TMI Blog2015 (7) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... llant had certain judicial pronouncements on the interpretation of Section 4 of the Central Excise Act, 1944 with respect to related persons . Under the existing factual matrix of facts, it can not be held that there was any intention on the part of the appellants to evade payment of duty. Accordingly, extended period is not invokable to the demands and no penalties are imposable upon the appellants. Demands have to be thus limited to the period under Section 11A of the Central Excise Act, 1944 without invoking extended period. - Decided partly in favour of assessee. - Appeal No. E/638-641/2011, E/10897-10900/2013, E/11056-11067/2014 - ORDER No. A/10572-10591/2015 - Dated:- 12-5-2015 - Mr. P.K. Das, Hon'ble Member (Judicial) And Mr. H.K. Thakur, Hon'ble Member (Technical),JJ. For the Appellant : Shri K.S.V. Ravishankar Shri N. Anand, Advocates For the Respondent : Shri K. Sivakumar, Authorised Representative ORDER Per : Mr. H.K. Thakur; These appeals have been filed by appellants M/s. Goldjyoti Polymers (Unit No. I and Unit No. III) and its partners against two OIO Nos. 01/OA/VAPI/2011 dated 10.01.2011 and 02/MP/VAPI/2011 dated 17.01.2011, pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of Section 2(41) and Section 6 of the Companies Act, 1956 as interpreted by the Courts. That the findings recorded in Para 20 of the OIO were never disclosed in the show cause notice. That the concept of relative under Section 4(3) (b) (ii) and (iii) are not applicable to ICUs especially when the goods manufactured by appellants are also sold to independent buyers and also at times the price, at which the goods sold to independent buyers, is higher than the price at which related persons sell the goods to independent buyers. Learned Advocate also argued that the demands for extended period are not sustainable, as it is an interpretational issue, in the light of various judicial pronouncements and there can not be any intention to evade any duty. He relied upon the following case laws in support of his contentions:- (a) Alembic Glass industries Limited vs. CCE [2002 (143) ELT 244 (SC)] (b) UOI vs. Atic Industries Limited [1984 (17) ELT 323 (SC).] (c) CCE vs. Bharti Telecom Limited 2008 (226) ELT 3 (SC).] (d) Sanjay Bahadur vs. CCE [2009 (240) ELT 282 Tri. Mum.)] (e) Chennai Petroleum Corporation Limited vs. CCE [2009 (240) ELT 372 (Tri. Che.)] (f) Pankaj Kast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Rule 10(a) of the Valuation Rules, 2000 as they existed prior to 01.12.2013. 4.1 Section 4(1) and (2) of the Central Excise Act, 1944 reads as follows:- 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. (3) For the purpose of this Section - (a) assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) persons shall be deemed to be related if (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8. RULE 10. When the assessee so arranges that the excisable goods are not sold by him except to or through an inter-connected undertaking, the value of goods shall be determined in the following manner, namely :- (a) If the undertakings are so connected that they are also related in terms of sub-clause (ii) or (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. RULE 11. If the value of any excisable goods cannot be determined under the foregoing rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle based upon the observations of Lord Tomlin in the case of IRC v. Duke of Westminster [(1936) AC 1] that every assessee is entitled to arrange his affairs as to not attract taxes. The Court said that tax planning may be legitimate provided it is within the framework of law. Colourable devices, however, cannot be part of tax planning. Dubious methods resorting to artifice or subterfuge to avoid payment of taxes on what really is income can today no longer be applauded and legitimised as a splendid work by a wise man but has to be condemned and punished with severest of penalties. If we examine the thrust of all the decisions, there is no bar on the authorities to lift the veil of a company, whether a manufacturer or a buyer, to see it was not wearing that mask of not being treated as related person when, in fact, both, the manufacturer and the buyer, are in fact the same persons. Under sub-section (1) of Section 4 of the Act, value of the excisable goods shall not be deemed to be normal price thereof, i.e., the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, if the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Again if the price is not the sole consideration, then again clause (a) of Section 4(1) will not be applicable to arrive at the value of the excisable goods for the purpose of levy of duty of excise. From the above, it is evident that excise authorities are not barred from probing to find out the persons behind the companies who are calling the shots to know when Section 4(1)(a) of the Central Excise Act, 1944 will not be applicable. 4.5 In the present case adjudicating authority in Paras 21 and 21.1 of the OIO No. 01/OA/Vapi/2011 dated 10.01.2011- 17.01.2011 has analysed the persons behind the appellants and the other inter-connect undertakings. It is also observed from the statement dated 06.5.2009 of Shri Premji V. Bhanushali that he is actively looking after all the day to day affairs of the appellants. Further, in answer to Q. NO.3, in Para 6.1 of the order-in-original dated 10.1.2011- 17.1.2011, Shri Premji V. Bhanushali has admitted that M/s. Gold Coin Polypact Pvt. Limited, Mumbai and M/s. Canon Laminators Pvt. Limited, Mumbai are their trading firms and controlled by him and his brother Kanji Bhanushali. 4.6 It is the case of the appellants that only biologica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) falls within reasonable norms. In the case of Sharda Synthetics Bombay (P) Limited vs. UOI [2006 (205) ELT 49 (Bom.)], Bombay High Court in Para 60 and 61 (reproduced below) held that while interpreting statutes, object of the statute are to be kept in mind:- 60. A statute as is well-known must be interpreted? having regard to the purpose and object which it seeks to achieve. In Associated Timber Industries and Others v. Central Bank of India, (2000) 7 SCC 93, while considering the provisions of the Bombay Money Lenders Act vis-a-vis the provisions of other Act upon a purposive and meaningful interpretation held that the banks do not come under the purview of the Assam Money Lenders Act. 61. The Court while interpreting the provisions of a? statute, although, is not entitled to re-write the statute itself, is not debarred from ironing out the crease . The court should always make an attempt to uphold the rules and interpret the same in such a manner which would make it workable. A similar view was expressed by the Apex Court in the case of Corporation Bank vs. Saraswati Abhransala [2009 (233) ELT 3 (SC)] in Para 25 reproduced below:- 25. Furthermore the Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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