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Collector Of Central Excise, Surat v. Besta Cosmtetic Ltd

Collector Of Central Excise, Surat v. Besta Cosmtetic Ltd

(Supreme Court Of India)

C. A. No. 7609 of 1999 with No. 4973, 4974 of 2002 of 1999, 7541 of 2002 | 09-03-2005

1. This appeal has been preferred from the decision of the Tribunal by which it rejected the appeal preferred by the appellant from the order of the Collector (Appeals), Central Excise, Ahmedabad. Both the fora have concurrently held that for the purpose of valuation of the respondents products under S.4 of the Central Excise Act, as it stood at the relevant period of time, Bulsara Hygiene Products Ltd. (hereinafter referred to as "BHPL") which marketed the appellants goods could not be said to be related person.

2. The appellant has questioned the finding on the factual basis (7) that both the assessee and BHPL had an equal interest in a partnership concern, namely, Bulsara extrusions; and (2) that they had one common Director and that one of the Directors of the assessee was the Company Secretary in BHPL.

3. The decision of this Court in Union of India v. Atic Industries Ltd. (1984 (3) SCC 575 [LQ/SC/1984/156] : 1984 SCC (Tax) 217 : (1984) 17 ELT 323 [LQ/SC/1984/156] ) has clearly stated that for the purpose of S.4, a concern would be taken to be a related person if there is a reciprocity of interest between the assessee and such allegedly related person, interest being defined as shareholding. The interest claimed in this case by the appellant is not an interest of the assessee in BHPL or of BHPL in the assessee but in a third concern, which is not relevant for the purpose of S.4 of the.

4. As far as the common Directors are concerned, this Court has in Alembic Glass Industries Ltd. v. CCE & Cus. (2002 (9) SCC 463 [LQ/SC/2002/475] : (2002) 143 ELT 244 [LQ/SC/2002/475] ) held that:

"[T]he fact that two public limited companies have common Directors does not mean that one company has an interest in the business of the other."


5. It is not in dispute that both the assessee and BHPL are public limited companies. The ratio of Alembic Glass Industries Ltd. (2002 (9) SCC 463 [LQ/SC/2002/475] : (2002) 143 ELT 244 [LQ/SC/2002/475] ) therefore, would be fully applicable.

6. Additionally, before us, a ground was sought to be raised that BHPL bears the entire advertisement cost of the product of the assessee. This was not a ground which was urged on behalf of the Revenue at any stage of the proceedings and we do not permit them to raise it now. This appeal is accordingly dismissed without any order as to costs.

In CAs Nos. 4973-74 of 2002, 3932 of 1999, 7541 of 2002

7. These appeals are disposed of in terms of the order passed in CA No. 7609 of 1999.

Advocate List
  • For the Petitioner ------ For the Respondent ------
Bench
  • HON'BLE MR. JUSTICE RUMA PAL
  • HON'BLE DR. JUSTICE ARIJIT PASAYAT
  • HON'BLE MR. JUSTICE C.K. THAKKER
Eq Citations
  • 2005 (183) ELT 132
  • (2005) 3 SCC 790
  • LQ/SC/2005/334
Head Note

Excise — Valuation — Related person — Determination of — Equal interest in a partnership concern, one common Director and one of the Directors of the assessee was the Company Secretary in BHPL — Held, for the purpose of S. 4 of 1944 Act, a concern would be taken to be a related person if there is a reciprocity of interest between the assessee and such allegedly related person, interest being defined as shareholding — Interest claimed in this case by the appellant is not an interest of the assessee in BHPL or of BHPL in the assessee but in a third concern, which is not relevant for the purpose of S. 4 of 1944 Act — Fact that two public limited companies have common Directors does not mean that one company has an interest in the business of the other — Central Excise Act, 1944, S. 4