Commissioner of Central Excise Vs. Balkrishna Synthetics Siyaram

Commissioner of Central Excise vs Balkrishna Synthetics Siyaram

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai Decided Apr 15, 2004

~4 min read

https://sooperkanoon.com/case/34948

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/34948
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Judge: J Balasundaram, A M Moheb
Decided On: Apr 15, 2004
Subject: Service Tax

Case Summary

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

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Commissioner of Central Excise

Respondent

Balkrishna Synthetics Siyaram

Excerpt

.....of the commissioner (appeals). some tenacity. some perseverance.4. the commissioner (appeals) rejected the revenue's appeal following the ratio laid down in the following decisions:-transweld products v. cce (1996 [88] elt 257 [t]) held that the fact that most of the goods are sold through a firm in which the manufacturer is represented by common partners etc. is not enough to reject the transaction value of the goods;cce, kanpur v. paliwal glass works (1997 [94] elt 96[t]), suprathi-tech electro equipments v. cce, cochin 1997 (93) elt 604. shareholding, bulk of the goods being sold through the firm when some of the directors are common is not enough to reject the transaction value;tungabhadra industries ltd. v. cce, hyderabad (1995 [75] elt 95 [t]) held that a large quantum of sales to a single firm does not make one the related person;satpin pharmaceutical v. cce, ahmedabad (1996 [82] elt 330 [t] the tribunal held more or less the same view; 5. the learned sdr argued that there is mutuality of interest in each others' business which is established through share holding, common directors, single chairman etc. in addition, the respondent was not including certain expenses while computing the job charges such as godown rent etc., thereby depressing the price at which goods are sold to m/s. siyaram silk mills ltd. m/s. balkrishna synthetics is a loss making company, that being so it could not have cleared the goods to m/s. siyaram silk mills ltd., incurring further losses by underselling the goods unless they have interest in their buyers; the price at which m/s. siyaram silk mills ltd. sells the goods in the market is much, much higher than the price at which they procure the goods from m/s.balkrishna synthetics. he argued that the price at which the goods are sold by m/s. siyaram silk mills ltd. should be taken as the assessable value in these circumstances.7. common share holding, common directors, chairman being the same etc.etc. would not establish mutuality.....

Full Judgment

2. The respondent is a processor of manmade fabrics falling under Chapter 54 and 55 of the Central Excise Tariff Act. He clears nearly 65% of his production on job work basis to M/s. Siyaram Silk Mills Ltd. He holds shares (177503 nos.) in M/s. Siyaram Silk Mills Ltd.. The latter holds shaves in the former as well. In addition M/s. Siyaram Silk Mills Ltd. holds shares in M/s. Balkrishna Synthetics of which the respondent is a division. Not to be undone, M/s. Balkrishna Synthetics also holds shares in M/s. Siyaram Silk Mills Ltd. In addition, the respondent company and M/s. Siyaram Silk Mills Ltd. have the same chairman or some directors are common. The department contends that these companies are related persons and so the price at which the goods are sold by the respondent to M/s. Siyaram Silk Mills Ltd. is not at arms length. The department proposes to adopt the price at which M/s.

Siyaram Silk Mills Ltd. sells the goods to its customers as assessable value in terms of proviso (iii) to Sub-section (1)(a) of Section 4 of the Central Excise Act.

3. Originally the Assistant Commissioner dropped the proceedings in this regard. The Revenue went in appeal to Commissioner (Appeals) who confirmed the order of the Assistant Commissioner. This appeal is against the order of the Commissioner (Appeals). Some tenacity. Some perseverance.

4. The Commissioner (Appeals) rejected the Revenue's appeal following the ratio laid down in the following decisions:-Transweld Products v. CCE (1996 [88] ELT 257 [T]) held that the fact that most of the goods are sold through a firm in which the manufacturer is represented by common partners etc. is not enough to reject the transaction value of the goods;CCE, Kanpur v. Paliwal Glass Works (1997 [94] ELT 96[T]), Suprathi-Tech Electro Equipments v. CCE, Cochin 1997 (93) ELT 604.

Shareholding, bulk of the goods being sold through the firm when some of the directors are common is not enough to reject the transaction value;Tungabhadra Industries Ltd. v. CCE, Hyderabad (1995 [75] ELT 95 [T]) held that a large quantum of sales to a single firm does not make one the related person;Satpin Pharmaceutical v. CCE, Ahmedabad (1996 [82] ELT 330 [T] the Tribunal held more or less the same view; 5. The learned SDR argued that there is mutuality of interest in each others' business which is established through share holding, common directors, single chairman etc. In addition, the respondent was not including certain expenses while computing the job charges such as godown rent etc., thereby depressing the price at which goods are sold to M/s. Siyaram Silk Mills Ltd. M/s. Balkrishna Synthetics is a loss making company, that being so it could not have cleared the goods to M/s. Siyaram Silk Mills Ltd., incurring further losses by underselling the goods unless they have interest in their buyers; the price at which M/s. Siyaram Silk Mills Ltd. sells the goods in the market is much, much higher than the price at which they procure the goods from M/s.

Balkrishna Synthetics. He argued that the price at which the goods are sold by M/s. Siyaram Silk Mills Ltd. should be taken as the assessable value in these circumstances.

7. Common share holding, common directors, chairman being the same etc.

etc. would not establish mutuality of interest in each others' business. Financial flow backs etc. do. There is no evidence to that effect. Further it was pointed out that the respondent sells his goods to other buyers more or less at the sale price. The Commissioner (Appeals) refers to this and says that the department could not rebut this claim. Further if certain elements are not included in the job charges, as argued by the learned SDR, the best course would be to rework the job charges and see whether such charges include all the elements that should go into it but not to discard the value and adopt the price at which the principal sells to his buyers. We cannot throw away the baby with the bath waters. Can we? 8. The Revenue failed to bring out that the transactions between the respondent and M/s. Siyaram Silk Mills Ltd. are related party transactions. Following the ratio of several decisions in this regard, we reject the department's appeals.

9. The appeals are rejected. The order of the Commissioner (Appeals) is upheld.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Mumb... Same Parties Commissioner of Central Excise vs Balkrishna Synthetics Siyaram Same Subject Service Tax Same Judge J Balasundaram, A M Moheb