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2016 (10) TMI 644 - CESTAT CHANDIGARH

2016 (10) TMI 644 - CESTAT CHANDIGARH - TMI - Valuation - related person u/s 4 (4) (c) of Central Excise Act, 1944 - assessable value - extended period of limitation - demand of duty with interest - imposition of penalty - constitution of firm referred - Held that: - constitutions of the firms states that the appellant M/s.Glory Hitech is company and M/s.Countech Systems is partnership firm and the trading company is also private limited company. From the constitution, it is clear that the appel .....

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iii) importantly the price charged from the related person was not the normal price but a price lower than the normal price and because of extra commercial consideration, the price charged was less than the normal value - the appellants are not related persons in terms 4 (4) (c) of Central Excise Act, 1944 - Certain advances given by trading company to the appellants - Held that: - it is routine practice in the business that buyers of the goods give certain advances to the suppliers, therefo .....

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ous banks, the additional benefits were given on the goods such as warranty, installation, commissioning, testing, after sale services, maintenance, etc. The price charged by the trading company includes these services charges, their profit and cost alongwith machines, in that circumstance, it cannot be said that the price of trading company is the influenced price of the goods sold by the appellant. - Appellant and trading company not related to each other - demand not sustainable - appeal .....

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. The facts of the case are that M/s.Glory Hitech Ltd. and M/s.Countech Systems were engaged in the manufacture of currency counting machines during the impugned period. These appellants supplied the entire manufactured quantity to M/s.Jay Enn India (P) Ltd. except for the period 1997-98. The appellants were selling these machines to the trading company @ ₹ 60,000/- upto 31.3.1997 and from @ ₹ 40,000/- per machine and further trading company was selling these machines to banks for pr .....

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d period of limitation and the same was adjudicated, the demand confirmed alongwith interest and penalties were imposed on all the appellants. Aggrieved with the said orders, the appellants are before us. 3. Learned Counsel for the appellants submits that the trading company and the appellants are not related persons in terms of section 4 (4) (c) of Central Excise Act, 1944 as two persons can be related persons only if there is mutuality of interest i.e. they have direct or indirect interest in .....

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appellants and the trading company are not related person. He submits that the advances received are only for commercial purpose and price of principal input charged by the trading company is not on lower side. He also submits that even if the entire sale of production is made by one person to another person the same cannot be treated as related person in view of the decision of this Tribunal in the case of Kanchan Industries (supra). He further submits that the price charged from the bank cann .....

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he extended period of limitation is not invokable. Consequently, the penalties are also not imposable. 4. On the other hand, learned AR submits that as director of the trading company and the appellants are related to each other, therefore, the selling price is influenced, further, the appellants were selling the goods at higher price in the open market. Therefore, the appellants have intentionally undervalued the goods by clearing the goods at lower price to the trading company, therefore, the .....

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Systems and Directors of the Trading Company: The appellant Trading Company Relationship of Trading Company s Director Poonam Bhattacharya Neelam Chakraborthy Sister A.Bhattacharya (from 20.1.98 J.Chakarborthy First cousins 7. We find from the above constitutions of the firms that the appellant M/s.Glory Hitech is company and M/s.Countech Systems is partnership firm and the trading company is also private limited company. From the aforesaid constitution, it is clear that the appellants and the t .....

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nd (iii) importantly the price charged from the related person was not the normal price but a price lower than the normal price and because of extra commercial consideration, the price charged was less than the normal value. 8. Further in the case of Alembic Glass Industries (supra) 7.In our view, this is the heart of the matter. The shareholders of a public limited company do not, by reason only of their shareholding, have an interest in the business of the company. Equally, the fact that two p .....

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