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Commissioner of Central Excise Mumbai-III Versus Shri. B.G. Gandhi M/s. Jaishri Engg. Co. Pvt Ltd

Valuation - related party transaction - whether the appellant and partnership firm concern M/s. Randeep Automobiles wherein HUF of Shri. B.G. Gandhi and M.G. Gandhi are the partners are related person and value at which the M/s. Randeep Automobiles sold the goods shall be treated as transaction value of the appellant - Held that: - there is nothing on record that there is any flow back of any extra consideration from M/s. Randeep Automobiles to the respondent company. Respondent company is a pri .....

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ber (Judicial) And Mr. Raju, Member (Technical) Shri. Sanjay Hasija, Superintendent(A.R.) for the Appellants Shri. H.G. Dharmadhikari, Advocate for the Respondent Per : Ramesh Nair This appeal is directed against Orders-in-Appeal No.AT/630 & 631/M-III/2005 dated 30-11-2005 passed by the Commissioner of Central Excise(Appeals), Mumbai Zone-II, whereby ld. Commissioner(Appeals) allowed the respondent's appeal therefore Revenue is before us. 2. The issue involved is whether the appellant an .....

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h the said trading concern and since Shri. B.G. Gandhi and M.G. Gandhi also directors of the respondent company both the concern are related as per the valuation provision effective from 2000, the value at which goods were sold by M/s. Randeep Automobiles shall be the assessable value for the purpose of charging excise duty on the clearances made by the respondent's company. The adjudicating authority also observed that payment of ₹ 5 Lakhs was paid by the respondent company to Mrs. Go .....

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ation provisions of 2000, price at which M/s. Randeep Automobiles sold the goods of respondent company should be taken as assessable value. 4. Shri. H.G. Dharmadhikari, Ld. Counsel for the respondent submits that respondent is private limited company and M/s. Randeep is partnership concern wherein no independent person such as Shri. B.G. Gandhi and M.G. Gandhi are the partners. He further submits that even if the independent director of the respondent company are the partners of partnership conc .....

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missions made by both sides. 6. We find that there is nothing on record that there is any flow back of any extra consideration from M/s. Randeep Automobiles to the respondent company. Respondent company is a private limited company and M/s. Randeep Automobiles is partnership firm therefore both are not related in the eyes of the law. The transaction of ₹ 5 lakhs as loan on payment of interest cannot be the reason for holding partnership and private limited as related person. Ld. Commission .....

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o allegation that the prices charged to M/s. Randeep Automobiles were lower or depressed than the prices charged to other Wholesale Dealers/Government Agencies for 65% of the goods. This was reiterated by the appellants before the adjudicating authority at the time of personal hearing on 19.05.2005 as recorded in para 26 of impugned order. This is not contested by the adjudicating authority. M/s. Randeep Automobiles are buying only nearly twenty fine percent of the goods from appellant No.1 and .....

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present case is squarely covered by the law declared by the Apex Court in Saci Allied Products Vs. CCE - Meerut[2005(183) ELT 225(S.C.)]. In that case the appellants were selling 65% of the goods to independent wholesaler buyers. Though the price for 'related person' was less, the duty was being paid at the price charged to independent wholesale buyers. It was held that- "Where sales are made by the assessee to wholesale buyers who are unrelated and also to buyers who are related th .....

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sfying the requirement of Section 4(1) (a) of the Act is available, then that price should be treated as the assessable value even in respect of sales is related person also'/. In view of the above finding the question whether M/s. Randeep Automobiles could be treated as a related person of appellant No.1 is a question of academic interest only. The adjudicating authority has relied upon the Apex court judgment in CCE Vs. I.T.E.C. (P) Ltd-2002(145) ELT 28C(S.C.). The ratio of the said judgme .....

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244 held that- The fact that two public limited companies have common director does not mean that one company has an interest in the business of each other" The provisions of related person have been incorporated in the act to check under valuation. When the price charged to alleged related person is same as that to independent wholesale buyers, no investigation into the nature of relationship is called for. The judgment discussed above was under Section 1 as it existed up to 30-6-2000. The .....

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