, it is also alleged that the appellant was under stating the value of sheets laminated while selling them to the related buyers (Marketing companies) thereby evading duty. 3. M/s. RMIL is a Limited company. Its Chairman is one Mr. Ramabatar Jhunjhunwala. It has three directors, two of them his relatives and one an outsider. It has a network of branches at Mumbai, Calcutta, Delhi, Bangalore, Madras etc. Goods manufactured by the appellant are first transported to various branches; the latter then sell them to the branches of marketing company, M/s. HLPL. The appellant sells his goods directly to M/s. HLPL who in turn sells them to various dealers in Mumbai. Similarly, the marketing outfit at Pune, M/s. RLPL, who gets the goods directly from the manufacturer sells them in whole of Maharashtra and upcountry. All the three marketing companies have Directors who are related to the Chairman of the appellant company as brought out in Para 4(f) of the impugned order. 4. The appellant manufacture 4 types of decorated laminated sheets, A, B, C D. The gradation reports maintained by them indicate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and in the case of Ramopol, it is Rs. 90 to Rs. 150/- during the years 1992-1995. He also stated that the selling price of laminated sheets is decided by Shri Balram Jhunjhunwala one of the Directors of the manufacturing unit. The Chairman of the manufacturing company has complete managerial control - whom to hire whom to terminate etc. - over the marketing units. Several instances have been brought out to show how the Chairman of the manufacturing company can make his employee a Director of the marketing unit. The Department thus alleges that M/s. RMIL and MLPL, HLPL and RLPL are related persons. M/s. RMIL during the relevant time had exercised all pervasive managerial control, price control etc. over the marketing amounts. It is also brought out that the marketing companies spent huge amounts on advertisement to promote the products of RMIL. This indicates according to the Department that the manufacturing company and the marketing companies have interest in each others business. The Department then seeks to adopt the price at which the marketing companies have sold the products, obtained from RMIL, to their dealers as the assessable value. On this count a demand for Rs. 4,07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce except the statements of employees; that RMIL sells its goods to outstation buyers independently and so the allegation that RMIL sells all its goods through related persons is not correct; that the price at which goods are sold to other independent buyers should at best be the price to be taken as assessable value; that the Commissioner ought not to have imposed penalties on the employees and Directors and that in any case the goods found in excess at MLPL should not have been confiscated. 15. The appellants relied on the following case law (a) Pepsico India Holdings (P) Ltd - 2004 (163) E.L.T. 478 wherein the Tribunal referring to the decision of the Hon ble Supreme Court in the case of Collector v. Indian Oxygen Limited - 1988 (36) E.L.T. 730 (S.C.) held that when part goods are sold to unrelated buyers and part to related buyers, Special Provisions under Proviso 3 and Section 4(1 )(a) of Central Excise Act prior to amendment of the Section in 1-7-2000 is not applicable, goods not being sold exclusively through related buyers (b) Philips India Limited - 1997 (91) E.L.T. 540 (S.C.) wherein the Hon ble Supreme Court held that the excise authorities have to keep in mind the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units at Rs. 326/-. There are other instances as well. He relied on the decision of the Hon ble Supreme Court in the case of SACI Allied Products v. Commissioner - 2005 (183) E.L.T. 225 (S.C.) in support of his contention that the sale price to independent buyers should be adopted for the purpose of assessment and not the price at which goods are sold to related buyers. 19. We have considered the rival contentions. From the evidence gathered and the records of the case, we hold that RMIL (the manufacturer) and MLPL, RMPL, HLPL (the marketing companies) are related to each other. The transactions between them come under related party transaction. Having said that we observe that RMIL (Manufacturer) also sells his goods to other buyers also who are not related. It is not a case where the manufacturer has so arranged his sales that the entire goods produced by him are sold through a related person. In such a case the price at which such goods are sold to other independent buyers by the related person becomes the assessable value. The ld. SDR pointed out instances where the manufacturer sold his goods at a higher price to unrelated buyers. It is this price that has to be adopted (th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and have had no role to play in the disposal of mis-branded goods. 24. The Commissioner also imposed penalties on various employees. Their role is restricted to following the instruction of their employer/Superiors. We see no reason to sustain any penalties on them. We therefore, set aside the penalties imposed on other appellants except the ones mentioned above. 25. In fine we hold :- 1. RMIL and the marketing units are related persons. 2. Assessable value cannot be determined under Section 4(1)(a)(3) of the Central Excise Act as the same goods are sold to unrelated buyers as well. Commissioner's finding that the price at which the related parties sold the goods to other independent buyers has to be adopted for assessment is set aside. 3. The finding of the Commissioner that A grade sheets were mis-declared as C D thereby evading appropriate duty leviable on them is upheld. Duty involved be calculated at the price at which A grade sheets are sold to unrelated buyers. The duty leviable be re-determined. 4. Penalties on RMPL, MHPL and Balram Jhunjhunwala be decided after computing the correct duty as stated in (3) above. 5. Pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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