TMI Blog2022 (12) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction value in terms of Section 4. The issue is settled in favour of the appellant - appeal allowed. - EXCISE Appeal No. 10102 of 2016 -DB, Excise Appeal No. 11993 of 2017, Excise Appeal No. 11200-11201 of 2018 and Excise Appeal No. 12992 of 2019 - FINAL ORDER NO. A/11765-11769 / 2022 - Dated:- 28-11-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Amal Dave, Advocate for the Appellant Shri Prabhat K. Rameshwaram, Addl. Commissioner (AR) for the Revenue. ORDER Briefly stated the facts of the case are that appellant is engaged in the manufacture of multi layer Printed Plastic Film and cleared to various District Co-operative Milk Producers Union (DCMPU for short) and also to the associated members affiliated to Gujarat Co-operative Milk Marketing Federation Limited (GCMMF for short). The case of the department is that the buyer of the appellant is inter-connected undertaking therefore, the price at which the goods were sold to DCMPU is not normal transaction value where the price is sole consideration. Accordingly it was contended by the Revenue that the value of the goods should be in terms of Rule 8 of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 pecified in either of sub-clauses (ii), (iii), or (iv) or clause (b) of subsection (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 person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8. Rule 10. When the assessee so arranges that the excisable goods are not sold by him except to or through an inter-connected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a body corporate and the other is owned by firm having bodies corporate as its partners, if such bodies corporate are under the same management, (vi) if the undertakings are owned or controlled by the same person or (by the same group), (vii) if one is connected with the other either directly or through any number of undertakings which are inter-connected undertakings within the meaning of one or more foregoing sub-clauses. Explanation I. - For the purpose of this Act, (two bodies corporate,) shall be deemed to be under the same management, - i. if one such body corporate exercises control over the other or both are under the control of the same group or any of the constituents of the same group; or ii. if the managing director or manager of one such body corporate is the managing director or manager of the other; or iii. if one such body corporate holds not less than (one fourth) of the equity shares in the other or controls the composition of not less than (one fourth) of the total membership of the Board of Directors of the other; or iv. if one or more directors of one such body corporate constitute, or at any time within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be deemed to be under the same management as the first mentioned bodies corporate. Explanation IV. In determining whether or not two or more bodies corporate are under the same management, the shares held by (financial institutions) in such bodies corporate shall not be taken into account. Illustration Undertakings N is inter-connected with undertaking A and undertaking C is inter-connected with undertaking B. Undertaking C is inter-connected with undertaking A; if undertaking D is inter-connected with undertaking C, undertaking D will be inter-connected with undertaking B and consequently with undertaking A; and so on. 24. Thus the term inter-connected undertakings covers large categories of legal entities/undertakings to whom goods are sold by the assesses which may be held as related person under the new definition. It may be noted that under the erstwhile provisions under Section 4, except for the specifically named categories, namely, holding company, subsidiary company, a relative and a distributor of the assessee and any sub-distributor of such distributor, buyer was held to be related to selling assessee only if they were so associated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dairies. The impugned order hold that M/s. GCMMF has a decisive role to play in financial matter on which the price of products is done. The impugned order holds that as per bylaw no.5.2.9, it is incumbent on GCMMF to plan overall production programme for the federation and its members keeping in view the market strategy. Bylaw no. 5.2.13 casts obligation on M/s. GCMMF to purchase or assist in purchasing raw material, etc and manufacture or collaborate with someone when required and bylaw no. 5.2.19 authorizes GCMMF to advise the members on price fixation, price policy, public relations and allied matters. She also relies on the fact that bylaw no. 9.2.1, 9.2.2, 9.2.3, 9.2.4 and 9.2.5 casts responsibility on member unions to abide by the directions given by the federation. She also pointed out that GCMMF is empowered to liquidate membership of any union faulty to the federation as per bylaw no. 5.2.30. She also relied on the balance sheet of GCMMF reflects the financial performances of the units owned by the federation as well as by the member unions of the federation. 4.4 On the basis of the above facts, she concludes that there is mutuality of interest in the business of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, allowed the writ petition and held that the Union and the Federation cannot be said to be related persons. The High Court has so held on the basis of a decision of this Court in the case of Union of India and Ors. v. ATIC Industries Ltd. reported in [1984 (3) SCC 575]. In this case, it has been held that in order to attract the definition of a related person in Section 4(4)(c), the assessee and the person alleged to be related, must have interest, direct or indirect, in the business of each other. It has been held that if there is a shareholder, then the shareholder may have an interest in the assessee company, but merely because some products are being sold by the assessee to the shareholder, it cannot be said that the assessee has any interest in the business of the shareholder. The ratio laid down in this case would fully cover the present case. In this case also, the Union, being a member of the Federation, may have an interest in the Federation. However, the question would be whether the Federation has any interest in the business of the Union. Merely because the Federation purchases milk from the Union would not be sufficient for the purposes of making the Federation a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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