Hindustan Engineering Enterprises Vs Commissioner of Central Excise (CESTAT Chandigarh)
The appeals were filed by a manufacturing concern and a marketing company against orders of the Commissioner (Appeals) affirming demands of central excise duty and penalties. The dispute arose from investigations conducted by the Anti-Evasion Wing of Central Excise, Panchkula. The Revenue alleged that the manufacturing firm and the marketing company were related persons under Section 4(3)(b) of the Central Excise Act, 1944 and, therefore, valuation of goods cleared by the manufacturer should be determined under Section 4(3)(b)(ii) of the Act read with Rule 9 of the Central Excise Valuation Rules. Show cause notices were issued, adjudicated, and the demands and penalties were confirmed by the lower authorities.
The appellants contended that the issue was already settled in their favour in earlier proceedings involving the same parties. They argued that the authorities had incorrectly treated the two entities as related persons. According to the appellants, Section 2(41) of the Companies Act, 1956 read with Section 6 and Schedule IA defines relationships between natural persons, and therefore two corporate entities cannot be regarded as “relatives” for the purposes of Section 4(3)(b)(ii) of the Central Excise Act. They also relied on judicial precedents supporting this interpretation.
