BURMAN LABORATORIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) APPELLANT is a limited company which manufactures hair oil and lal dant manjan. These items are manufactured exclusively for supply to M/s. Dabur India Ltd. (for short, Dabur). The products are manufactured as per specifications of Dabur.

(2.) APPELLANTS are paying duty on the goods manufactured by them and sold by them to Dabur at their sale price to Dabur. A show cause notice dated 12.07.1994 was issued alleging "Burman Laboratories Limited exists entirely for the benefit of Dabur and does not have a separate existence. Therefore, it appears that the sale of products by Burman Laboratories to Dabur could not be treated as sales in the normal course of wholesale trade as many other considerations as mentioned above decide the sale and that the price at which Dabur sells the products of Burman to their wholesale dealers should form the price for assessable value under Section 4 of the Central Excises and Salt Act, 1944. Duty would appear to be payable on that assessable value" (para 9 of show cause notice). Appellant resisted the demand and submitted that manufacturer and the buyer in the present case were related companies and the commercial relationship was entirely one between independent parties. They also submitted that there was no relationship other than purely commercial relationship between them and the price in such a transaction should form the assessable value for central excise purposes. They also relied on several decisions on the subject, in particular the decision of the Supreme Court in Sidhosons and Anr. v. Union of India and Ors., 1986 (26) E.L.T. 881. Their contentions failed before the adjudicating authority who confirmed the duty demand arising on account of treating sale price of Dabur as the assessable value. Penalty equal to the duty demanded was also imposed on the appellant. The finding in the order is that "the notice company has been created as a company by promoters of M/s. Dabur to avoid tax liability on value of the goods manufactured and cleared by them". Reference has also been made to the following clauses in the Agreement to show Dabur and the appellants were having mutuality of interest in the business of each other: -

(3.) IT has been submitted before us on behalf of the appellant that the facts stated in the show cause notice, the agreement between the parties and other materials on the records of the case do not support either the contention that Dabur and appellants were related or that the appellant company was created by the promoters of Dabur to avoid tax liability. The show cause notice states that Shri G.P.S. Bhandari, General Manager, Dabur and Shri Ramesh Burman, Sales Manager, Dabur were the founders of M/s. Burman Laboratories. It is also stated that majority of shareholders in Burman Laboratories Limited are M/s. Devi Associates. The investment companies which invested in Devi Associates i.e. M/s. Param Expo and Weltime Investment Companies, Lucky Lab. Limited, Rachana Investment, Bhagvati Charitable Trust exist one in name and the actual control is exercised by Dabur through its officers. However, it has not been shown that G.P.S. Bhandari, General Manager and Ramesh Burman, Sales Manager were the promoters of Dabur and they created the appellant company to avoid tax liability.