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TMI Blog2019 (12) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... ly sold to the sub-distributors/in the market. Alleging that M/s Adelphi Pharmaceuticals and M/s Heilen Lab are related to the Appellant M/s Sigma Laboratories in terms of Section 4(3)(b)(iv) of Central Excise Act, 1944 as they were having mutual interest in the business of each other show Cause Notice was issued to the Appellant demanding differential duty of Rs. 25,73,350/- along with interest and penalty, taking into consideration the price at which the goods are sold by the Appellant to the sub-distributors as the transaction value. On adjudication, the demand was confirmed with interest and penalty; personal penalty was also imposed on Appellants Shri Dilip Coulagi and Mrs. Nayana Dilip Coulagi under Rule 26 of Central Excise Rules, 2002. Hence, the present Appeals. 3. The learned Advocate for the Appellant has submitted that the parties viz. M/s Adelphi Pharmaceuticals and M/s Heilen Lab are independent Loan Licensors and not 'related' to the Appellant within the meaning of 'related person' prescribed under Sec.4(3)(b) of CEA,1944 as wrongly held by the learned Commissioner. It is his contention that the purchases and sale of the goods are on principal to principal basis an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete equity share holding in M/s Sigma Laboratories except 8% which is held by IDBI Bank. The learned A.R. for the Revenue has further submitted that from the statements recorded during the course of hearing and discussion by the Adjudicating authority in the impugned order, it is established that the value at which M/s Sigma Laboratories sold the goods in the market/distributor be considered as transaction value. Referring to the statements recorded and accepted by the Commissioner in the Order, he has submitted that Shri Chandramauli in his statement dt.05.08.2004 stated that the transaction value adopted by the Assessee-Appellant is mis-leading. In his statements Shri Sunder Nair, AGM (Excise) recorded on 16.10.2004, 19.12.2004, 18.05.2007 and 01.06.2007 admitted the fact that the value declared by the Appellant is 30% less than the transaction value due to huge advertising expenses borne by the Assessee. Shri Chanderkant M. Rode, Officer (Excise) also admitted that the value at which the goods sold by M/s Sigma Laboratories is 30% less than the trading price. Further, he has submitted that the Managing Director Shri Dilip S. Coulagi in his statement dt.10.05.2007 accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also the proprietor of M/s Adelphi; Mrs. Nayana C. Coulagi, wife of Shri Dilip S. Coulagi was the proprietor of M/s Heilen Labs and Director of the Appellant till 2004. Also, it is not in dispute that majority share holding in the Appellant's company is held by Shri Dilip S. Coulagi in association with his family members and only minor portion is held by the Financial Institution i.e.IDBI. 9. Analysing the evidences on record, the learned Adjudicating authority observed that the Appellants not only manufactured the goods under loan licence agreement on job work basis for M/s Adelphi Pharmaceuticals and M/s Heilen Lab, but also purchased the entire production for further sale in the market as sole selling agent/wholesale distributor of the Loan Licensors. The agreement between the Appellant and loan licensor reveals that the Appellant was given absolute right to fix the MRP of the medicines bearing brand name of M/s Adelphi Pharmaceuticals and M/s Heilen Lab. The learned Adjudicating authority analysing the evidences recorded in the Orded as follows:- "124. The arrangement between M/s Sigma and M/s Adelphi and between M/s Sigma and M/s Heilen has been very well elaborated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging duty on the price less 30% of the MRP; and in turn selling the goods to the independent dealers/retailers as sole distributor of M/s Adelphi and M/s Heilen. Hence, in the present case, the role of M/s Sigma is not restricted to job work alone but extends further to determine the MRP/Price, and advertise for the products manufactured and carry on whole sale distribution/ marketing of the said products. In the present case, as the loan license holder, manufacturer as well as sole selling agent are the related persons, the value at which M/s Sigma sells the goods to their independent dealer is the price to be considered for the payment of duty. Alternatively, even if the goods were manufactured by M/s Sigma not on loan license basis, the value would have been the price at which the goods were sold to independent wholesale dealers. I, therefore, hold that the differential duty is rightly demanded and is required to be recovered under the proviso of Section 11A of the Central Excise Act, 1944 along with interest under Section 11 AB of Central Excise Act, 1944. 10. The Hon'ble Apex Court in similar circumstances in the case of M/s I.T.E.C. (P) Ltd.'s case, where the entire bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the price at which the Appellant sold the manufactured goods to the subdistributor be considered as a transaction value as per Sec.4(1)(b) of CEA,1944 read with Rule 9 of The Central Excise Valuation Rules,2000. Therefore, the learned Commissioner has rightly confirmed the differential duty short paid by the Appellant. 12. The plea of the Appellant that the issue was decided in their favour l in the judgment of this Tribunal in the case of M/s Heilenlab Vs.CCE,Mumbai-II Order No. C-II/919-20/WZB/2000 dt. 23.4.2000 is mis-placed. The periodical notices were issued to M/s Helien lab who was a manufacturer of the P&P Medicines on job work basis, to add the excess discount of 22% claimed from the price as an additional consideration in determining the value of the goods sold. There has been no detailed investigation of their relation with the buyer, share holding pattern, etc. in the said case. However, in the present case the Appellant M/s Sigma Laboratories is the job-work manufacturer and M/s Adelphi Pharmaceuticals and M/s Heilen Laboratories were licensor & seller of the goods and the statements recorded in the instant case revealed the interse relation among the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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