9911796707
TMI Blog2015 (11) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... tion OF PALI with PEIL by Honble Punjab and Haryana High Court. The other appellant-M/s. Philips Electronics NV Netherlands (hereinafter referred to as Philips Netherlands) is the holding company of PEIL. As mentioned above, PEIL was previously known as Philips India Limited (PIL) and is a subsidiary of Philips Netherlands. 1.2 PEIL, a subsidiary of Philips Netherland, manufactures lamps, tube lights, Electronics Products and domestic appliances, etc and also do the trading in these items. PEIL in addition to manufacturing the lamps, tube lights, electronic products and electrical appliances, were also purchasing lamps from various other parties for sale under the brand name - Philips. In the year, 1983, PALI was incorporated as a Joint-Venture between Punjab State Industrial Development Corporation (PSIDC), a fully owned Punjab Government undertaking, M/s. Punjab Anand Batteries Limited (PABL) and Philips, Netherlands. An agreement dated 19/12/1983 was signed between PABL and Philips Netherlands and the agreement provided that the joint-venture PALI would sell its products only to PEICO Electronics and Electricals Limited (presently the PEIL) and PABL in the ratio of 90:10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of Rs. 5,13,78,778/- against PALI under proviso to section 11A (1) of Central Excise Act, 1944 along with interest on it under section 11AB and besides this, while imposed penalty of equal amount on PALI under Rule 173Q (1) AND Rule 9 (2) of Central Excise Rules, 1944 read with section 11AC of Central Excise Act, 1944, penalty under Rule 209A of Central Excise Act, 1944 of Rs. 2.5 crore was imposed on Philips India Limited and penalty of same amount was imposed on M/s. Philips, Netherlands. Besides this, the land, building, plant, machinery, etc of PALI used in the manufacture production and storage of excisable goods was ordered to be confiscated under Rule 173 Q(2) of Central Excise Rules, 1944 with an option to be redeemed on payment of redemption fine in lieu of confiscation of one crore. 1.4 Since even before passing of this order and confirmation of duty demand against PALI, PALI stands merged with Philips India Limited w.e.f. 26/4/2003 and the name of Philips India Limited was subsequently changed to Philips Electronics India Limited (PEIL), it is PEIL which has filed the appeal along with Philips, Netherland. Against the above mentioned order passed by the Commissioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Limited. In this regard, reliance is placed on the Tribunals judgment in the case of Pepsico Holding India Private Limited reported in 2004 (163) ELT 478 and also on the judgment of Honble Bombay High Court in the case of Cosmos India Rubber Works Private Limited and Ors. Vs. Unions of India reported in 1988 (36) ELT 102 BOM. (2). In the present case, admittedly, goods are sold by PALI to Philips India Limited as well as Bajaj Electricals Limited and Bajaj Electricals Limited is admittedly an unrelated buyer. No dispute has been raised with regard to the price at which the goods were sold to Bajaj Electricals Limited. The goods were being sold to M/s. Bajaj Electrical Limited on regular basis during the period of dispute. In view of this, the sale price of the goods to Bajaj Electricals Limited has to be treated as the normal price which would be applicable in respect of the sales to Philips India Limited also. In para 27 (IV) of the impugned order, the Commissioner has recorded the submissions of the appellant that the similar goods were sold during the period of dispute to M/s. Bajaj Electricals Limited at more or less the same price as the price at which the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Madras High Court in the case of Ragger Die Cutting Vs. CCE-Chennai-II reported in 2010 (255) ELT 3 MAD. In the present case, if the appellant company is treated as subsidiary company of Philips India Limited, applying the above judgment of the Tribunal which has been relied upon by the Honble Madras High Court also, even if the entire production of the appellant company is treated as having been sold to Philips India Limited, 3rd proviso to section 4 (1) (a) cannot be invoked in absence of any evidence produced by the Revenue to show that the goods were sold at the lower price than the price to independent buyers. In the present case, the appellant has provided evidence to show that during the same period, Philips India Limited were also buying similar bulbs and tube lights from other manufacturers at about the same price at which the appellant were supplying the same goods to Philips India Limited. (5). In any event, the appellant company and PALI cannot be treated as subsidiary of Philips India Limited, as the shareholding of Philips India Limited in the appellant company was about 25 per cent. Just because the Philips, Netherlands had shareholding in the appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to honor the margin of 15 per cent of the lamps sold by PALI to Philips India Limited. The payment of Rs. 1.5 crore by Philips India Limited to Shri C,L. Anand was on the basis of understanding between Philips Netherland and Mr. Anand and Rs. 1.5 crore did not relate to the sale of lamps by PALI to Philips India Limited. In any case, the said document is ten years prior to period of dispute and did not relate to the period involved in the present proceedings from 1/3/1994 to 31/5/1998. (8). In any case, the extended limitation period of five years is not invokable for recovery of allegedly short paid duty and for some reason no penalty is imposable on the PALI as there was no fraud, wilful mis-statement, suppression of facts under section 11AC on their part. For some reason no penalty is imposable on PEIL (earlier Philips India Limited) and Philips, Netherlands. 4. Shri Pramod Kumar, ld. JCDR, defended the impugned order by reiterating the findings of the Commissioner in it and emphasized that during the period of dispute, since the shareholding of Philips India Limited along with Philips, Netherland in PALI was more than 50 per cent, PALI has to be treated as a subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be the assessable value of the goods. Since neither there is allegation of the department that M/s. Bajaj Electricals Limited were also related person of PALI within the meaning of this term as defined in section 4 (4) (c) nor there is any evidence on record that PIL and Bajaj Electrics Ltd are related persons, the sales of PALI to Bajaj Electricals Limited have to be considered as sales to independent buyers. The department also does not refute the claim of PALI that the sale price of similar goods to Bajaj Electricals Limited was more or less same as the sale price of the same goods to Philips India Limited. It is also not the allegation of the Department that sales of similar goods to Bajaj Electricals Ltd. were not genuine transactions. Therefore, the sale price of the similar goods to Bajaj Electricals Ltd. has to be treated as the normal price. The Commissioner, however, in para 55 of the impugned order observing that the practically PEIL was lifting nearly the whole of the PALIs production and allowing the meager quantity to Bajaj Electrical Limited with intent to circumvent situation of facing any Central Excise obligation has held that the sales of the lamps by PAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail; 7.1. The definition of related person as given in the sub-section (4) (c) of section 4 is also reproduced below: (c) related person means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor. From the perusal of section 4 (1) (a), it is clear that 3rd proviso to section 4 (1) (a) becomes applicable only when the assessee so arranges that the goods, generally, are not sold by him in course of wholesale trade except to or through related person, as defined in section 4 (4) (c) and only in such a situation the normal price of the goods for the purpose of calculation of duty shall be deemed to be price at which the goods are ordinarily sold by the related person in course of whole sale trade at the time and place of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated persons within the meaning of this term as defined in the section 4 (4) (c), the assessable value of the goods sold by PALI to Philips India Limited would be the price at which the similar goods were being sold by PALI to Bajaj Electricals Limited and in this regard, the department has not refuted the plea of PALI that the sale price of the goods manufactured by them to PIL was more or less same as the sale price of similar goods to Bajaj Electricals Limited. In view of this, it cannot be said that the PALI, in respect of their sales to Philips India Limited have not paid duty on the normal price. When undisputedly 2 to 3 per cent of the sales of PALI were to Bajaj Electricals Limited and neither the genuineness of these transactions is disputed by the department nor the department has alleged that PALI and Bajaj Electricals Limited were related person within the meaning of this term as defined in section 4 (4) (c), the department cannot invoke 3rd proviso to section 4 (1) (a) and charge duty in respect of the sales of PALI to Philips India Limited at the sale price of Philips India Limited to its dealers. 8. Therefore, irrespective of whether PALI and Philips India Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
