TMI Blog2007 (4) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... . Color- bond Marketing Limited (CML). During the course of investigations undertaken by the department, share holding pattern of all the 4 companies was examined and statements of directors of the companies were recorded. It was inter alia revealed that 7 persons/individuals along with their family members formed a group of named as "Creative Group" with a view to control and manage business of the 4 companies mentioned above. Each of the said 7 members of the group was Director on the Board of Directors of at least one of the 4 companies. The group companies used common logo/symbol in their all correspondences so as to indicate that they were member constituents of the "Creative Group". 3. S/Shri P.M. Gupte, A.D. Pardhy, Vinay V. Ghatge and Vishwas V. Ghotge, who are the members of the group and directors of the companies viz. CPPL, KPPL, APL and CML respectively in their respective statements confirmed the share holding pattern of their respective company, which was communicated by the companies to the department. They confirmed the existence of the group viz. "Creative Group" and that their respective companies were members of the said group. Further, it was also disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period from 1st July, 2000 onwards, when the concept of "transaction value" replaced the concept of "normal price" and therefore judicial pronouncements pertaining to the period prior to July, 2000 were not applicable in the present case. He failed to appreciate the existence of "Creative Group" whose members were also Directors who shared 100% share capital of APL and KPPL, 80% of CPPL and also held 81% share of marketing company viz. CML. Thus almost entire shareholdings of all the four companies viz. APL, CPPL KPPL, the manufacturing companies, CML, the marketing company were held by the members of the group along with their families Further except for the two persons who are not members of the group, all other directors of the four companies are from the group. 8. He invited our attention to Section 2(g) of MRTP Act, 1969 which de fines "interconnected undertaking" and states that if any of the following connections exists, the two undertakings would be deemed to be interconnected undertaking. (1) If one owns or controls another; (2) --------------- (3) If both are owned by companies and... .(c) If both body corporates are under the same management….. (d)….. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree manufacturing units and marketing units, the same have to be considered as under the same management and therefore to be interconnected companies and therefore related in terms of Section 4 of Central Excise Act and Central Excise Valuation Rules. Further shareholdings pattern of the four companies indicates that there existed mutuality of interest between the manufacturing companies and the marketing company. In terms of the shareholdings, 81% of the profit earned by the marketing company (CML) was being flowed back to the three manufacturing companies through their shareholders. The Commissioner did not appreciate the fact that the individuals/directors who held shares of the manufacturing, companies were members of the group and their relatives and they were also majority shareholders of the marketing company. Since mutuality of interest was not disclosed to the department extended period was rightly invoked and various decisions relied upon were not relevant as they related to pre 2000 period except in the case of Pepsico India Holdings (P) Ltd. v. CCE - 2004 (163) E.L.T. 478 (Tri.) which related to later period in that case discount granted by the manufacturing company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri.) held that merely because the other company had majority share in the respondent company, it cannot be concluded that both are one. 15. It was submitted that even it is admitted that 4 companies are interconnected, same is not sufficient unless it is shown that they are related in terms of sub-clause (ii) or (iii) or (iv) of clause (b) of section 4(3) of the Act or the buyer is a holding company or subsidiary company. Therefore the burden is cast upon the department to prove that - (a) undertakings are interconnected undertaking and in addition they are - (b) (i) relative or (ii) buyer is a relative and a distributor of the assessee or a sub-distributor, or (iii) they are so associated that they have interest, directly or indirectly, in the business of each other, or (iv) the buyer is a holding company or subsidiary company or the assessee, 16. They refer to the decision of the Tribunal in the case Kirloskar Ferrous Industries Ltd. v. CCE - 2007 (78) RLT 402 in which it was held that in terms of Boards' letter F. No. 354/81/2000-TRU, dated 30-6-2006, merely because the undertaking are interconnected undertaking, it would not be a ground to reject the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of each other. Thus though the customer company holds 50% of the share capital of the manufacturing company and has interest as a shareholder in the business of the manufacturing company, it cannot be said that the manufacturing company has also any interest, direct or indirect in the business of the customer company. 19. In the present appeal, none of the manufacturing units holds share in the marketing company viz. CML or in other manufacturing units. Further CML does not hold any share in APL and KPPL. It holds only 12% share in CPPL. In view of this share holding, it cannot be claimed that any of the manufacturing company has any interest, direct or indirect, in the business of CML. Further it can also not be alleged that CML has any interest, direct or indirect in the business of APL and KPPL. 20. Holding of 12% share only in CPPL by CML would not amount to having any interest in the business of CPPL as held by the Supreme Court in the case of UOI v. ATIC Industries Ltd. - 1984 (17) E.L.T. 323 (S.C.). Reliance is also placed on the decision in the case of New India Industries Ltd. v. UOI - 1988 (37) E.L.T. 547 (Bom.) = 1990 (46) E.L.T. 23 (Bom.) wherein the Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards was invited to the Tribunal decision in the case of Shree Krishna Minerals v. CCE, Hyderabad - 2005 (190) E.L.T. 251 (Tri.), CCE v. Sethia Foods - 2003 (156) E.L.T. 395 and others. Further, it was submitted that in this case the duty has been demanded separately from all three units which means the department it self is treating all the three units as independent company. Reliance was placed on the decision of the Supreme Court in the case of Gajanan Fabrics Distributors v. CCE, Pune - 1997 (92) E.L.T. 451 (S.C.) in this regard. 24. We have considered the submission. We find that it is admitted and undisputed fact that all three manufacturing companies were selling only 60% of their products to the so-called related marketing company viz. CML. There is no dispute that remaining 40% clearances were to independent buyers including industrial consumers. It is not the case of the department that the price at which the goods were being sold to CML was different from the one being charged from the independent buyers. Therefore the price at which the goods are being sold to CML cannot be said to be influenced by the so-called relationship between them. In view of this, even if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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