KANCHAN INDUSTRIES Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) In these appeals, arising out of a common Order -in -Original No. 72/91 dated 8 -8 -1991 the issue involved are whether the value of clearances of excisable goods of M/s. Kanchan Industries, M/s. Neha Industries and M/s. Kanchan Kitchen Aid Pvt. Ltd. are to be clubbed together for the purpose of Notification No. 175/86 -C.E., dated 1 -3 -1986, whether M/s. Meghal Enterprises are the related persons in terms of erstwhile Section 4 of the Central Excise Act, whether penalties are imposable on all the Appellants and whether extended period of limitation is invocable for demanding Central Excise duty.

(2.) Shri B.L. Narasimhan, learned Advocate, mentioned that M/s. Kanchan Industries, a proprietary firm of Shri Ashok Khimavat started manufacturing Mixer - Grinders of Kanchan Brand since January, 1987 and closed down their manufacturing activity of mixer from 30 -11 -88; that M/s. Neha Industries, Appellant No. 2, a partnership firm of two partners, namely, Ashok C. Khimavat and Dilip Kumar Rai, started manufacturing unbranded mixer since September, 1987; that they closed down their activities in November, 1988; that M/s. Kanchan Kitchen Aid P. Ltd., of which Shri Ashok Khimavat is one of the shareholder, started manufacturing Kanchan brand of mixer sometimes in September, 1988; that they sold mixers to M/s. Meghal Enterprises on outright sale basis at the prevalent market prices. The learned Advocate submitted that even if the value of clearances of the goods of all these three units are clubbed together, they would remain within the exemption limit provided in the small scale exemption Notification that M/s. Meghal Enterprises are not their related person as understood under Section 4(4)(c) of the Central Excise Act, at the relevant time; that they do not have mutual interest directly or indirectly in the business of each other; that even sale of entire production is not sufficient to hold each other as related persons; that it has been held by the Tribunal in the case of Lakme Ltd. v. CCE, Mumbai -II, wherein the entire production was sold to a company, that the manufacturer was not related to the company which was not shown to have any interest in the business of the manufacturer. The learned Advocate also relied upon the decision in the case of Kwality Ice Cream Co. v. CCE, .

(3.) He also contended that the finding in the impugned Order that the entire responsibility of advertisement and publicity rested with M/s. Meghal Enterprises and its distributors and therefore, their dealing were not from principal to principal is not correct and is based on assumption and is against the law enunciated by the Supreme Court in the case of Moped India Ltd. v. Assistant Collector, wherein it has been held that because the after sale services were provided by the dealer, he cannot be treated as relative not being the relative of manufacturer; that it is wrong to hold that because the advertisement expenses were borne by M/s. Meghal Enterprises they were relative of the manufacturer. He relied upon the decision in the case of Moon Beverages Ltd. v. CCE, Meerut - (T) wherein it has been held that sharing advertising expenses would not amount to flow of additional consideration and unless Revenue is able to show that there is additional consideration flowing from customer to the assessee, it cannot be held that the sale is not one principal to principal. Finally he submitted that the demand of duty is time barred as the show cause notice was issued on 7 -3 -90 for demanding duty for the period from 1987 -88 to 1988 -89 which is beyond the normal period of six months specified in Section 11A(1) of the Central Excise Act; that as the Department had approved the price list filed by them, there cannot be any suppression of facts alleged against them; that the Commissioner had not dealt with this contention of demand being time -barred in the impugned Order; that no penalty is imposable on any of the Appellants since no finding has been given in the impugned Order for imposing the penalties; that further as the value of clearance is within the exemption limit prescribed in the Notification, no penalty is imposable.