TMI Blog2020 (3) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial consideration or flow back of money and free flow of money from one company to another, cumulatively, for indicating interdependence of the units with each other. In the instant case, there has been no free flow of money from one company to another nor has there been any money given by the two companies to the appellant company - the allegation of mutuality of interest fails. Further, there is nothing on record to show that the price charged by the appellant company from the said two buyer companies i.e. JBIL and SRBSL, had been influenced by either the common directors on the Board of the companies involved or due to the shareholding of the promoter group in the appellant and the said two buyer companies - The price agreed by the appellant company to the said two buyer companies at the time of entering into contracts were for bulk quantities to be supplied over the next twelve months. Such rates were in consonance with the price then prevailing and the difference of 20-30% alleged in the show cause notice is in respect of rates charged to other independent buyers under changed market conditions at a later point of time, for much smaller quantities. No additional cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHAREHOLDERS 2006-07 2007-08 2008-09 % % % ADITYA JAJODIA 4.08 4.08 3.74 RAJIV JAJODIA 0.01 0.01 0.01 SRBSL/JBIL NAME OF SHAREHOLDERS 2006-07 2007-08 2008-09 % % % ADITYA JAJODIA 8.14 6.01 6.01 RAJIV JAJODIA 3.31 3.33 3.33 2. Pursuant to EA-2000 audit undertaken by the Central Excise officers of the Bhubaneswar-II Commissionerate, the Commissioner of Central Excise Customs, Bhubaneswar-II Commissionerate issued a show cause notice dated 09.06.2010 in which it was alleged that the appellant had cleared excisable goods to related parties (JBSL, SRBSL and JBIL) during the period :- i) 2007-08 to 2009-10 to JBSL; ii) 2007-08 to SR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the claim of the learned Advocate that these two units are even though inter-connected undertaking of the appellant, but are not to be assessed under Rule 10(i) of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, as they do not have mutuality of interest and accordingly, the circumstances mentioned in Clauses (ii), (iii) and (iv) as laid down under the definition of related persons under Sub-section (3) (b) of Section 4 of Central Excise Act, 1944, are not satisfied. It is his submission that the learned Commissioner s finding that because the appellant and other two units have common Directors, common Head Office and also in the balance shown as related persons , therefore, these units be considered as related persons , is erroneous. It is his submission that these facts are not sufficient to establish mutuality of interest, in absence of free flow of interest in both the directions, hence, for the purpose of determination of assessable value, even though they do not dispute that these two units are interExcise connected undertakings, the assessable value be determined under Rule 10(b)(ii) of Central Excise Valuation Rules, 2000, i.e. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid-up share capital; (vi) anybody corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director of manager; (vii) any person on whose advice, directions or instructions a director or manager is accustomed to act: Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity; (viii) any company which is (A) a holding, subsidiary or an associate company of such company; or (B) a subsidiary of a holding company to which it is also a subsidiary; (ix) such other person as may be prescribed; It is under the Companies Act that the appellant company was statutorily required to declare related party transactions in its Annual Report under Schedule R. Whereas, the concept of related party under section 4(3)(b) of the Central Excise Act is narrower and reads as follows:- Section 4(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies, no company exercised managerial or financial control over the other companies. 9. It is settled law that there has to be extra commercial consideration or flow back of money and free flow of money from one company to another, cumulatively, for indicating interdependence of the units with each other. In the instant case, there has been no free flow of money from one company to another nor has there been any money given by the two companies to the appellant company. In view of the aforesaid, the allegation of mutuality of interest fails. 10. Further, there is nothing on record to show that the price charged by the appellant company from the said two buyer companies i.e. JBIL and SRBSL, had been influenced by either the common directors on the Board of the companies involved or due to the shareholding of the promoter group in the appellant and the said two buyer companies. The price agreed by the appellant company to the said two buyer companies at the time of entering into contracts were for bulk quantities to be supplied over the next twelve months. Such rates were in consonance with the price then prevailing and the difference of 20-30% alleged in the show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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