Mohanlal Maganlal Bhavsar (Deceased) ... vs Union Of India (Uoi) And Ors. on 20 November, 1985
7. It is this aspect of identity of interest as between partnership firm which was stressed by the Supreme Court in the case of Mohanlal Maganlal Bhavsar v. U.O.I. -1986 (23) E.L.T. 3 in a case of valuation under Section 4 of Central Excises & Salt Act, 1944. The contention before the Court was that in determining the assessable value of the goods the price at which the petitioner sold the goods to their chief distributor, M/s. N.B. Bhavsar & Sons should have been adopted and not the wholesale price at which the goods were sold. The Supreme Court, however, observed that Bhavsar & Sons, though a separate partnership firm, was in fact a firm in which not only the original appellants \ were partners, but a son of each of them was also a partner. There was thus identity of interest, held the Supreme Court, between the two firms and further noted that both these firms had their offices in the same premises and under the partnership agreement the sons of the original appellants were to share only in the profits of M.B. Bhavsar and Sons but not to be liable for any losses. "These two firms, therefore, cannot be said to be at arm's length or independent parties and the prices at which the medicinal preparations were supplied by Bhavsar Chemical Works to M/s. M.B. Bhavsar & Sons cannot be taken to be the real value of the said preparations", held the Supreme Court. In the present case also, there is sufficient evidence, as noted above, to show such identity of interest amongst the firms under whose names the 3 units at Bulsar and the one at Bombay are run and because of that it cannot be held that these firms though separate are independent parties. The totality of circumstances in this case are * sufficient to show that Sh. Bhavnani and his wife in reality owned, directed and controlled the production of all the seemingly separate units, which served only as a facade to avail of the exemption.