Judgment:
1. Collector of Central Excise, Aurangabad has filed this appeal against the Order-in-Appeal dated 7-2-1991 passed by the Collector of Central Excise (Appeals), Bombay, reversing the order-in-original dated 8-3-1989 passed by the Assistant Collector of Central Excise, Nasik, 2. Respondent, M/s. Kersons Manufacturing Co. of India Ltd., engaged in the manufacture of excisable goods, filed price list in Part I with effect from 7-12-1987. Entire production of the respondent was being sold to M/s. Crompton Greaves Ltd. (for short, Crompton). Show cause notice was issued alleging that the respondent and Crompton were related persons and, therefore, assessable value for the purpose of computation of duty required to be paid by the respondent should be based on the price at which Crompton was selling the goods to wholesale buyers. Though the respondent resisted the proposal, the Assistant Collector confirmed the proposal. In appeal. Collector (Appeals) held against the relationship set up and set aside the order with direction to add the salary of the Company Secretary of the respondent to the assessable value. This order is now challenged.
3. The Assistant Collector relied on four circumstances in proof of relationship under Section 4(4)(c) of the Central Excise Act, 1944.
Respondent was a sick unit and according to the Assistant Collector, "taken over" by Crompton. What transpired was that Crompton contributed to equity shares to the extent of 47.85% in the respondent, thereby providing capital for the operations of the respondent. The services of an employee of Crompton were lent to the respondent to function as Company Secretary. Employees of Crompton were working as Managers under the respondent. The entire production of the respondent was being sold to Crompton. Collector (Appeals) found that it was not true that the employees of Crompton were working as Managers of the respondent, except the person who acted as Company Secretary. It is suggested by the counsel for the respondent that being a sick unit under revival, it would have been a burden on the respondent to have a full time employee as Company Secretary and, therefore, the services of an employee of Crompton were taken. We are, therefore left only with three features, namely, Crompton owning 47.85% equity shares of the respondent, the respondent selling the entire production to Crompton and an employee of Crompton functioning as Company Secretary of the respondent. There is no case for the Department that the respondent had any shareholding in Crompton. Undoubtedly, Crompton can be said to have interest in the business of the respondent. However, the circumstances relied on are not sufficient to hold that respondent had any interest in the business of Crompton. Mutuality of interest, which is required under Section 4(4)(c) of the Act is absent. The Department has no case that Crompton must be regarded holding company of the respondent. Collector (Appeals) was, therefore, justified in holding that there was no relationship as alleged in the show cause notice and found by the Assistant Collector.