TMI Blog2001 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... other buyers were given either no discount at all given or given discount up to 26%. The department's enquiries showed that the stockholding pattern of the HVIE and Powertech to be as follows : HVIE Share Holder No. of Shares Percentage Venugopal Nandlal Dhot 250 12.5% Himat Ratilal Vora 990 49.5% Jyoti Himat Vora 10 0.5% Sushmabai Rajkumar Dhoot 249 12.45% Nalinibai Pradipkumar Dhoot 500 25% Mecotex Consultants Pvt. Ltd. 1 0.05% Powertech Pradip Nandlal Dhoot 12% Rama Venugopal Dhoot 19% Sushma Rajkumar Dhoot 19% Ratilal Hirachand Vora 15% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earances made beyond six months and therefore invoked extended period contained in sub-section (1) of Section 11A of the Act alleging suppression of fact of relationship. The notice alleged propose to disallow the discount extended to HVIE beyond that actually passed on by it to its buyers and recovery of duty consequentially payable. Penalty on both companies was also proposed. In that order the Additional Collector has confirmed the proposal in the notice. He has found mutuality of interest in the business of each other and said that the price charged by Powertech to HVIE is not in sole consideration of sale. He justified the applicability of the extended period for recovery of duty, imposed penalty on Powertech and Hemant Ratilal Vora, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased 80% of the goods totally manufactured. HVIE also extends substantial discount and incur expenditure on advertisement. 7.We have seen the stock holding pattern in the HVIE and Powertech. It is clear therefrom that the entire stock of Powertech and HVIE, but for 0.5% of HVIE, is held by the family of Venugopal Dhoot and his close family members (specifically his wife, sister's in law) and Himat Vora and his family (his wife, brother and father). The Supreme Court in its judgment in Calcutta Chromotype v. CCE - 1998 (99) E.L.T. 202 has noted that the principle that the company under the Companies Act, 1956 is a separate entity where a manufacturer and buyer, if they are companies, cannot be related is not a universal application. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be shown that the manufacturer generally sells his goods to or through the related persons as the proviso itself provides. It must also be established that the price is influenced by the fact of relationship. That the Bombay High Court observed in Ralliwolf Limited v. Union of India - 1992 (59) E.L.T. 220 in this regard as follows : "Reading the section as a whole it is clear that merely because a company is the subsidiary of holding company ipso facto, it cannot attract Section 4(4)(c). It must be further established that each has interest in the business of the other. It must be further established that the transaction in question is not based on principal to principal and that extra commercial considerations have lowered the normal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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