TMI Blog2005 (6) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... t the divestiture of its business vide a letter dated 5-1-1994. 1.3 A price list, consequent to the change in marketing of detergent powder of Ariel brand. In this price list it was specifically mentioned that from 1-11-93 Ariel branded detergent powder was to be sold by PGIL to PGHP and that two Directors of PGIL and PGHP are common. In the questionnaire filed along with the price list, PGIL informed that Ariel detergent powder was sold to the stockists through the depots all over the country and consequent to the transfer of marketing and distribution of Ariel detergent powder business to PGHP with effect from 1-11-93, the entire production would be sold to PGHP. The price at which Ariel detergent powder was sold to PGHP was declared as the basis and value was arrived at accordingly. The assessable value declared in this price list was less than the assessable value declared earlier. 1.4 (a) The Superintendent of Central Excise vide letter dated 11-1-1994 referred to the price list No. 43 dated 3-1-94 and directed PGIL to file the price list in Part IV as per the provisions of Rule 173C(2) of the Central Excise Rules, 1944 on the ground that the entire production of Ariel was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of officers of Audit branch including Assistant Commissioner visited the factory premises of PGIL on 13-2-1997 and 14-2-1997 and checked the records maintained by PGIL. The queries raised by the officers were replied by PGIL by letter dated 20-3-1997. Copy of the agreement entered into by PGIL with PGHP was again submitted by PGIL. PGIL vide letter dated 30-6-1997 the information called for by the Superintendent of Central Excise (Audit) letter dated 14-2-1997. (ii) The Superintendent (Preventive) along with his team visited the factory premises of PGIL on 26-8-1995, checked the records maintained by PGIL at the factory and seized certain records and stocks. (iii) PGIL vide letter dated 30-8-1995 to the department categorically submitted the relationship between it and PGHP as also shareholding pattern of PGIL, PGHP, Richardson Vicks Inc. USA and the Proctor Gamble Company, USA. The Proctor Gamble Company, USA who is holding company of Richardson Vicks Inc. USA was also informed in this letter. Shareholding pattern of PGIL was also submitted along with the other answers to the queries. The shareholding pattern of PGHP was also informed. The fact that Proctor Gamble Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P prior to 31-3-1994 which was declared in the price list filed under Rule 173C and the price at which the goods were sold by PGIL to PGHP after 1-4-1994 as shown in the invoices issued by PGIL. The difference in the aforesaid value was treated as differential value and differential duty of Rs. 4,11,77,059/- had been demanded accordingly for the period from 1-4-1994 to June 1996. (e) Further, the show cause notice also alleged that during the period from 1-4-1994, although MRPs of the goods were revised upward, there was no proportionate increase in the assessable value based on the price at which goods were sold by PGIL to PGHP. Accordingly, differential duty of Rs. 1,55,22,330/- was demanded for the period from 1-4-1994 to 30-6-1996 by increasing the assessable value proportionately to the extent of increase in the MRP during the aforesaid period. 1.6 The Commissioner of Central Excise after hearing the appellants, confirmed the demands of duty on the following grounds: (a) The price at which the goods were sold by PGIL to PGHP after 1-4-2004 was not the sole consideration since PGHP have given an amount of Rs. 12.8 crores to PGIL as non-compete fee and licence fee. (b) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments could be a consideration to depart from Section 41(1)(a) "normal price". 2.4 The finding of the Commissioner that since Proctor Gamble Company, USA is ultimately holding company of both PGIL and PGHP, PGIL and PGHP are (sic) to be treated as 'related person' having interest in the business of each other, is unsustainable in law. In this regard reliance placed on the following decisions is well founded. (a) International Computer India Manufacture Co. Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 287. (b) Indian Oil Corporation v. CCE - 1990 (48) E.L.T. 80. 2.5 The decision of Supreme Court in the case of Flash Laboratories Ltd. v. CCE - 2003 (151) E.L.T. 241 as urged, is not applicable to the present case as - (a) The facts of the case of M/s. Flash Laboratories Ltd. are that Flash Laboratories Ltd. was the manufacturer of toothpaste with prudent brand name. They had sold the goods to their holding company M/s. Parle Products Ltd. which was the holding company of M/s. Parle Biscuits Ltd. also. Thus Flash Laboratories had sold part of the goods to its holding company and part of the goods to another subsidiary of the said holding company. The h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... South Asia Tyres Pvt. Ltd. vide Final Order No. A/219, 220/WZB/05-C-II dated 11-3-2005 [2005 (189) E.L.T. 304 (Tri.)], had arrived at a finding at para 2.1(c) therein that decision of the Supreme Court in the case of Flash Laboratories Ltd. v. Commissioner of Central Excise - 2003 (151) E.L.T. 241 cannot be treated as laying down the ratio that two subsidiary companies of one common holding company are inter se related on the ground of mutuality of business interest between them. That Bench referred to and relied upon the aforesaid decision of the Supreme Court in the case of Alembic Glass Industries Ltd. v. Commissioner of Central Excise reported at - 2002 (143) E.L.T. 244. Nothing contrary was shown to us, therefore following our earlier decision we would hold that PGIL PGHP cannot be related persons. The sales therefore in between two Public Limited Companies, as pleaded at arms length has to be accepted. 2.6 Entire goods sold to PGHP cannot be a ground to hold that sale price of PGIL is not normal price as :- (a) The fact that the entire goods were sold to PGHP cannot be a ground to hold that PGHP is related person. This submission is fully supported by the following dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited - 1988 (35) E.L.T. 647 would help the appellants case since it prescribes that the manufacturers price when sales are at arms length or all sales made to one customer cannot be rejected (see paras 6, 5, 2 and 7 of the decision). The price in that case was rejected by the Tribunal by relying on specific clause of the agreement that sales promotion of the product was to be done by the buyers. The issue and attempts of Revenue to add Advertisement Expenses incurred by the marketing agent of the assessee on the grounds of relationship has been finally laid to rest by the full Bench of the Apex Court in case of CCE, Baroda v. Beta Cosmetics Ltd. - 2005 (183) E.L.T. 122 (S.C.) = 2005 (122) ECR 389 (S.C.) as also that Common Directorship would not automatically bring in 'related person' clause into operation CCE, Surat v. Besta Cosmetic - 2005 (183) E.L.T. 132 (S.C.) = 2005 (122) ECR 390 (S.C.). This would call for coming to a conclusion that no reason exist for DR's reliance and Revenue's effort in this case to upset the valuation declared. 2.8 Before parting with this matter on valuation, we would like to observe that the Commissioner's determination of valuation based on enhan ..... 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