Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S Agp Engg. P. Ltd on 24 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 24/11/2015. DATE OF DECISION: 24/11/2015. Excise Appeal No. 2368 of 2007 [Arising out of the Order-in-Appeal No. 53/RPR-II/2007 dated 06/03/2007 passed by The Commissioner (Appeals), Customs and Central Excise, Raipur.] For Approval and signature : Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble 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? 2. Whether it would 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? 4. Whether order is to be circulated to the : Department Authorities? CCE, Raipur Appellant Versus M/s AGP Engg. P. Ltd. Respondent
Appearance Shri Govind Dixit, Authorized Representative (DR) for the appellant.
Shri Manish Saharan, Advocate for the Respondent.
CORAM: Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 53682/2015 Dated : 24/11/2015 Per. Sulekha Beevi C.S. :-
Revenue is in appeal challenging the impugned order which set aside the duty demand, interest and penalty.
2. The respondents are manufacturers of Iron and Steel products and hold Central Excise registration. During the period 22/03/2001 to 16/06/2003 the appellants cleared excisable goods to M/s J.S. Strips, Bhilai, M/s Alka Industries and M/s General Fabricators, Bhilai. A show cause notice was issued alleging that the respondents suppressed facts on goods cleared to the above three units, being related persons, with intention to evade payment of duty. After adjudication, order was passed confirming the duty demand, interest and penalty on the observation that all the above companies and firms have interest in the business of each other as the key persons of all the units are members of a family and are related persons. The respondents, filed appeal before the Commissioner (Appeals) who vide the impugned order set aside the demand, interest and penalty. Being aggrieved the Revenue is before the Tribunal.
3. The learned DR reiterated the grounds of appeal and submitted that the key persons of all the units are related persons. Therefore the profit accruing from sale thorugh such persons goes to the same family and this would establish mutuality of interest.
4. The learned Counsel appearing for the respondents argued that goods were sold to independent buyers also and the sale price charged from such unrelated buyers is not disputed by the authority. When price is available, this alone can be treated as price in respect all the sales made. Further that respondent is a private limited company.
5. We have heard the rival submissions and perused the records carefully. The Commissioner (Appeals) has set aside the demand on the following observation :
7. It is not the case of the Department that one company is a subsidiary of the other. Also there is no evidence of flow back of moneys from the buyer to the seller of the goods. It is also not the case of the Department that there is mutuality of the interest among the appellants and the buyers. Therefore, valuation in terms of the provisions of sub-clauses (i), (iii) and (iv) of clause (b) of sub-Section (3) of Section 4 of the Central Excise Act, 1944 is ruled out. Consequently, the question for decision gets limited to the provisions of sub-clause (ii). Whether the two limited companies or a private limited company and a firm or a private limited company and a proprietary concern can be said to be related in terms of sub-clause (ii) is what needs to be decided. The use of the word related in sub-clause (ii) has to be understood within the meaning of relative as defined under Section 6 of the Companies Act, 1956. A private limited company is an artificial person. It is a creation of the Companies Act, 1956. It is owned by its shareholders. It is now settled law that the shareholders of a company are distinct from the company itself. Merely because the shareholders of the two companies are relatives (the directors here), or the director of the private limited company and partners of the firm are relatives or the directors of the private limited company and the proprietor are relatives can it be said that the two limited companies are also related to each other. That it is not so has been so held in various pronouncements of the Courts and the Tribunal.
6. The Department has not been able to adduce any evidence to establish mutuality of interest in the above units. The observations of the Commissioner (Appeals) that merely because the key persons of all units are related or are members of a HUF it cannot be said that they are related persons under the Excise law is correct. We do not find any infirmity in the impugned order. The same is sustained.
7. In the result, the appeal of Revenue is dismissed.
(Operative part of the order pronounced in the open court.) (Sulekha Beevi C.S.) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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