TMI Blog2012 (1) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. On completion of the manufacture of Cell Pack the appellants were returning the same to M/s. Sysmex Transasia Bio-Medicals Ltd. under the cover of central excise invoice. The appellants were ultimately selling the goods from the godown at the prices ranging from Rs. 2100/- per unit to Rs. 3100/- per unit. They were filing regular monthly returns and maintaining records prescribed under the law. The facts being so and supported by several documents as a proof, it can be safely concluded that M/s. STBM cannot be a dummy unit - There is nothing on record to show that Cell Pack manufactured on job work out of the raw material supplied by M/s. Sysmex Transasia Bio-Medicals Ltd. were not dispatched to the premises Gala No. 5, Prithvi, Industrial Complex, Somnath, Nani, Daman. The copies of transport receipt showing excise invoices were produced by the appellants and they had paid transportation charges to the transporters. For purpose of Section 4 concerned would be taken to be the related person if there is a reciprocity of interest between the assessee and such allegedly related person - The burden to prove that the goods in question were under-valued by the respondent lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 See further Balram Kumawat v. Union of India (2003) 7 SCC 628 pp. 636, 637 : AIR 2003 SC 3268 pp. 3273, 3274. 2. This is an appeal filed by M/s. Transasia Bio-Medicals Ltd., Shri Vijay Parikh, Shri Suresh Vazirani and Shri S.R. Malhotra against the order of Commissioner of Central Excise Customs, Daman (Order No. 03/MP/DAMAN/2007, dated 28-2-2007). 3. The brief facts of the case are that M/s. Transasia Bio-Medicals Ltd. (TBM) were manufacturing and selling Cell Pack to the customers but it has alleged that they devised a new modus operande and a company called M/s. Sysmex Transasia Bio-Medicals Ltd. (M/s. STBM) was created to show that M/s. TBM manufactured goods on job work basis for M/s. STBM. These goods were shown to have been cleared to M/s. STBM @ Rs. 850/- per pack which was subsequently sold to the trading arm of M/s. TBM @ Rs. 850/- per pack. Subsequently, these goods were sold to independent customers @ 1,800/- to Rs. 2,400/- per pack. The Revenue alleged that the goods never moved to the declared premises of M/s. STBM and were cleared directly from the factory of M/s. TBM either to the godown in Mumbai or to some ultimate customers. It was further alleged that M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Falia, Dabhel, Nani Daman (Unit No. 1) B-11, OIDC, Ringanwada, Daman (Unit No. 2) and SDF-VI, Unit No. 161/162, SEEPZ, Andheri (East), Mumbai-96. M/s. TBM carry on the manufacture of diagnostics reagents at Unit No. 1 and of auto analyzers at Unit No. 2 and also at their unit at SEEPZ. M/s. TBM also carry on trading of diagnostics reagents and auto anailyzers from Unit No. 1. 5.3 There was common independent company known as M/s. Sysmex Transasia Bio-Medicals Ltd. found vide a joint agreement dated 31-3-1998 which entered into an agreement between M/s. Toya Medical Electronics Co. Ltd., Japan with the farmer holding 51% shares and the balance 49% of equity being held by M/s. TBM. 5.3.1 M/s. Sysmex Transasia Bio-Medicals Ltd. was desirous of taking such limited licence with respect to the business centre development by M/s. TBM and both parties entered into a business centre agreement, dated 23-7-1998 by which a limited licence was granted by M/s. TBM to M/s. Sysmex Transasia for the use of the said business centre on payment of licence fee of Rs. 60,000/- per month and a refundable/interest free licence deposit of Rs. 3,00,000/- to be made by M/s. Sysmex Transasia. 5.3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired and prescribed under the law. Such records filed by M/s. TBM were also verified, assessed or audited by the department from time to time. 6.1 The Revenue strongly contested the points raised by the assessee. Shri S.K. Mall, learned SDR appearing on behalf of Revenue stated that a company M/s. Sysmex Transasia Bio-Medicals Ltd. was created on paper to show that M/s. TBM manufactured goods on job work basis for M/s. STBM. The goods manufactured by M/s. TBM were shown on paper to have been cleared to M/s. STBM @ Rs. 850/- per pack which subsequently sold the same to the trading arm of M/s. TBM @ Rs. 850/- per pack. M/s. STBM, Daman have shown sale of Cell Packs to M/s. TBM but M/s. STBM was not registered with Sales Tax at Daman. The goods were subsequently sold by M/s. TBM to independent customers at the rate of Rs. l800/- to Rs. 2400/- per pack. There was huge difference between the rate at which duty was paid by M/s. TBM and the rate at which the goods were finally sold by M/s. TBM. The investigations revealed that the goods never moved to the declared premises of M/s. STBM. The same were cleared directly from the factory of M/s. TBM, either to the godown of M/s. TBM in Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y gate only and the transportation charges in any nature would be includable in the assessable value? 8. We have considered the rival submissions carefully. According to the Revenue the assessee are related in terms of Section 4(3)(b)(j)(iv) of the Act and therefore the valuation has to be done in terms of Section 4(1)(b) of Section 4(1) which reads as under : Section 4 : Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value. (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. We also consider the Revenue s allegation that the assessees are related in terms of Section 4(3)(b)(iv). Clause (b) of sub-section (3) reads as under : (3) For the purpose of this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly :- (a) If the undertakings are so connected that they are also related in terms of sub-clause (ii), (iii) or (iv) of Clause (b) of sub-section (3) of Section 4 of the Act or the buyer is a holding company or subsidiary company of the assessee, then the value shall be determined in the manner prescribed in Rule 9. Explanation - In this clause holding company and subsidiary company shall have the same meanings as in the Companies Act, 1956 (1 of 1956). (b) In any other case, the value shall be determined as if they are not related persons for the purpose of sub-section (1) of Section 4. 10. The basic issue was that M/s. STBM has been held as a dummy unit but no show cause notice was issued to them. We find that the Commissioner in this regard held that M/s. STBM was a dummy unit only in the sense that there was no employee in M/s. STBM that all works of M/s. STBM were done by the employees of M/s. TBM and the goods never reached the premises of M/s. STBM. Therefore he found that M/s. STBM is a company on paper only and held that M/s. STBM is a non-existent company. It was not required therefore to issue a show cause notice to M/s. STBM. 11. We proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Sysmex have been holding the meetings of their Board of Directors at least once in a quarter and the minutes of such meetings were recorded in the prescribed minutes register. They also submitted that M/s. Sysmex Transasia Bio-Medicals Ltd. had applied to the Reserve Bank of India for remitting the payment towards royalty on sales to M/s. Sysmex Corporation and the same was granted by the Reserve Bank of India vide their letter dated 8-7-1998 and subsequent communication dated 12-4-2001. The following documents were submitted by the appellants. 1. Joint Venture Agreement dated 31-3-1998. 2. Agreement dated 18-9-1998 between M/s. Sysmex Corporation, Japan and M/s. Sysmex Singapore Pvt. Ltd. 3. Memorandum and Articles of Association of M/s. Sysmex Transasia. 4. Annual returns filed by M/s. Sysmex for the years 1998-99, 1999-2000, 2000-01, 2002-03, 2003-04 receipt of filing fees in respect of annual return for 2001-02 5. Income Tax Returns (acknowledgement) filed by M/s. Sysmex for the Asst. Years 1999-2000 to 2004-05. 6. Minutes of 22 Board Meetings held by M/s. Sysmex during the period from Sept. 1998 to March, 2004. 7. Letters dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dummy unit as argued by the Revenue. 15. It is also a fact that during adjudication or later the genuineness of the the documents submitted by the appellants were not challenged. There is nothing on record to show that Cell Pack manufactured on job work out of the raw material supplied by M/s. Sysmex Transasia Bio-Medicals Ltd. were not dispatched to the premises Gala No. 5, Prithvi, Industrial Complex, Somnath, Nani, Daman. The copies of transport receipt showing excise invoices were produced by the appellants and they had paid transportation charges to the transporters. The argument of the appellants that they were doing the marketing of Cell Pack as they were already in the business of selling not only diagnostic reagents and also imported Cell Counters. Physical movement of Cell Pack to and from M/s. Sysmex Transasia Bio-Medicals Ltd. was neither necessary nor envisaged nor obligatory in law gain credence. It could only be termed as a choice of business practice by the concerned parties. 16. In view of the above facts and circumstances, the Hon ble Supreme Court of India s judgment in the case of Union of India Ors. v. Atic Industries Ltd. - 1984 (17) E.L.T. 323 (S.C.) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quires is that the person who is sought to be branded as a related person must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other. It is not enough that the assessee has an interest, direct or indirect, in the business of the person alleged to be a related person nor is it enough that the person alleged to be a related person has an interest, direct or indirect, in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of each other. Each of them must have a direct or indirect interest in the business of the other. The equality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect. That would not make any difference, so long as each has got some interest, direct or indirect, in the business of the other. Now, in the present case, Atul Products Limited has un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acity as a shareholder, but how can Crescent Dyes and Chemicals Limited of which 40 per cent of the shares are held by Imperial Chemical Industries Limited, London which in its turn is a shareholder of the assessee, can be said to have any interest, direct or indirect, in the business of the assessee. Equally the assessee has no interest direct or indirect in the business of Crescent Dyes and Chemicals Limited, which is just a wholesale dealer purchasing dyes from the assessee in wholesale on principal to principal basis. It is obvious that for the same reasons which have prevailed with us while discussing the case of Atul Products Limited, the assessee has no direct or indirect interest in the business of Crescent Dyes and Chemicals Limited. The first part of the definition of related person in Clause (c) of sub-section (4) of Section 4 of the amended Act is, therefore, clearly not satisfied both in relation to Atul Products Limited as also in relation to Crescent Dyes and Chemicals Limited and neither of them can be said to be a related person vis-a-vis the assessee within the meaning of the definition of that term in clause (c) of sub-section (4) of Section 4 of the amended Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellants. The cost of such demokits as stated by the appellants is included in the sale price of the instruments which are exempted from payment of duty. In the absence of any evidence to prove otherwise the contention of the appellant seems to be acceptable. 18. The Revenue has raised the point of demanding duty on packing and forwarding charges. It was the contention of the appellant that as per provisions of Section 4 read with Rules 5 and 7 of Valuation Rules when the goods are sold at the factory gate but the goods are transferred to a depot or such other place from where the delivery is made to the customers premises the assessable value would be the transaction value without the addition of case of transportation. Rule 5 of the Central Excise Valuation Rules reads as follows : Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of Section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at o place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the production and clearance of diagnostic reagents demokits were duly recorded by them in their records and had been subjected to audit/verification. Regarding freight charges also it was submitted that they were under the bona fide belief that the excess of actual amount paid towards the freight was not liable to be included for purpose of determination of assessable value in view of the principles of law laid down in the Acts and Rules. It was the opinion of the appellant that the department was in full knowledge of the activities while they were initiating proceedings by way of issue of show cause notice on different grounds in the past during the relevant time. In support of their submissions the appellants relied upon the following judgments ; 1. Pushpam Pharmaceuticals Co. v. CCE, Bombay - 1995 (78) E.L.T. 401 (S.C.). 2. Cosmic Dye Chemical v. CCE, Bombay - 1995 (75) E.L.T. 721 (S.C.) 3. Collector v. Chemphar Drugs Liniments - 1989 (40) E.L.T. 276 (S.C.). 4. Padmini Products v. Collector - 1989 (43) E.L.T. 195 (S.C.) 5. ATE Enterprises Ltd. v. CCE - 2004 (163) E.L.T. 314 (Tri.-Del.) 6. MEK Slotted Angles (India) Ltd. v. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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