TMI Blog2009 (2) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ble debentures for a value of Rs. 1200 lakhs to MBD - purchase of 0% fully convertible debentures cannot be held to be interest free loan extended by MBD to SVS - , in the absence of allegation of mutuality of interest on any other ground, even interest free loan extended by the buyer cannot to be a reason to hold that the sale price to the buyer is not a normal price – demand set aside. - E/397/2002 - 212/2009 - Dated:- 13-2-2009 - Ms. Jyoti Balasundaram, Vice-President and Shri P. Karthikeyan, Member (T) S/Shri R. Raghavan and M. Kannan, Advocates, for the Appellant. Shri V.V. Hariharan, JCDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)].- M/s. S.V. Sugar Mills Ltd., (SVS) cleared molasses to holding compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted buyer. Sale price of Rs. 860/- by SCS could not be adopted for assessment of clearances of molasses by SVS. SVS paid sales tax at a higher 30% ad valorem as against 4% CST paid by SCS for its sales of molasses to nearby Kerala buyers. The molasses generated in the tour co-operative sugar factories in the neighborhood of SVS had higher sugar content and better demand. Such molasses fetched a higher price. The assessee was under compulsion to clear molasses at a lower price due to lack of adequate storage capacity. During 1995-96 the appellants had produced 21,644.295 MTs of molasses whereas it had storage capacity of only 10,000 MTs. The sale price of molasses of different sugar mills also depended on the quantity, quality, terms of cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. U.O.I - 1992 (59) E.L.T. 220 (Bom.-HC) 2. Railis India Ltd. v. CCE, Bombay - 2000 (118) E.L.T 780 3. CCE v. Beacon Neyrpic Ltd. - 2001 (133) E.L.T. 590 (Tri.) 4. Y.N. Shah v. CCE, Mumbai-II - 2004 (170) E.L.T 353 The Commissioner apparently accepted the position that two entities could not be treated as related persons unless there was also mutuality of interest between them. He found mutuality of interest for the reason that MBD had purchased interest free 0% fully convertible debentures for Rs. 1200 lakhs from SVS. The appellants contended that debentures eventually got converted into equity shares at par and could be sold at the prevailing market price. This transaction was the sole basis for Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CCE, Delhi - 2002 (146) E.L.T. 190. 5. We have carefully considered the facts of the case and the submissions by both sides. We find that the impugned demand and penalty were ordered following a finding that the price charged for sale of molasses by SVS to MBD was not acceptable for assessment as the transactions were not at arms length. The Commissioner found SVS and MBD to be related on account of the fact that they were subsidiary and holding companies arid there existed mutuality of interest between them. We find that the Hon'ble High Court of Bombay had held in the case of Ralliwolf Ltd. v. UOI - 1992 (59) E.L.T. 220, after referring to the judgment of the Apex Court in the case of UOI v. Atic Industries Ltd. - 1984 (17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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