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TMI Blog2024 (6) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... on Director and controls the management of the appellant and the buyer companies. Accordingly, it was alleged that the appellant has evaded Central Excise Duty of Rs. 1,21,97,209/- and a Show Cause Notice dated 22.04.2010 was issued to the appellant demanding the differential duty. The Notice was adjudicated vide the impugned order wherein the Ld. Commissioner has confirmed the demand of duty of Rs. 1,21,97,209/- along with interest and penalty. Aggrieved against the impugned order, the appellant has filed this appeal. 3. The Appellant submits that they used to sell their finished goods to different buyers, including their group Company Units, as per the prevailing market price on the date of clearance. The officers of the Directorate General of Central Excise Intelligence (DGCEI), Shillong Regional Unit, Guwahati, conducted investigation on 24.03.2009 and alleged that the Appellants sold their finished goods to their group companies on grossly undervalued price during the period from April 2005 to January 2008 and thereby evaded Central Excise Duty. The appellant submits that they have cleared their finished goods to other unrelated units also at the same price. The appellant fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(1) of the Centra Excise Act, 1944? (III) Whether the entire issue is barred by limitation of time? 7. Whether M/s. Meghalaya Cast & Alloys Pvt. Ltd., M/s. Shree Ganapati Rolling Mills Pvt. Ltd. and M/s. Pawan Casting (Meghalaya) Pvt. Ltd., private Limited companies registered under the Companies Act, 1956, are distinct legal entities or related persons to the appellant in terms of Sec.4(3)(b)(i) and (iv) of the Central Excise Act, 1944? 7.1. The first issue to be examined in this appeal is whether the appellant company and the Group companies to whom the appellant sold the goods are 'related persons' as Central Excise Act, 1944. We observe that Sec. 4(3)(b) of the Central Excise Act, 1944 which defines "Related Person" as - (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 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 undertakings" shall have the meaning assigne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d several grounds in support of the writ petition before the High Court but it is not necessary to refer to them in detail, because the High Court ultimately decided the writ petition in favour of the assessee only on two grounds and it will, therefore, be enough if we refer to those two grounds alone and consider whether the decision of the High Court is correct in so far as it decided those two grounds in favour of the assessee. The first ground was that the concept of "related person" occurring in clause (c) of sub-section, (4) of section 4 of the amended Central Excises and Salt Act, 1944 was outside the legislative competence of Parliament under Article 246 read with Entry 84 in the Union List and was, therefore, unconstitutional and void. This ground found favour with the High Court in view of the earlier decision given by the same Bench on 20/21 February, 1979 in Special Civil Application No. 119 of 1976. But, this decision of the High Court striking down clause (c) of sub-section (4) of section 4 of the amended Act cannot stand in view of the decision of this Court in Union of India v. Bombay Tyres International Limited (1984) 1 SCC 467 = 1983 E.L.T. 1896 (SC) where an iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter sold the dyes to the dealers or the consumers, represented the true measure of the value of the dyes for the purpose of chargeability to excise duty. This conclusion reached by the High Court was assailed before us by the learned Attorney General appearing on behalf of the Revenue. He fairly conceded that the only part of the definition of "related person" in clause (c) of sub-section (4) of section 4 on which he could reply was the first part which defines "related person" to mean "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other". The second part of the definition which adds an inclusive clause was admittedly not applicable, because neither Atul Products Limited nor Crescent Dyes and Chemicals Limited was a holding company or a subsidiary company nor was either of them a relative of the assessee, so as to fall within the second part of the definition. But we do not think that even the limited contention urged by the learned Attorney General on behalf of the Revenue based on the first part of the definition can succeed. What the first part of the definition requires is that the person who is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is and then sells such dyes in the market. The assessee is not concerned whether Atul Products Limited sells or does not sell the dyes purchased by it from the assessee nor is it concerned whether Atui Products Limited sells such dyes at a profit or at a loss. It is impossible to contend that the assessee has any direct or indirect interest in the business of a wholesale dealer who purchases dyes from it on principal to principal basis. The same position obtains in regard to Crescent Dyes and Chemicals Limited. Perhaps the position in reard to Crescent Dyes and Chemicals Limited is much stronger than that in regard to Atul Products Limited. Crescent Dyes and Chemicals Limited is not even a shareholder of the assessee and it has, therefore, no interest direct or indirect in the business of the assessee. It is Imperial Chemical Industries Limited, London which holds 50 per cent of the share capital of the assessee and this foreign company also holds 40 per cent of the share capital of Crescent Chemicals and Dyes Limited. Imperial Chemicals Industries Limited, London would admittedly have an interest in the business of the assessee in its capacity as a shareholder, but how can Crescen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has not brought in any evidence to substantiate the allegation that the appellant company is related to the group companies to whom the appellant has sold the goods. Accordingly, the answer to question no. (I) at paragraph 6 (supra) is in the negative. 8. Whether the price determined by the appellant on the basis of prevailing market price at the time of removal of the finished goods was the "Transaction Value" in terms of Sec. 4(3)(d), and the price is to be determined in terms of Sec.4(1) of the Central Excise Act, 1944? 8.1. The issue to be decided here is whether the price charged by the appellant to their group companies can be considered as 'Transaction Value' for the purpose of payment of duty. We observe that the transactions between the appellant and their customer were on principal-to-principal basis and the price charged by the appellant to the customer was the sole consideration for the sale. There was no evidence brought on record to establish that the appellant has collected any extra commercial considerations from the customers. We observe that the price charged by the appellant was on the basis of prevailing market price at the time and place of removal a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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