Custom, Excise & Service Tax Tribunal
C.C.E. Delhi-I vs M/S. Seth Brothers (Perfumers) Pvt. Ltd on 16 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. E/1103/2007 & E/616/2008-EX(DB)
[Arising out of Order-in-Appeal No. 29-30/CE/DLH/2006 dated 09.03.2007 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Delhi].
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Shri B. Ravichandran, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
C.C.E. Delhi-I .Applicants
Vs.
M/s. Seth Brothers (Perfumers) Pvt. Ltd. .Respondent
Appearance:
Shri Govind Dixit, DR for the Applicants Shri Seema Jain, Advocate for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Shri B. Ravichandran, Member (Technical) Date of Hearing: 16.05.2016 FINAL ORDER NO. 51981-51982/2016-EX(DB) Per B. Ravichandran:
These two appeals filed by the appellant dealing with common issue are taken up together for decision. The respondents are engaged in the manufacture of perfume liable to Central Excise duty. For sale of their items they were offering a discount of 10% to all industrial customers and a trade discount of 25% to retailers who have purchases above Rs.60 lakhs in a calendar year. During the course of audit of their accounts, officers found that one M/s. Seth Trading Company, a partnership firm is the only buyer purchasing goods for above Rs.60 lakhs and availing the trade discount of 25%. It is seen that M/s. Seth Trading Company is a partnership firm of four partners who are wives / sons of Directors of the appellant company. Hence by entertaining a view that the transaction between the appellant and M/s. Seth Trading Company can be considered as transaction between interconnected undertakings in terms of section 2(g) of MRTP Act 1969, proceedings were initiated to demand Central Excise duty short paid due to undervaluation of excisable goods. The demand notices issued were adjudicated by the original authority confirming the above view. On appeal the Commissioner (A) vide impugned orders allowed the assessee / respondents appeal holding that there is no ground for demanding differential Central Excise Duty. Aggrieved by these orders Revenue is in appeal.
2. The Ld. AR elaborated on the grounds of appeal. He submitted that M/s. Seth Trading Company is a partnership firm with partners who are closely related to the Directors of the respondent company and should be considered as interconnected undertaking in terms of section 2(g) of MRTP Act 1969. The term relative shall have the meaning assigned as per clause (41) of section 2 of the Companies Act, 1956. As the partnership firm is constituted by the partners who are either wives or sons of the Directors of the respondent company, the discount allowed to such firm is not legally tenable. Further, the Ld. AR also stated that there are certain outstanding amount from the trading firms which shows there was pre-arranged relationship and common interest. Both are working from same premises and the trading firm is using the logo and the name of respondent in their letter head and invoice etc.
3. The Ld. Counsel for the respondent on the other hand strongly contested the grounds of appeal and submitted that there is nothing new in these grounds which were not examined by the Commissioner (A) in his impugned orders.
4. We have heard both the sides and examined the appeal papers. The short point for discussion is whether or not M/s. Seth Brothers (Perfumers) P Ltd. - respondent in these appeals and M/s. Seth Trading Co. were interconnected undertakings for the purpose of valuation of excisable goods cleared by the respondent. We find that the original authority as well as Revenue in the grounds of appeal has fallen in error to consider two separate legal entities as interconnected undertakings without any legal basis. The respondents are a registered Pvt. Ltd. company having the status of a separate legal entity. The fact that some of the close relatives of the Directors of the respondent company are partners of trading company is of no consequence as clearly seen from the provisions of the section 2(g) of MRTP Act 1969 read with Boards classification dated 30.06.2000. We have perused the impugned order carefully. The Ld. Commissioner (A) examined in detail applicable provisions of law relevant to the issue and arrived at the conclusion that the respondent company and M/s. Seth Trading Co. are separate legal entities for all purposes and cannot be termed as interconnected undertaking or relative to each other. As correctly pointed out by Ld. Commissioner (A) for rendering the buyer a related person of the respondent in terms of sub section 4(3)(b) of the Central Excise Act 1944, relationship as described in clauses (ii), (iii) or (iv) has to be established and it is to be true that the buyer is also holding company or a subsidiary company of the assessee.
5. Regarding contention of the Revenue that certain outstanding amounts were shown pending on account of the trading firm, we find that there is no reason to consider the existence of outstanding amount as a reason for rejecting the transaction value including the trade discount offered to all. Working in the same premises or the trading firm using the logo and name of the manufacturing firm by itself are of no consequence to consider the transaction value as tainted. There is no allegation of flow back or extra commercial consideration in the transaction between respondent and the trading firm.
6. We find that the sales pattern is declared by the respondent in terms of the Rule 173(C) which has been examined by the Commissioner (A). He came t the conclusion that there is no deliberate omission or commission on the part of the respondent with the intention to evade payment of duty. As such he held that demand prior to 15.09.2003 is hit by time bar. We are in agreement with the said finding of the Commissioner (A).
7. In view of the analysis and categorical and clear finding in the impugned order we find no reason to interfere in the said order. Accordingly the appeals filed by the Revenue are dismissed.
[Operative part of the order pronounced in the open Court] (B. Ravichandran) (Archana Wadhwa) Member (Technical) Member (Judicial) Bhanu 5 E/1103/2007 & E/616/2008-EX(DB)