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TMI Blog2018 (2) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... held shares in the appellant company. Department harboured the view that appellant and the two firms are related to each other and having mutual interest; that appellants adopted lower prices to these two firms compared to that of other independent customers; that appellants were collecting certain amounts as twisting & straitening charges from these two firms by raising debit notes which are not being included in the assessable value. Accordingly, various show cause notices were issued dated 15.04.2005, 30.08.2005, 02.02.2006, 04.05.2006 and 26.07.2006, covering the period 12.05.2001 to 30.09.2005, cumulatively proposing demand of differential duty of Rs. 26,31,409/- and education cess Rs. 9,819/- - totalling Rs. 26,44,828/- alongwith interest thereon and imposition of penalties under various provisions. All these show cause notices were adjudicated by a common Order-in-Original No. 07/06-07(JN), dated 30.10.2006, wherein the adjudicating authority confirmed the proposed demand of duty along with interest appropriated an amount of Rs. 5.00 lakhs paid by them during investigation, imposed penalty of Rs. 21,44,588/- under section 11 AC of the Act and also imposed penalty of Rs. 2.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules, 2002 Un-quantified interest u/s 11AB of the CE Act. 8. E/1558/2012 10/2010 dt.30.3.2010 15/2012 (V-I) CE dt.8.3.2012 Rs.1,21,145 Penalty of Rs. 15,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 9. E/1559/2012 11/2010 dt.30.3.2010 15/2012 (V-I) CE dt.8.3.2012 Rs.2,75,779 Penalty of Rs. 30,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 10. E/1563/2012 22/2010 dt.24.8.2010 15/2012 (V-I) CE dt.8.3.2012 Rs.2,24,658 Penalty of Rs. 22,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 11. E/1562/2012 23/2010 dt.24.8.2010 15/2012 (V-I) CE dt.8.3.2012 Rs.1,61,041 Penalty of Rs. 15,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 12. E/1557/2012 25/2011 dt.4.7.2011 15/2012 (V-I) CE dt.8.3.2012 Rs.3,21,649 Penalty of Rs. 1,00,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of the CE Act. 13. E/2659/2012 42/2011 dt.29.11.2011 46/2012 (V-I) CE dt.28.6.2012 Rs.3,00,906 Penalty of Rs. 1,00,000 under Rule 25 of the CE Rules, 2002. Un-quantified interest u/s 11AB of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt In the matter of Black Gold Profiles Limited. (vii) The authorities below have failed to appreciate that in the absence of two-way interest or traffic of interest and mutuality of interest, inter connections cannot be inferred as held by the Supreme Court time and again. (viii) The orders of the authorities below fall foul of the decisions of the Apex Court in UOI Vs.Kantilal Chunilal, 1986(26)ELT 289 (SC), UOI Vs. Ind Lamps Ltd. 1989(43)ELT 161(SC), UOI vs. Atic Industries 1984(17) ELT 323 (SC), Alembic Glass Industries Vs. CCE, 2002(143)ELT 244(SC), CCE Vs. T.I. Millers Ltd 1988(35) ELT 8 (SC) and series of Tribunal decisions following the above judgments. The impugned orders are, therefore, manifestly untenable. Impugned orders are opposed to the decisions of the Tribunal particularly in the cases of Panchaj Kasturi Herbals India Limited Vs. CCE, 2010 (250) ELT 559 (T) and CCE Vs. Akash Ispat Ltd 2016(337)ELT 295(T), Reliance Industrial Products Vs. CCE 2012(276)ELT 107(T), CCE Vs. Seth Brothers Perfumers 2016(344)ELT 647 (T), Handy Wires Pvt. Ltd Vs. CCE 2015(329)ELT 169(T), Surya Wire Pvt. Ltd. Vs. CCE, 2017-TIOL-2979-CESTAT. (ix) Even assuming that there has been int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard both sides and have gone through the facts. The core issue that comes up for appellate decision concerns the interpretation of the definition of related personunder section 4 of Central Excise Act, 1944, read with definition of "interconnected undertakings" in Section 2(g) of MRTP Act, 1969. In particular, it is to be decided whether the shareholding of "close relatives" of the partners can be added to the shareholding of the partners themselves for the purposes of adjudging whether the partners of each firm hold directly or indirectly, not less than 50% of the share of another entity which is a body corporate. 6.2 The period of dispute in all these appeals spans from May 2001 to December 2010. Section 4 of Central Excise Act, which lays down statutory provisions concerning valuation of excisable goods for purpose of charging duty, was amended/substituted w.e.f. 01.07.2000, by section 94 of Finance Act, 2000. At the time of introduction of new section 4, the CBEC thought it proper to issue a circular No. 354/81/2000-TRU dated 30.06.2000 which sought to explain the changes brought about. In para 5 of the said circular, CBEC clarified that new section 4 essentially seeks to acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. (2) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of section 3. (3) For the purpose of this section,- (a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) persons shall be deemed to be "related" if - (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. Explanation. ___ In this clause - (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969); and (ii) relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(g) of MRTP Act, 1969, however, do not specifically indicate as to which of the categories (i) to (vii) of the said definition is attracted to the facts of the case in hand. Notwithstanding this omission, the original adjudicating authority has chosen to examine whether the said entities are inter-connected undertakings only from the aspect of Section 2(g)(iv). 6.6 In the Order-in-Original No. 7/06-07(JN), dated 30.10.2006 (related to appeal No. E/609/2008), the adjudicating authority has proceeded to examine the shareholding pattern in the background of the aforesaid provisions. In this case and also in respect of the adjudication orders in the remaining appeals, which have been upheld by the impugned orders thereat, all have arrived at the same conclusions to hold that the appellant and their two buyer firms are related to each other. In fact, the line of reasoning and conclusions arrived at by the adjudicating authority and confirmation thereof by lower appellate authority in respect of appeal No. E/609/2008, has been followed in respect of all the remaining 13 appeals. The adjudicating authorities have proceeded on the premise, which have been upheld by the lower appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower appellate authorities, it is to be seen whether the partners in M/s.AS Steel Tradrs hold 50% or more of shares of M/s Black Gold. Similarly, it is to be seen whether the partners of Sri Vijayalaxmi Steel Traders hold 50% or more than shareholding of M/s Black Gold. From the information supplied by Ld. Advocate during the hearing, the combined shareholding of partners of A.S. Steel Traders, namely S/Shri A. Nagesh, A. Mahesh and A. Jagadish as Directors of M/s.Black Gold works out to 30.80%. In the case of Sri Vijayalaxmi Steel Traders, S/Shri Ramesh Gupta and A. Jagadish, partners cumulatively own 33.80% of the shareholding as Directors of M/s Black Gold. Discernibly then, the combined shareholding of the concerned partners in each of the firms as Directors of M/s.Black Gold does not touch the 50% bench mark in each case, to bring the entities within the fold of interconnected undertakings and by implication related persons, for the purpose of Section 4 of the Central Excise Act. 6.9 The adjudicating authorities in all these cases have however taken the view that not only is the shareholding of the partners of the firms in the body corporate to be taken into account, the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of shareholding of close relatives. Secondly the conclusions arrived at by the adjudicating authorities in this regard are against all accepted principles of statutory interpretation. Words in a statute should be interpreted literally and as they stand, and the starting point for interpreting a statue, is the language of the statute itself. When the words of a statute are unambiguous, this first canon is also the last. This cardinal rule of interpretation has time and again been reiterated by higher appellate courts. For example, in the landmark judgment of Doypack Systems (Pvt.) Limited, Vs. Union of India [1988(36)E.L.T 201(S.C)], the Hon'ble Apex Court had, inter-alia, held as under: "56. The words in the statute must, prima facie, be given its ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given effect to see Chandravarkar S.R. Rao v. Asha Lata (1986 4 S.C.c. 447 at page 476), approving 44 Halsburys Laws of England, 4th Ed. Paragraph 856 at page 552. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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