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TMI Blog2007 (6) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner held that there was mutuality of interest in the business of each other between BSUA and BPL Ltd. and the price of the goods sold to BPL Ltd. was reduced deliberately to shell off the burden of doing advertisement/sale/promotion etc. with the intention to evade duty. Consequently, he confirmed duty demand of Rs. 8,83,77,549.00 and further imposed the following penalties. (i) Rs. 8,83,77,549.00 on M/s. BSUA under Section 11AC. (ii) Personal penalty of Rs. 8,83,77,549.00 on M/s. BPL Ltd. (iii) Personal penalties of Rs. 9 lacks each on (a) Shri Vishwanath Nambiar, Managing Director, BSUA; (b) Shri K.S. Jayanth Kumar, Director-CMO, BPL Ltd.; (c) Shri M. Sasi, Finance Director, BSUA. The appellant strongly challenge the impugned order. 3. Shri G. Shiva Dass, the learned Advocate, appeared on behalf of the appellants and urged the following points: - (i) Even if the appellant and BPL are held to be related persons, the sale price cannot be rejected if the relationship has not affected the price. The total difference between the selling prices of the appellant and BPL Ltd. ranged betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly prior to 2-3-1993, the appellant company was subsidiary to M/s. BPL Ltd. and BPL Ltd. was a holding company of the appellant company. Therefore, for the period in question, the allegation that the appellant company was subsidiary of M/s. BPL Ltd. has no relevance. Therefore, the portion of the definition of related person dealing with subsidiary company cannot be invoked. It has been held that the term "relative" as mentioned in Section 4(4)(c) would not be applicable to impersonal bodies of companies incorporated under the Companies Act, 1956. [M/s. Hind Lamps - 1977 (1) E.L.T. J1 affirmed by the Supreme Court in the case of UOI v. Hind Lamps as reported in 1989 (43) E.L.T. 161]. In the present case, the appellants have no share holding in BPL Ltd. at any point of time. Even if BPL Ltd. has shares in the appellant company, that cannot be a reason to hold that the appellants and M/s. BPL Ltd. have interest directly or indirectly in the business of each other. Hence, it cannot be alleged that M/s. BPL Ltd. is a related person. Consequently, proviso (iii) to Section 4(1)(a) cannot be invoked (UOI & Others v. Atic Industries - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses incurred on advertisement/publicity, marketing etc. were extra commercial consideration flowing from M/s. BPL Ltd. to the appellants. The Tribunal, in the case of Corner Stone Brands Ltd. v. CCE - 1996 (86) E.L.T. 257, has held that advertisement expenses incurred by the brand name owner cannot be included in the assessable value of the goods manufactured by another person and sold to the buyer. (vii) The Show Cause Notice has compared the assessable value of the appliances prior to 1-4-1994 and that of after 1-4-1994 to hold that the assessable value of appliances had come down when the appellants had started selling the goods to M/s. BPL Ltd. Prior to 1-4-1994, the appellants were selling the appliances to various dealers throughout the country. However, after 1-4-1994, they started selling to only one dealer viz. M/s. BPL Ltd. Therefore, it was not necessary for the appellants to incur any expenditure on advertisement/publicity/marketing to that extent. Reliance is placed on the following decisions :- (a) CCE & C, Aurangabad v. P.N. Dhoot Investment Co. Pvt. Ltd. - 1999 (111) E.L.T. 118 (Tribunal) - affirmation by Supreme Court as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 461 (Tri-Mumbai) (ii) Pilco Pharma, Kanpur v. CCE, Kanpur - 1987 (29) E.L.T. 523 (Tribunal) (iii) N.P. Textile Mills v. CCE, Bombay - 1996 (88) E.L.T. 493 (Tribunal) (iv) UOI & Ors. Etc. Etc. v. Bombay Tyre International Ltd. Etc. Etc. - 1983 (14) E.L.T. 1896 (S.C.) 5. Shri Shiva Dass took us through the earlier decisions of this Bench on the same issue and urged that all the documents before the Commissioner in respect of the present case were available even earlier. All these have been taken into consideration while holding that there is no mutuality of interest between the two companies and they are not related. He also relied on a large number of case-laws. 6. We have gone through the records of the case carefully. Revenue proceeded against M/s. BPL Sanyo Utilities & Appliances Ltd., Bangalore, earlier and the original authority, in his order dated 13-11-1998, held that the assessable value should be based on the price at which M/s. BPL Ltd. sold the goods to their wholesale dealers. In that case, the appellant M/s. BPL Sanyo Utilities & Appliances Limited, Bangalore had an agreement with M/s. BPL Ltd. All the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore in this case there was no mutuality of interest to hold that the price at which BPL sold the goods to wholesale dealers should be adopted." In view of the same and after a perusal of the findings arrived at in the OIA and the perusal of the impugned documents, we also do not find any substance or material in the grounds alleged by Revenue before us to upset the findings arrived at by the Commissioner (Appeals). The order is not exhibiting any silence as regards the documents to be considered for which the de novo adjudication was to be conducted. A reading of the findings does indicate that the same have been considered. (b) The Commissioner (Appeals) has given considerable thought and attention to the decision of the Hon'ble Supreme Court in the case of Calcutta Chromo Ltd., 1998 (99) E.L.T. 202 (S.C.) and has come to a finding that "both the conditions must co-exist so that the price at which the manufactured goods are sold" and both the conditions are not met here, there is no challenge of this finding. (c) The ld. Advocate for the Respondents very clearly has brought out that the facts in this case before us that facts in the case before the Apex Court in the case of I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; There is no material produced by Revenue that the title in the goods does not pass from BSUA to BPL on the sale of the goods within the meaning of the word "sale" under the Sale of Goods Act. Sales Tax under the Karnataka Sales Tax Act on such transactions (though exempted for a particular period by specific Notification being a new industry), and after the expiry of this period of exemption, sales tax was being paid by BSUA for the sale transactions to BPL. (e) When Director-Marketing of BPL is addressing letters to the Managing Director of BSUA seeking the reduction of the sale price and the officials of BSUA are refusing to accept such price reductions as is indicated in the very correspondence relied by the Assistant Commissioner, it is incredible for anybody to suggest/conclude that the transactions are not in the nature of principal to principal sale transactions. If Director-Marketing of BPL loosely mentions the sale price as 'transfer price', it does not become a 'stock-transfer price' between one Division and the other. The legal consequences flowing from the actual sale of the goods between BSUA and BPL cannot be obliterated by loose referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ask BPL to collect the arrears of payment from such dealers. The Respondents had suggested to M/s. BPL Ltd., to take certain action against the dealers in case of not paying the arrears to the Respondents. This would only indicate a desire on part of BSUA to liquidate outstanding in the market and nothing more as in respect of sales made after 1-4-94 to M/s. BPL Ltd., by the Respondents, no such request has been brought on record. The appellants case is that when the goods are sold by BSUA to M/s. BPL Ltd., the manner of disposal of such goods by M/s. BPL Ltd., should not be the appellants concern and whether M/s. BPL Ltd., would incur loss or make profit should not concern them. This obviously would be in respect of the sales made after 1-4-94 which are in dispute in the present case. This position cannot be inferred by the suggestion made in the letters to M/s. BPL Ltd., for collection of arrears of payment from the dealers in respect of sales made by the Respondents directly to the dealers prior to 1-4-94. The order of the Assistant Commissioner holding that monitoring of payment from the dealers is being resorted would not apply to clearances made after 1-4-94. Therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Affirmation by the Supreme Court of the above case of British Health Products Ltd. - Order dated July 19, 2001 in Civil Appeal No. 4972 of 1999 - 2001 (133) E.L. T. A160 (S. C). (7) Cosepa Fiscal Industries Ltd. & Ors. v. CCE, Aurangabad - [2002 (149) E.L.T. 421 (T) = 2002 (49) RLT 608]. (8) Automotive Axels Ltd. v. CCE, Bangalore - 2002 (142) E.L.T. 706 (T) = 2002 (49) RLT 926. (c) On advertisement expenses incurred by buyers not includible (1) Corner Stone Brands Ltd. v. CCE, Ahmedabad - 1996 (86) E.L.T. 257. (2) Philips India Ltd. v. CCE, Pune - 1997 (91) E.L.T. 540 (S. C.). (3) Besta Cosmetics Ltd. v. CCE, Ahmedabad - 1999 (109) E.L.T. 237. (4) Precision Instrument Co. v. CCE - 2001 (129) E.L.T. 99 (5) Shri Ram Honda Power Equipment Co. v. CCE, Meerut - 1999 (107) E.L.T. 145. (6) Lakshmi Card Clothing Mfg. Co. Ltd. v. CCE, Coimbatore - 2001 (137) E.L.T. 924. 6.1. This Bench also had an occasion to deal with a similar issue in the case of CCE, Bangalo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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