TMI Blog2015 (8) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... ed were interest free loans or at interest much lower than the market rates. The appellant company and M/s. AIL can be treated as related persons if there is an evidence to prove that the appellant company had all pervasive financial year and managerial control over M/s. AIL and M/s. AIL were just an extension of the appellant company. But in this regard, we do not find any such evidence. Commissioner was required to go only into the question of duty demand of ₹ 35,63,928/- confirmed against the appellant company and also question of imposition of penalty on them and other notice. The duty demand of ₹ 28,35,170/- had not been challenged by the department and as such was not the subject matter of the appeals filed before the Tribunal which were decided by the Tribunal vide order dated 4/5/2001. In view of this, the Commissioner's order confirming the duty demand of ₹ 28,35,170/- is not only totally incorrect order but also a perverse order and, therefore this part of the order has to be set aside. Apex Court also in the case of CCE Vs. Xerographic Limited reported in [2006 (3) TMI 308 - SUPREME COURT] has held that the distributor companies of an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis that the assessable value of the goods manufactured and cleared by the appellant would be the price at which the same were sold by M/s. AIL. The same show cause notice demanded another duty of ₹ 28,35,170/- on the account of trade discounts being given by M/s. AIL, as according to Department, deduction of these trade discounts was not admissible. 1.2 The matter was adjudicated by the Commissioner vide order-in-original no. 48/2000 dated 22/12/2000 by which while the Commissioner dropped the duty demand of ₹ 28,35,170/- holding that the deduction of trade discounts extended by M/s. AIL to its dealers is admissible, he confirmed the duty demand of ₹ 35,63,928/- on the ground that the appellant and M/s. AIL are related persons, and therefore, the price charged by M/s. AIL from their dealers would be the assessable value of the goods cleared by the appellant. Besides this, he also imposed penalty of equal amount on the appellant company under section 11AC and another penalty of ₹ 10 lakh on them under Rule 173Q. He also demanded interest on the above mentioned duty under section 11AB. The Commissioner also imposed penalty of ₹ 10 lakh, ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules, 1944 of ₹ 2 lakh, ₹ 1 lakh and ₹ 1 lakh on M/s. AIL, Shri Lokesh Khanna and Shri Ashok Chawla respectively. 1.5 Against this order of the Commissioner, these four appeals have been filed by the appellant company (M/s. Ondia Saka Limited), it employees Shri Ashok Chawla, Shri Lokesh Khanna and the marketing company-M/s. AIL. 2. Heard both the sides. 3. Shri R. Santhanam, Advocate, ld. Counsel for the appellants, pleaded that the confirmation of duty demand of ₹ 28,35,170/- linked with the question as to whether the trade discounts extended by the appellant company to M/s. AIL are admissible or not, is absolutely without any basis and illegal, as this duty demand had been dropped by the earlier order dated 22/12/2000 passed by the Commissioner and the matter of refund of this amount is pending before the Assistant Commissioner and the Revenue had not filed any appeal before the Tribunal against the Commissioner's order dated 22/12/2000 dropping the duty demand of ₹ 28,35,170/-. He, therefore, pleaded that the duty demand of ₹ 28,35,170/- has to be set aside simply on the ground that this duty demand was not the subject matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE Vs. Amar Sinhji Stationery Indus Ltd., reported in 2005 (184) ELT 186 (Tri.-Del) (6). Samtel Electron Devices Ltd. Vs. CCE, 2000 (118) ELT 262 (Tribunal-LB) (7). Basudev Garg Vs. CCE reported in 2013 (294) ELT 353 (Del.) (8). Shalimar Rubber Industries Vs. CCE reported in 2002 (146) ELT 248 (SC) (9). Uniworth Textiles Ltd. Vs. CCE reported in 2013 (288) ELT 161 (SC) 3.1. Shri Santhanam also pleaded that in any case, the duty demand raised by the show cause notice dated 4/6/1999 for the period from June, 1994 to August, 1996 is time barred, as the conditions required for invoking extended period under proviso to section 11A(1) existence of fraud, wilful mis-statement, suppression of facts, deliberate contravention of the provisions of Central Excise Act, 1944 or of the Rules made therein with intent to evade the payment of duty or not preset in the present case. He, therefore, pleaded that the impugned order is not correct. 4. Shri M.S. Negi, ld. DR, defended the impugned order by reiterating the findings of the Commissioner in it. He cited the judgment of Tribunal in the case of M/s. Adonis (India) Limited Vs. CCE-Meerut reported in 2000 (119) ELT 68 wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sales depots. However, the premises taken on rent by M/s. AIL were also being used by the employees of Appellant company as Branch Office of M/s. Onida Saka Limited and no rent or telephone charges were being paid by the Appellant Company. (5). In the instruction manual of the Colour T.V. Sets the depots of M/s. AIL were being shown as branch office of the Appellant Company. (6). There was no written agreement or contract between the Appellant company and M/s. AIL regarding marketing of the goods manufactured by the appellant company by M/s. AIL. 4.1. Shri Negi also pleaded that the appellants have suppressed the facts from the department and hence, longer limitation period of five years under proviso to section 11A(1) has been correctly invoked. 5. Shri R. Santhanam in rejoinder with regard to the Tribunal's judgment in the case of M/s. Adonis (India) limited Vs. CCE-Meerut reported in 2000 (119) ELT 68 , pleaded that this judgment is not authority for holding that M/s. Onida Savak Limited and M/s. AIL were related persons, as this allegation had not been contested by the appellant's counsel in this case. 6. We have considered the submissions from both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuance of the Tribunal's order dated 16/12/2004, the matter of refund of ₹ 28,35,170/- is still pending before the Assistant Commissioner. The appellant company along with other noticee - M/s. M/s. Adonis (India) Limited, Shri Ashok Chawla, and Shri Lokesh Khanna had filed an appeal before the Tribunal against the Commissioner's order dated 22/12/2000 confirmed the duty demand of ₹ 35,63,928/- along with interest and imposing penalty on the appellant company as well as other notice. In respect of these appeals, the Tribunal vide final order dated 4/5/2001 had remanded the matter to the Commissioner for de-novo adjudication. The present order dated 16/1/2006 of the Commissioner is in pursuance of the Tribunal's final order dated 4/5/2001. In the de-novo proceedings, the Commissioner was required to go only into the question of duty demand of ₹ 35,63,928/- confirmed against the appellant company and also question of imposition of penalty on them and other notice. The duty demand of ₹ 28,35,170/- had not been challenged by the department and as such was not the subject matter of the appeals filed before the Tribunal which were decided by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of each other. Similarly, just because the appellant company along with two other group companies, had extended loan of about ₹ 50 crore to M/s. AIL, it cannot be said that the transactions between the appellant company and M/s. AIL was not on principal to principal basis, as it is not the contention of the department that the loans extended by the appellant company - and two other group companies, M/s. Adonis (India) Limited were interest free loans or at interest much lower than the market rates. 11. The appellant company and M/s. AIL can be treated as related persons if there is an evidence to prove that the appellant company had all pervasive financial year and managerial control over M/s. AIL and M/s. AIL were just an extension of the appellant company. But in this regard, we do not find any such evidence. A manufacturer manufacturing certain goods can always decide to sell his entire production to another person instead of marketing the same himself and incurring expenses on marketing and advertisement himself and for this reason, the manufacturer and his customers cannot be treated as related persons. As regards the allegation of the department that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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