Collector of Central Excise Vs. Parekh Dye Chem (P) Ltd.

Collector of Central Excise vs Parekh Dye Chem (P) Ltd.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Feb 03, 1997

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Citation: sooperkanoon.com/10738
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On: Feb 03, 1997
Subject: Land Acquisition

Case Summary

AI-generated summary - not the official court judgment text.

Land Acquisition

Key legal issue: Land Acquisition

Parties & Advocates

Appellant / Petitioner

Collector of Central Excise

Respondent

Parekh Dye Chem (P) Ltd.

Legal References

Reported In: (1998)(98)ELT648TriDel

Excerpt

.....for the purpose of reckoning and paying duty. respondent fesisted the notices admitting that the respondent has five directors who are also directors of m/s.pidilite industries but contending that on that account two concerns cannot be regarded as "related persons" and even if it be so, there was no justification to disallow the discount since price charged to the sister concern even after discount was higher than the price which other manufacturers charged to their buyers. adjudicating authority upheld both these contentions and dropped the proceedings. his order was confirmed by collector- (appeals). being aggrieved by this order, collector of central excise, bombay has preferred the present appeal.2. only circumstance relied on by the appellant is that respondent has five directors and these persons are directors of the sister concern which has one more director who is not a shareholder. this circumstance, by itself, is not sufficient to render the sister concern "related person" of the respondent. department has no case that the respondent is a holding company or that the sister concern is a subsidiary company. therefore, unless mutuality of interest in the business of each other is established the sister concern cannot be treated as "related person". even if sister concern is to be treated as related person it is doubtful if proviso (iii) to section 4(1 )(a) of the central excise act, 1944 will enable the department to disallow the discount. this is particularly so in the facts of the case when it is seen that the net price to the sister concern is higher than the price at which other manufacturers effect sale of goods to independent buyers. we find no ground to interfere.3. appeal is dismissed. cross objection being supportive of the impugned order is disposed of.

Full Judgment

1. Respondent, engaged in the manufacture of Polyvinyl Acetate Dispersion, was filing price list from time to time and clearing goods on payment of duty on the price approved by the Department. The dispute in this appeal relates to the period 1-10-1976 (sic) to 30-6-1977.

Department issued two show cause notices to the respondent alleging that bulk, discount was being given to another concern by name Pidilite Industries. The said discount is not admissible since the two are sister concerns and are "related persons". Notices proposed demand of duty on the amount covered by the discount alleging that such amount should have been added to the assessable value for the purpose of reckoning and paying duty. Respondent fesisted the notices admitting that the respondent has five directors who are also directors of M/s.

Pidilite Industries but contending that on that account two concerns cannot be regarded as "related persons" and even if it be so, there was no justification to disallow the discount since price charged to the sister concern even after discount was higher than the price which other manufacturers charged to their buyers. Adjudicating authority upheld both these contentions and dropped the proceedings. His order was confirmed by Collector- (Appeals). Being aggrieved by this order, Collector of Central Excise, Bombay has preferred the present appeal.

2. Only circumstance relied on by the appellant is that respondent has five directors and these persons are directors of the sister concern which has one more director who is not a shareholder. This circumstance, by itself, is not sufficient to render the sister concern "related person" of the respondent. Department has no case that the respondent is a holding company or that the sister concern is a subsidiary company. Therefore, unless mutuality of interest in the business of each other is established the sister concern cannot be treated as "related person". Even if sister concern is to be treated as related person it is doubtful if proviso (iii) to Section 4(1 )(a) of the Central Excise Act, 1944 will enable the Department to disallow the discount. This is particularly so in the facts of the case when it is seen that the net price to the sister concern is higher than the price at which other manufacturers effect sale of goods to independent buyers. We find no ground to interfere.

3. Appeal is dismissed. Cross objection being supportive of the impugned order is disposed of.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Collector of Central Excise vs Parekh Dye Chem (P) Ltd. Same Subject Land Acquisition