Trent Ltd. Vs. Commissioner of Central Excise

Trent Ltd. vs Commissioner of Central Excise

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai Decided Oct 12, 2000

~3 min read

https://sooperkanoon.com/case/19412

For advocates & juniors · 7-day free trial

Brief this judgment before chambers

Stop skimming 50 pages - get an 18-section AI Brief on this case, ask scoped follow-ups, and find related precedents with Semantic Search. Full trial, no card required.

18-section brief - facts, issues, ratio, relief
Ask this case - answers cite the judgment
Semantic search - find precedents by meaning
Research drawer - sections, cites, related cases

Citation: sooperkanoon.com/19412
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On: Oct 12, 2000
Subject: MRTP

Case Summary

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

MRTP

Key legal issue: MRTP

Parties & Advocates

Appellant / Petitioner

Trent Ltd.

Respondent

Commissioner of Central Excise

Legal References

Reported In: (2001)(127)ELT800Tri(Mum.)bai

Excerpt

.....for waiver of deposit of penalty of rs. 1.11 crores approximately. the duty, equivalent to the penalty, and interest of rs. 5 lakhs demanded in the order has already been deposited.2. duty had been demanded on redetermining the value of goods manufactured at the deonar factory belonging to applicant, earlier known as m/s. lakme limited. by a memorandum of understanding dated 22-6-1998, lakme limited sold this factory as a going concern to hindustan lever limited (hll for short). this was subject to the obtaining of statutory approvals, among which was a clearance under section 269c of the income-tax act. this clearance was obtained on 10-11-1998 the transfer of the factory to hll with effect from 1-6-1998 was ratified. during this period the goods manufactured by lakme limited in this factory were sold to the applicant. this company was initially set up as a joint venture between lakme limited and hll, each holding 50% of the stocks. on 20-5-1998 lakme ltd. sold its shares in this company to hll and lakme company become a wholly owned subsidiary of hll from this date. it is on these facts that the value of the goods sold from the deonar factory should be in accordance with the proviso under section 4(1 )(a) of act. the applicant does not dispute the department's view regarding valuation of the goods. it had, of its own accord, paid the differential duty due on this score on 5-12-1998.3. penalty has been imposed on the view that the fact of sale of the goods to a related company was suppressed by the applicant. two grounds were advanced in this regard. the first is that it cannot be said that a holding company and a wholly owned company are ipso facto related for which the judgment of the bombay high court in ralliwolf ltd. v. union of india - 1992 (59) e.l.t. 220 is cited. it is secondly contended that the sales from the factory became sales to a related person only from 1st december, 1998 by virtue of the sale having taken effect from that date only. obtaining.....

Full Judgment

1. The application is for waiver of deposit of penalty of Rs. 1.11 crores approximately. The duty, equivalent to the penalty, and interest of Rs. 5 lakhs demanded in the order has already been deposited.

2. Duty had been demanded on redetermining the value of goods manufactured at the Deonar factory belonging to applicant, earlier known as M/s. Lakme Limited. By a memorandum of understanding dated 22-6-1998, Lakme Limited sold this factory as a going concern to Hindustan Lever Limited (HLL for short). This was subject to the obtaining of statutory approvals, among which was a clearance under Section 269C of the Income-tax Act. This clearance was obtained on 10-11-1998 the transfer of the factory to HLL with effect from 1-6-1998 was ratified. During this period the goods manufactured by Lakme Limited in this factory were sold to the applicant. This company was initially set up as a joint venture between Lakme Limited and HLL, each holding 50% of the stocks. On 20-5-1998 Lakme Ltd. sold its shares in this Company to HLL and Lakme Company become a wholly owned subsidiary of HLL from this date. It is on these facts that the value of the goods sold from the Deonar factory should be in accordance with the proviso under Section 4(1 )(a) of Act. The applicant does not dispute the department's view regarding valuation of the goods. It had, of its own accord, paid the differential duty due on this score on 5-12-1998.

3. Penalty has been imposed on the view that the fact of sale of the goods to a related company was suppressed by the applicant. Two grounds were advanced in this regard. The first is that it cannot be said that a holding company and a wholly owned company are ipso facto related for which the judgment of the Bombay High Court in Ralliwolf Ltd. v. Union of India - 1992 (59) E.L.T. 220 is cited. It is secondly contended that the sales from the factory became sales to a related person only from 1st December, 1998 by virtue of the sale having taken effect from that date only. Obtaining of the income-tax clearance was a condition precedent to the transfer of the factory. Applicant had informed the jurisdictional Assistant Commissioner of the memorandum of understanding by its letter dated 1-6-1998. By its letter dated 5-9-1998 the fact of finalising of the proposed arrangement was also conveyed.

4. The departmental representative's contention that the sale actually took effect on 1-6-1998 is no answer. Prima fade, if these statutory clearances had not been obtained, the sale could not have taken place.

In imposing the penalty, a somewhat simplistic view appears to have been taken of the legal provisions.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Mumb... Same Parties Trent Ltd. vs Commissioner of Central Excise Same Subject MRTP