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2015 (10) TMI 1840 - CESTAT NEW DELHI

2015 (10) TMI 1840 - CESTAT NEW DELHI - 2015 (330) E.L.T. 787 (Tri. - Del.) - Valuation - Related person - mutuality of interest - SSI exemption - Held that:- As held by the Hon'ble Apex Court in the case of Alembic Glass Industries Ltd. (2002 (4) TMI 75 - SUPREME COURT OF INDIA), merely having shareholding does not make them related persons. - loans has been repaid by M/s. SIPL in future. Moreover, goods sold to M/s. CF by M/s. SIPL at a gross profit of around 16-18% and the sale by M/s. SIPL t .....

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price by M/s. CF cannot be held as assessable value for M/s. SIPL. Therefore, we hold that demand of ₹ 4,84,076/- is not sustainable. Accordingly, same is set aside.

M/s. K S Enterprises is a sub contractor and who has got manufactured this aluminum windows in question by purchasing their own raw material and at site. M/s. K S Enterprises has issued invoices to M/s. SIPL to that extent M/s. K S Enterprises, has also filed an affidavit stating that the goods have been manufactur .....

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aluminum windows were manufactured by M/s. K S Enterprises who was enjoying SSI Exemption and M/s. SIPL is only trader for said goods. Therefore, duty cannot be demanded from M/s. SIPL. - Decided in favour of assessee. - Appeal Nos. E/3362-3364/2006-EX(DB) - Final Order No. 52363-52365/2015 - Dated:- 29-7-2015 - Ashok Jindal, Member (J) And B Ravichandran, Member (T) For the Appellant : Shri Naveen Mullick, Adv For the Respondent : Pramod Kumar, DR ORDER Per Ashok Jindal The appellant M/s. Shre .....

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upto 31.03.2002. An investigation was conducted in the factory premises of the appellant M/s. SIPL and it was revealed that there was another unit in the name of M/s. Continental Furnishers (CF) at Panchkuian Road, New Delhi, engaged in the business of construction, purchase, trading, manufacture of handmade carved artistic goods and decorative furniture termed as "Handicraft" who claim the exemption under notification no. 76/86-CE. On the basis of the documents it was found that both .....

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ailash Lamba (HUF). 3. M/s. SIPL also procured unsecured loan from Shri Kailash Lamba. During the period 2001-02, 2002-03 and 2003-04 M/s. SIPL sold some goods to M/s. CF and towards such sales M/s. SIPL earned gross profit of 15.79% to 18.70%. It was alleged that as sales have been affected by M/s. SIPL to M/s. CF who is a related person, therefore, the sale price of M/s. CF shall be the assessable value of the goods sold by M/s. SIPL through M/s. CF as being related persons. A demand of ₹ .....

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erest and penalties against all the appellants before were also proposed. Matter was adjudicated. Both the lower authorities confirmed the demand as proposed in the show cause notice along with interest and penalties were also imposed. Aggrieved from the said orders appellants are before us. 4. The Ld. Counsel for the appellants submits that the allegation in the show cause notice is that as both M/s. SIPL and M/s. CF are related persons, therefore, the price at which the clearance took place fr .....

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is about 4% and other share holding of Shri Kailash Lamba (HUF) is only 0.01%. Therefore, the provision of section 4(3)(b)(3) also cannot be invoked as it is not alleged that M/s. CF is distributor or sub distributor of M/s. SIPL. He further submits that the provision of section 4(3)(b)(2) in relation to M/s. CF cannot be invoked as a Pvt. Ltd. company cannot be treated as related because the legal status of directors and shareholders is different from the company. Merely because M/s. SIPL cons .....

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not be considered for working out transaction value of goods sold by M/s. SIPL to M/s. CF. As during the period 2001-02 to 2003-04 sales of M/s. SIPL to M/s. CF were 8.97%, 20.23% and 3.20% respectively which shows that M/s. SIPL was not selling the goods manufactured by them through M/s. CF. As per the Rule 9 and 10 of the Valuation Rules during the impugned period the said rules could only be made applicable where all the sales in general are routed through the related persons. Therefore, load .....

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r projects. He further submits that Shri Kailash Lamba provided unsecured loan to M/s. SIPL which was duly entered in their books of account and the said loan itself was required to be returned and M/s. SIPL has paid the said loan amount to Shri Kailash Lamba. He further submits that M/s. CF was in existent in 1948 and M/s. SIPL came into existence only in the year 1999. He also submits that by providing interest free loan does not create any mutuality of interest relying on the decision in the .....

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the demand of ₹ 47,600/- of aluminum windows, he submits that said work has been executed by Shri Kultar Singh proprietor of M/s. KS Enterprises who during the proceedings filed his affidavit saying that they have manufactured these aluminum windows from their raw material and are claiming SSI Exemption. The Adjudicating authority also accepted that these aluminum windows have been manufactured separately by M/s. K S Enterprises as Central Excise duty is leviable only on the activity of m .....

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each other. b) Whether the demand of duty can be confirmed on fabrication of aluminum windows by M/s. K S Enterprises in the hands of M/s. SIPL or not. 9. In the first issue, the case of the Revenue is that as Shri Kailash Lamba (HUF) is having its shareholding in both the firms and have advanced certain interest free loans to M/s. SIPL, therefore, both are related persons and having mutual interest in each other's business. Merely having shareholding in two firms does not constitute the re .....

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therefore, not possible to uphold the conclusion of the Tribunal that the assessee and the chemical company were related persons. This being so, it is unnecessary to go into the alternate arguments advanced on behalf of the assessee." 10. Therefore, merely having shareholding does not make them related persons. 11. Another reason for holding related person is that Shri Kailash Lamba (HUF) has advances certain interest free loans to M/s. SIPL. It is admitted that these loans has been repaid .....

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