TMI Blog2002 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... uits Limited is also a subsidiary company of Messrs. Parle Products Limited. Therefore, the relationship between the appellant and Messrs. Parle Biscuits Limited, though indirect, they have mutual interest in the business of each other. The facts and circumstances of the case show that there is mutuality of interest between the three companies as sixty per cent of the products of the appellant are sold to Messrs. Parle Products Limited and the remaining forty per cent of the total product of toothpaste is being sold to Messrs. Parle Biscuits Limited. Moreover, Messrs. Parle Products Limited are incurring the expenses for sales promotion and advertisement for the sale of the appellant's product, namely, "Prudent toothpaste". Thus no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Aggrieved by the same, the appellant filed an appeal before the Custom Excise Gold (Control) Appellate Tribunal. The Tribunal confirmed the demand, but reduced the penalty to Rs. 50,000/-. Civil Appeal No. 5619 of 1994 is directed against that decision of the Tribunal. 2.Based on the original order dated 26-4-1991, further show cause notices were issued to the appellant. The appellant filed an appeal to set aside the order-in-original, dated 26-4-1991. The Asstt. Collector, Central Excise, dropped the proceedings against the appellant on the ground that the issue regarding "related person" had already been decided in favour of the appellant by the Collector (Appeals), Central Excise, New Delhi, vide order dated 23-8-1991. The Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsidiary company of Parle Products Limited. Messrs. Parle Products Limited has also another subsidiary company, that is, Messrs. Parle Biscuits Limited. Sixty per cent of the products manufactured by the appellant are sold to Messrs. Parle Products Limited and forty per cent of the products are sold to Parle Biscuits Limited. According to the respondent, the appellant and Messrs. Parle Biscuits could be treated as "related person" within the meaning of Section 4(4)[c] of the Central Excise Act, 1944. 4.Section 4 of the Central Excise Act, 1944 deals with valuation of excisable goods for purposes of charging of duty of excise and as per Section 4(1)(a), the value shall be deemed to be the normal price thereof, that is to say, the price at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated person is a person who is so associated with the assessee that they have interest, direct or indirect, in the business of each other and includes a holding company or a subsidiary company and is being used in sufficiently restricted sense for employing a legal fiction. 6.In Union of India Ors. v. Atic Industries Limited - (1984) 3 SCC 575, the assessee was a limited company manufacturing dyes. Fifty per cent share capital of the assessee was held by a limited company, AP Limited and the remaining fifty per cent thereof was held by a foreign company, ICI Limited, London. The ICI Limited, London, was having fifty per cent share capital of an Indian company, CDC Limited. The assessee sold the dyes manufactured by it in wholesale to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the business of each other. Each of them must have a direct or indirect interest in the business of the other. The equality and degree of interest which each has in the business of the other may be different; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect." 7.Having regard to the above decision and the plain meaning of the definition of "related person", it is to be noticed that the appellant is a subsidiary company of Messrs. Parle Products Limited and Messrs. Parle Biscuits Limited is also a subsidiary company of Messrs. Parle Products Limited. Therefore, the relationship between the appellant and Messrs. Parle Biscuits Limited, though i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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