TMI Blog2005 (3) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... rprises are the related persons in terms of erstwhile Section 4 of the Central Excise Act, whether penalties are imposable on all the Appellants and whether extended period of limitation is invocable for demanding Central Excise duty. 2. Shri B.L. Narasimhan, learned Advocate, mentioned that M/s. Kanchan Industries, a proprietary firm of Shri Ashok Khimavat started manufacturing Mixer - Grinders of Kanchan Brand since January, 1987 and closed down their manufacturing activity of mixer from 30-11-88; that M/s. Neha Industries, Appellant No. 2, a partnership firm of two partners, namely, Ashok C. Khimavat and Dilip Kumar Rai, started manufacturing unbranded mixer since September, 1987; that they closed down their activities in November, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is based on assumption and is against the law enunciated by the Supreme Court in the case of Moped India Ltd. v. Assistant Collector, 1986 (23) E.L.T. 8 (S.C.) wherein it has been held that because the after sale services were provided by the dealer, he cannot be treated as relative not being the relative of manufacturer; that it is wrong to hold that because the advertisement expenses were borne by M/s. Meghal Enterprises they were relative of the manufacturer. He relied upon the decision in the case of Moon Beverages Ltd. v. CCE, Meerut - 2003 (156) E.L.T. 396 (T) wherein it has been held that sharing advertising expenses would not amount to flow of additional consideration and unless Revenue is able to show that there is additional co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits. She, further, submitted that the dealings were not as principal to principal and were not at arms length as the manufacturing company had not sold their goods to any other party, except a few instances in May, 1987 which is very negligible compared to total sale; that even after the goods reached Meghal Enterprises, they were known in the market as those of Kanchan Industries; that Meghal Enterprises had not marketed any other similar goods, i.e. mixer grinders; that moreover the price list of Meghal Enterprises was circulated under the letter head of Kanchan Industries. She contended that mutuality of interest is established by the fact that Meghal Enterprises are bearing the cost of advertisement, after sale service and they were be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such peson has an interest, direct or indirect, in the business of the assessee. In the case of UOI . v. Atic Industries Ltd., 1984 (17) E.L.T. 323 (S.C.), the Supreme Court has held that each of them must have direct or indirect interest in the business of each other. In the present matters, the mutuality of interest has been presumed by Revenue on the basis of sale of entire production by the manufacturing units to M/s. Meghal Enterprises on the basis of mutually agreed price, the goods were known in the market to be those of Kanchan Industries, price list was circulated on the letter head of Kanchan Industries and the entire responsibilities of advertisement and publicity rested with Meghal Enterprises. These grounds do not satisfy the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween them. Normal commercial terms in agreement between the manufacturer and buyer do not constitute mutuality of interest between them. The second part of the definition of related person as given in Section 4(4)(c) of the Act is also not attracted as it is not that a natural relative is purchasing the goods. Meghal Enterprises as a partnership concern and M/s. Kanchan Kitchen Aid P. Ltd. is a company under the companies Act. We thus hold that the Revenue has not succeeded in establishing that M/s. Meghal Enterprises are a related person. To this extent we allow the appeal without going into the aspect of demand being time-barred. As the question of clubbing of the value of clearance has not been pressed before us, the matters are remand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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