TMI Blog2002 (12) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. BPL Ltd., who were holding 11% of the share capital in M/s. BSUA and had been advertising for the said goods being manufacture by M/s. BSUA from April 1994, suggested that M/s. BSUA and M/s. BPL Ltd., had associated themselves in such a way so as to have an indirect interest between them in the business of each other; thereby rendering the transaction between them as not at arms length and the selling price between them as a price not in the normal course of wholesale trade. As it appeared that M/s. BSUA and M/s. BPL Ltd., were related persons in terms of Section 4 of Central Excise Act, 1944, having mutuality of interest in the business of each other, the price at which the goods were sold by M/s. BPL Ltd., to dealers appeared to be the normal price; hence M/s. BSUA were issued with an SCN dated 27-12-96 proposing finalisation of provisional assessment by revising the Assessable value by taking the price at which the goods were sold by M/s. BPL Ltd., to their dealers and demanding of Rs. 10,84,58,075/- as differential duty for the period April 94 to September 96. Four more SCNs were issued to the assessee covering the period upto June 98 which proposed to demand another Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng those documents has not been given by the Commissioner (Appeals). 5.The Commissioner (Appeals), vide Order-in-Appeal No. 237/2002 dated 1-5-2002 decided the issue de novo, arising along with other appeals filed by the assessee against O.I.Os No. 98/2000 dated 1-4-2000 and 119/2000 dated 21-9-2000 passed by the Assistant Commissioner of Central Excise, IV Division, Bangalore. The details of the product, period and duty involved in the three appeals are as follows : O.I.O. No. and Date Product Period Amount Rs. 151/98 dated 13-11-98 Washing Machines 4/94 to 6/98 9,10,98,179/- 98/2000 dated 14-8-2000 Washing Machines 7/98 to 2/99 1,80,62,763/- 119/2000 dated 21-9-2000 Vaccum Cleaners and Microwave Ovens 5/97 to 5/98 57,61,744/- TOTAL 11,49,22,686/- 6.Aggrieved by the above O.I.A. passed by the Commissioner (Appeals) present appeal is being filed by Revenue, on the following grounds : (a) The learned Commissioner of Central Excise (Appeals) while passing OIA No. 237/2002 dated 1-5-2002 has erred in holding that the price at which the goods were so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the said goods were concerned; that the activities of manufacturing and marketing were divided between them by way of an arrangement in which the costs of manufacturing and cost of marketing were also divided and thus the cost of marketing were not included in the Assessable value determined by the appellants, thereby rendering the transaction between them as not at arms length and the selling price between them as a price not in the normal course of wholesale trade; that on the other hand the said goods entered in to the main stream of market in the normal course of wholesale trade when the said goods were sold by M/s. BPL Ltd., to their dealers, thereby making the price at which M/s. BPL Ltd., were selling goods as a normal price in the course of wholesale trade as contemplated in the Act. (d) The learned Commissioner (Appeals), while setting aside the OIOs has erred by not discussing the observation made by the original authority that the agreement between the appellants and the buyer M/s. BPL Ltd., was an agreement for mutual benefit and was a colourful device adopted by the appellants to avoid payment of duty. The Hon'ble Supreme Court in the case of Union of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellants in the appeal was that the original adjudicating authority had violated the principle of natural justice by relying on the fresh documents not referred in the Show Cause Notice and by not giving a fair and reasonable opportunity to make their submissions on the documents. Under such circumstance, in all fairness, the learned Commissioner (Appeals) should have examined the veracity of such documents or remanded the case for fresh consideration. The learned Commissioner (Appeals) has erred manifestly by going ahead and setting aside the OIO without proper appreciation of various facts of the case evidenced by records. 7.After hearing both sides and considering the material it is found - (a) The Commissioner (Appeals) after considering that the letters [documents mentioned in para 6 (b) supra] having a mention of 'Transfer Price' would not effect the nature of transaction between BSUA BPL unless BPL is established to be a holding company. He held that a letter mentioning 100% control by the Chairman would not effect relationship or that of Monitoring of collections by BPL. Thereafter, he concluded that the inter-office memos especially No. CHM:BC:93 dated 18- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bic Glass Industries (supra) which is applicable, we find no cause to upset the findings arrived at by the Commissioner (Appeals) could be formed. (d) Even on merits the case of Revenue is found to be not sustainable for the following reasons. (i) The Assistant Commissioner had relied upon three documents to observe that the internal documents of the Respondents showed that the retail price is being determined by the Respondents. The three documents are letters dated 9-4-94, 2-12-94 and 5-12-94. The Assistant Commissioner had come to the conclusion that the price charged for the products by BSUA from BPL is in the nature of a transfer price and such transfer price is not the normal price under Section 4. Though he has not elaborated further, the reasons for holding such sale price as not normal price, it seems to suggest that there is no sale taking place between BSUA and BPL and that the transactions are more in the nature of transfer of goods from one division to another division of the same company. In this connection, the following aspects are to be noted. (a) BSUA and BPL are Public Limited companies which are widely held companies. Their stocks are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UA and not closeness. The transactions are therefore, in fact, at arms length and not the opposite as suggested by the learned Assistant Commissioner in the order-in-original and as being canvassed before use. (ii) The Order-in-Original next refers to letter dated 11-3-94 written by Shri T.P.G. Nambiar to the Chairman Chief Executive Officer, Sanyo Electric Co. Ltd., Japan in order to allege that T.P.G. Nambiar was controlling all the BPL group companies. The learned Assistant Commissioner had failed to appreciate the intent and purpose of this letter and the context in which it is written as BPL Limited had a long-term association with Sanyo Group, Japan. And it is to further that understanding between these two groups, this letter could be written. Further, it is clearly mentioned in the aforesaid letter that BPL group consisted of independent companies. In the present case, the companies have independent existence and operate through the Board of Directors and no one person or family can influence the decision of the company. The claim made by Shri T.P.G. Nambiar which are in nature of negotiation offers and not facts has been wrongly appreciated by the Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot ipso facto be treated as showing mutuality of business interest in each other in order to treat them as related person under Section 4 (4) (c) for treating the price of M/s. BPL Ltd., as the basis for determination of assessable value. Hence, the aforesaid letter dated 18-11-93 has no bearing on the issue. (v) The Respondents before us, rely on the following decisions in support of the submissions made by them and we find that these cases help them and not the case of Revenue. (a) Common directors in Public Limited Companies does not indicate interest in the business of each other : (1) Alembic Glass Industries Ltd., v. CCE - 2002 (143) E.L.T. 244 (S.C.) (2) Bharati Telecom Ltd. v. CCE, Chandigarh - 2002 (145) E.L.T. 399. (3) CCE Cus., Aurangabad v. P.N. Dhoot Investment Co. Pvt. Ltd., - 1999 (111) E.L.T. 118. (4) Affirmation by the Supreme Court of the above case of P.N. Dhoot as reported in Commissioner v. P.N. Dhoot Investment Co. Pvt. Ltd. - 2000 (120) E.L.T. A194 (S.C.). (5) International Computer India Manufacture Co. Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 287. (b) On mutuality of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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