TMI Blog2019 (5) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the admission of the directors that they are relatives and that 100% of the product of the unit are being transferred to the Balbeer group of companies , namely QMI and BRML. It has also been asserted that the directors are members of Hindu Undivided Family. These factors are immaterial in so far as relationship between two companies is concerned. The relationship of directors has no relevance whatsoever. Another allegation made in the SCN is that they are using common basic infrastructure and staff. We find that no specific instances have been pointed out. There are no evidences in support of the allegation that M/s VDI and M/s BRML are related in terms of Section 4(3)(b) of the Central Excise Act. Consequently, the demand of duty made against VDI for clearance made to BRML cannot be sustained - In the instant case it is not in dispute that part of the sales during 2010-11 and 2012-13 were to independent buyers. Moreover BRML is not a related entity. Thus, under these circumstances rule 8 can not be invoked - In respect of clearances made by VDI to QMI also Rule 8 of the Central Excise Valuation Rules cannot be invoked as during this entire period part of the clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case lf Mafatlal Industries 2009 (241) ELT 153, which was upheld by Hon ble Apex Court as reported in 2010 (255) ELT A77 (SC). He pointed out that in the instant case, the appellants unit VDI and the sister unit QMI are located in same plot, although separately registered with Central Excise. He argued that in such circumstances, Tribunal in the case of Dhampur Sugar Mills 2001 (129) ELT 73 has held that the benefit of Notification 67/95-CE also cannot be denied for clearance from one unit to another. He argued that two divisions are practically one factory although separately registered. He argued that similar findings has been given by the Tribunal in the case of Mahabir Jute Mills Ltd. 2007 (220) ELT 121 (Tri. Del.) wherein it has been held that two units cannot be treated as separate entities but are to be treated as one judicial person. In these circumstances, Ld. Counsel argued that the demand should be set aside on merit also. He further argued that demand should also be set aside on account of Revenue neutrality on the grounds of limitation as well as extended period of limitation has been invoked to demand the said amount. 2.3 Ld. Counsel furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956); The rule 8,9 and 10 of the Central Excise Valuation Rules read as follows: Rule 8. Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Rule 9. When the assessee so arranges that the excisable goods are not sold by an assessee except to or through a person who is related in the manner specified in either of sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail : Provided that in a case where the related pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BMPPL. BMPPL has commonly applied for loan and got it sanctioned on account of VDI and QMI. After mortgaging assets of VDI and QMI and they are enjoying common credit facility for both the divisions of the said group of companies. Capital asset of M/s VDI and QMI are owned by M/s BMPPL. The balance sheet and income tax returns are being filed in the name of BMPPL. They have common administrative office, head office and infrastructure. 2.6 Ld. Counsel pointed out that mere allegation that the VDI and BRML are interconnected undertaking is not sufficient to invoke Rule 8 of the Valuation Rules. He pointed out that to invoke Rule 8 read with Rule 9, it has to be established that the interconnected undertakings are also related in terms of sub-clause (ii), (iii) or (iv) of clause (b) sub-section 3 of Section 4 of the Central Excise Act. Ld. Counsel argued that the VDI and BRML cannot be relatives as only natural person can be a relative as held by Tribunal in the case of Reliance Industries Products 2012 (276) ELT 107. Ld. Counsel pointed out that situation envisaged in (iii) of Clause (b) of sub Clause (3) of Section 4 does not arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant are related to the buyers of the goods namely, Quartz Metal Industries (QMI) and Balbir Rolling Metal Pvt. Ltd (BRML). 4.1 In so far as status to QMI is concerned, it is admitted by the appellant that appellant as well as QMI are both divisions of Balbir Metal and Power Plant Ltd. (BMPPL), thus, it is apparent that the two are not only related but they are as essentially one and the same legal person. Ld. Counsel has argued that the entire duty demanded from the appellant is available as credit to the same legal entity viz BMPPL in its another division namely, QMI. He argued that the entire situation is Revenue neutral. He argued that in these circumstances the demand of duty cannot be sustained and he has relied on the following decisions. 1. Lanco Industries Ltd. Vs. CCE, Tirupathi- 2010 (255) ELT 275 (Tri. Bang.) 2. Trinity Dic Forgers Ltd Vs. CCE., Pune-I-2017 (348) ELT 276 (Tri. MUM.) In the aforesaid decisions, it has been held that the extended period of limitation cannot be invoked in such Revenue neutral circumstances when supplies are made from a unit to its sister unit, when both are part of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to obtain one consolidated licence for the manufacture of its goods within its factory complex as the object behind the grant of consolidated licence is that any person manufacturing different excisable goods within one factory area is entitled to obtain one licence instead of different licences for different commodities. The decisions relied upon by the learned SDR are not applicable as the facts are different. In Devidayal Electonics case the Bombay High Court was interpreting the term Industrial Unit . In fact in the said case it was observed by the Bombay High Court that as the Notification uses the word factory and it uses the word industrial unit, it must, therefore, be assumed that the words were intended to bear different meanings. Put differently the words Industrial Unit must mean something other than factory . Similar was the situation in the case of Dhampur Sugar Mills, 1998 (26) RLT (669). Accordingly we hold that the benefit of Notification No. 67/95 is available to the Appellants as the excisable goods have been used in the factory of manufacture only. Both the appeals are thus allowed. The said decision of the Tribunal has been approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said directors or their relatives are holding the position of Directors and thereby they have directly or indirectly associated concerned and have substantial mutuality of interest. It is seen from the above allegation that entire assertion in the SCN is based on the fact that there are some common directors. It is seen that BMPPL and BRML are two limited Companies. The Section 4(3)(b) prescribes that 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 under takings shall have the meaning assigned to it in the clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the above allegation is totally misrepresentation of the statute. The statute requires that the assessee and buyers should be related and not that the directors of the two entities should be related. It is seen that the allegations of relationship between the two is based on the admission of the directors that they are relatives and that 100% of the product of the unit are being transferred to the Balbeer group of companies , namely QMI and BRML. It has also been asserted that the directors are members of Hindu Undivided Family. We find that these factors are immaterial in so far as relationship between two companies is concerned. The relationship of directors has no relevance whatsoever. Another allegation made in the SCN is that they are using common basic infrastructure and staff. We find that no specific instances have been pointed out. Even otherwise use of certain common basic infrastructure and staff is not relevant in so far as establishing the relationship between two companies is concerned. In these circumstances, we do not find any evidence in support of the allegation that M/s VDI and M/s BRML are related in terms of Section 4(3)(b) of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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