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2018 (4) TMI 753

for determination of duty on the appellant? - Held that: - “Related person” as given in Section 4(4)(c) must be a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other - it cannot be said that there was mutuality of interest in the business of each other. EJIPL, making payment for goods supplied by the appellant, on account ‟basis cannot be a reason to allege financial inter-dependence - there is no justification to hold that the two entities are related persons in terms of Section 4(4)(c) of the Central Excise Act. Since the sale of goods by the appellant to EJIPL is on principal to principal basis, there is no justification to adopt the price at which EJIPL sell s .....

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are entirely cleared to ME - 1 for further use in the manufacture of mixers and juicers. Such mixers and juicers are entirely sold to M/s Electrocom Juicer (India) Pvt. Ltd. (EJIPL). Various plastic body parts for mixers and juicers are manufacture by M/s Eskay Polymers Pvt. Ltd. (EPPL). EJIPL was originally manufacturing juicer and mixers till 1986 and thereafter they were purchasing the said goods from the appellant. The Department investigated an allegation that the appellant was clandestinely clearing goods without payment of duty to EJIPL and also that the appellant was undervaluing the goods cleared to them. Upon conclusion of investigation and issue of show cause notice both charges were upheld by the original adjudicating authority .....

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h Sagar, Managing Director of EJIPL was the person who was looking after and controlling not only EJIPL but also EPPL as well as both the units of the appellant. The juicer s and mixer s cleared by the appellant was sent to EJIPL where they were packed and affixed with brand name and sold at price s which were higher than that at which the appellant cleared the same to EJIPL. (ii) The Department further found that there was financial inter independence bet ween EJIPL and appellant since funds were flowing to and fro between these firms without any reference to the actual bills or sale of goods. The payment for goods supplied by appellant to EJ IPL was not accounted and paid consignment - wise but was made on account. (iii) The Department co .....

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cipal to principal basis. (v) The salaries of the employees of the appellant as well as EJIPL were paid only by the respective firms. Even though payments are made on account of goods supplied to EJIPL, the accounts are settled periodically at the end of the financial year. A Chartered Accountant ‟s Certificate has been submitted before the Adjudicating Authority regarding reconciliation of the ledger entries for the period under dispute. (vi) There is no justification for adopting the value of the goods sold by EJIPL for clearances made by the appellant to EJIPL. (v) The allegation of clandestine clearance cannot be made only on the basis of the Outward Register maintained by the Security Guard. The Adjudicating Authority has not tak .....

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L as well as EPPL. (iii) Money was flowing to and fro between the two firms without any reference to actual business deal t or sale of goods. 9. Related person as given in Section 4(4)(c) must be a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other. In the present case, we note that the appellant is a proprietorship concern with Proprietor Ms. Bulbul Dilshad David. EJIPL, on the other hand is a private limited company with Sh. Suresh Sagar, Managing Director. The two have independent existence in the eye s of law as they are registered separately under various Authorities. The appellant manufacture d and supplies mixer and juicer to EJIPL who was a trader and who in tur .....

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