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TMI Blog2005 (2) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... sell most of their goods to M/s. Kores India Ltd., the brand name owners. They also sell their products to others at more or less the same price at which they sell their products to M/s. Kores India Ltd. (hereinafter referred to as KIL). Show cause notice was issued to the above three and as well as to their Managing Director, Director and other Officers alleging that the respondents no. 1 and 2 KIL are related persons and therefore, the assessable value of "KORES" brand Carbon Papers and Typewriter Ribbons should be determined on the basis of the price at which KIL sells them to its buyers under proviso (iii) to Section 4(1)(a) of the Central Excise Act, 1944. The charge of relationship was based upon the following : 1. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d majority of shares in noticees no. 1 and 2. 11. Both Thiranis have given crores of rupees of unsecured loan to noticee no. 2 who in turn have given loans at higher rate to other companies. 12. The dealings between no. 1 and 2 of one part and noticee no. 3 of the other part are not on principal to principal basis. 13. The buyer (noticee no. 3) is associated with the manufacturer (noticee no. 1 and 2) and they have interest directly or indirectly in the business of each other. 2. The notice proposed recovery of duty of Rs. 6,91,35,733/- and Rs. 1,31,32,260/- for the period from March, 1995 to December, 1999 and also proposed imposition of penalty on the three companies and their offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors of a Private limited company should hold any shares in that Company. It is not disputed that respondents no. 1 & 2 do not hold any shares in KIL, therefore, neither of them have any interest in the business of KIL. 4. We note that all the allegations relate to control of KIL over SASIL and SPPL but there is no allegation corresponding control by SASIL or SPPL over KIL. This would clearly show that there is no mutuality of interest itself between the SASIL and KIL or between SPPL and KIL, as regards the alleged control over maintenance of quality of goods, employment of staff and procurement of raw materials and office expenses. Raw materials are purchased by SASIL and SPPL from independent suppliers. Even if specialised raw mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oom v. CCE, Rajkot, reported in 2002 (139) E.L.T. 199 (T), relied upon by the learned SDR, is distinguishable as in that case the entire production of the manufacturer was sold to the Marketing Company while in the present case goods were sold by SASIL and SPPL to KIL as well as to others. This position has been accepted by the Revenue in its appeals wherein it is stated that 90% and 60% respectively of the sales of SASIL and SPPL have been made to KIL. 5. We also note that the case of the Department is that the persons behind the actual manufacturers, namely, SASIL and SPPL and the buyer i.e. KIL are the same, i.e. Shri A.K. Thirani and his family members and the employees of KIL of which Shri A.K. Thirani is the Joint Managing Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence, it appears to have been so stated in relation to and in the context of the facts of that case." In the same Alembic decision, the Apex Court further observed that "Shareholders of a Public Limited Company, do not, by reasons only of their shareholding, have an interest in the business of the Company". 7. The decisions relied upon by the Revenue in the case of P&B Pharmaceuticals (Pvt.) Ltd. v. Collector of Central Excise, reported in 1995 (76) E.L.T. 616 (T) and in the case of N.P. Textile Mills v. Collector of Central Excise, Bombay, reported in 1996 (88) E.L.T. 493 (T) have no application to the present case for the reasons that those decisions relate to partnership firms while in the present case, the manufacturers and the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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