mc
. "UNION OF INDIA AND OTHERS ATIC INDUSTRIES LIMITED June 22, 1984
[P.N’ BHAGWATI, R.S. PATHAK AND
AMARENDRA NaTH Sen, JJ.]
Central Excise and Salt Act, I 944—Clause (c) of sub-section (4) of section 4 as it stood after its amendment'by sec. 2 of the Central Act 22 of 1973—
~ Consitutational validity of.
: Central Excise and Salt Act, 1944—The words “‘related person” occurring ‘ in clause (c) of sub-section (4) of sec. 4 asit stood after its amendment by sec. 2 of the Central Act 22 of 1973—Definition and applicability of.
«
Bank Guarntee—Whether the High Court was right in directing the costs of furnishing bank guarantee to be paid by the Revenue to the assessee in cases where the demand for duty is quashed as unjustified. -
The respondent—assessee, a limited company, was engaged in the business of manufacturing dyes. Its 50 per cetit share capital was held by Atul’
products Ltd. and the remaining 50 pér cent by Imperial Chemical Industries Ltd. London witich also had a subsidiary company fully owned by it, called ‘é{mperial Chemical Industries (India) Pvi. Ltd. The Imperial Chemica! Industries (india) Pvt. Ltd, ceased to be a subsidiary company wholly owned by the Imperial Chemical Industries Ltd. London on 13th March 1978, since 60 per cent of the share capital of Imperial Chemica! Industries (India) Pvt. Ltd, was offered to the public in pursuance of the policy of the Government of India requiring that not more than 400/ of the share capital of an Midian company
* should be held by a foreign shareholder. Consequent upon this dilution 0 foreign shareholding, the name of Imperial Chemical Industries (india) Pvt. Ltd, was changed to Crescent Dyes and Chemicals Ltd.
”
The assessee at all material times sold the Jarge bulk of dyes manufac-
. tured by it in wholesale to Atul Products Ltd. and Imperial Chemical Iidustries (India) Pvt. Limited which subsequently “came to be known as Crescent .
Dyes and Chemicals Ltd. at a uniform price applicable alike to both these wholesale buyers and these wholesale: buyers sold these dyes to dealers and consumers at a higher price which inter alia included the expenses incurred by
+k
- UNION pv. ATIC INDUSTRIES 931 - them as also their profit. The tracsactions between the assessee on the one hand and Atul Products Ltd. and Crescent Dyes and Chemicals Limited on the other were as principal to principal and the wholesale price charged by the assessee to Atul Products Ltd and Crescent Dyes and Chemicals Ltd. was the sole consideration for the sale and no extra-commercial considerations entered in the determination of such price.
The assessce went on clearing the dyes manufactured by it after payment - of excise duty as per the price list submitted by it on the basis of the wholesale price charged to Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. as the same was approved by the Asst. Collector on 29th October, 1975. The Superintendent of Central Excise, however, issued a notice to the assessee on 3ist July’ 1976 calling upon the assessee to show cause why the earlier decision approving the price list should not bg reviewed and.the differential duty worked out on the basis of selling price charged by Atul Products Ltd. and Cresceat Dyes & Chemicals Ltd. should not be recovered w.ef. Ist October, 1975 onthe ground .that the assessee on the one hand and Atul Products Ltd, and Crescent Dyes and Chemicals Ltd. onthe other were ‘elated persons” and the assessable value of phe dyes manufactured by the assessee was therefore liable to be calculated” on the basjs of the price at which Atul Products Ltd. and Crescent Dyes and Chemicals Ltd. sold the Dyes to the dealers and the consumers. The assessee jn its reply dated 31st
_ August 1976 pointed out that the assessee on the one hand and Atul Products
Ltd. and Crescent Dyes and Chemicals Ltd. on the other were not “related persons” within the meaning of the definition of that term contained in clause (c) of sub-section (4) of section 4 of the amended Central Excise and Salt Act 1944. The Asstt. Collector was however not satisfied with the ‘explanation offered by the assessee and viewed” his earlier order of approval of the price list and confirmed the demand of differential duty which came to an aggregate amount of Rs 1, 17, 77, 737.65 with retrospective effect from 1st October, 1975° and dirceted tho assessee to file a fresh price list on the basis of the selling price cnarged by Atul Products Ltd. and Crescent Dyes and Chemicals Ltd.
The assessee thereupon fileda writ pctitionin the High Court of Gujarat challenging the validity of the demand made by the Asstt. Collector on two grounds namely, (i) that the concept of ‘‘related per-
“gon” occuring in clause (c} of sub-section (4) of section 4 of the amended Central Excise and Salt Act, 1944 was outside the legislative competence Of “Parliament. under Art. 226 read with Entry 84 in the Union List and was therefore unconstitutional and void ; & (ii) that the agsessee on the onehand’ and Atul Products Ltd. and Crescent Dyes & Chemicals Ltd. onthe other were not ‘“‘related persons” and the wholesale cash price charged by the assessee to’ Atul Products Ltd. and Crescent Dyes and Chemicals Lfd., and not the price at which the latter sold the dyes tothe dealers or the consumers represented the true measure of the value of the dyes ‘for the purpose of chargeability to excise duty. The High Court allowed the writ petition on these two grounds and also gave direction ‘tothe Revenue for paying the costs incurred by. the assessee in
?
H-
932 | SUPREME COURT ‘REPORTS [1984] 3 s.c.R. ,
. 4 connection with the’ bank ‘guarantee furnished by it. Hence the appeal ; to this Court by certificate granted under Art. 132 and 133 (1) of the Constitution, - ,
, °
Allowing the appeal in part, the Court. |
HELD: (1) Ona proper interpretation of the definition of “related person” in sub-section (4) (c) ofsec. 4, the words “relative and a distributor of the assessee’ do notrefer to any distributor but they are limited * only to adistributor whi is a relative of the ‘assessee within the meaning ; of the Companies Act, 1956. The definition of ‘“‘related person’ is not , “unduly wide and does not suffer from any constitutional infirmity, It is within the legislative competence of Parliament. The decision of the
‘High Court holding that <‘the concept of related person occurring in amended section 4 is ultra vires the. legislative competence of Parliament under Article 256 read with Entry 84 in the Union List and striking down clause (c) of sub-section (4) of sec. 4as also, the expression ‘‘the ’ buyer is pot arelated person and” in clause (a) of sub-section (1) of sec. d 4 and proviso (iii) to that clause must ccnsequently be set aside and it must
‘be held that these provisions are constitutionally valid. [937 E-H]
Union of India v. Bombay Tyres International Lid. [1984)} 1 scc 467 applied, ; ; 467 app . oo _ — High Court judgment in Special < Civil Appin. No. 119.of 1976 decided on 20°
21F ebruary 1979 reversed.
(2) ~The first part-of the definition of “related person’’ in clause (c) of sub-section (4) of sec. 4 defines ‘related person’ to mean “‘a person who is so " assoicated with the assessee that. they have interest directly or indirectly in the . business of each other” It is not enough that the asséssee has an interest, direct or indtrect. in the business of the person alleged to, be a related ”
person noris it etough that the person allehged to be a related pesson has an interest, direct or indirett in the business of the assessee. ‘ To attract the applicability of the first part of the definition, the assessee and the person alleged to bea related person must have interest, direct or indirect in the business of each other. Each of them must havea direct or indirect interest in the business of the other. The quality ‘and a degree of interest which each has in the business of the other may be different ; the interest of one in the business of the other may be direct while the interest of the latter in the business of the former may be indirect. . - That would not make any difference ‘so long as each has got some interest, , direct of indirect in the business of the other. {938 G—H; 939 A—B]
ae to
(3) @) In the present case Atul Products Ltd. has undoubtedly interest in the business of the assessee since it holds 50/ of the share capital of the assessee and has interest as shareholder in the business carried on by the | asessec, But, it connot be said that the assessee, aLtd. company, has any - interest, direct or indirect in the business carried on by one of its shareholders,
+ UNION V. ATIC INDUSTRIES’ | 933 namely Atul . Products Ltd., even though the share—holding of such shareholder may be 50 per cent. Secondly, Atul Products Ltd. is a wholesale
‘ buyer of the dyes manufactured by the assessee but even then, since the transactions between them are .as principal to principal, it is difficult to appreciate how’ the assessee could be said by virtue of that circumstance to have any interest, direct or indirect, in the business of Atul Products Ltd. The assessee is not concerned whether Atul Products Ltd. sells or does not sell the dyes purchased by it from the assessee nor is it concerned whether Atul Products Ltd. sells such dyes at a profit or ata loss. [939 C—F]
(ii) Perhaps. the position in regard to Crescent Dyes and Chemicals Ltd. is much stronger than that in regard to Atul Products Ltd. Crescent Dyes and Chemicals Ltd. isnotevena shareholder of the aSsessee and it has therefore no interest direct or indirect in the business of’ the assessee. Equally, the assessee has no interest, direct or indirect in the business of Crescent Dyes.and Chemicals “Ltd., which is just a wholesale dealer purchasing dyes from the assessee in wholesale on principal to principal basis. - [939 G-H}
(iii) The first part of the definition of related persons inclause (c) of sub-section (4) of section 4 of the amended Act is therefore clearly not satisfied both in. relations to Atul Products Ltd. asalsoin relation to
~ Crescent Dyes and Chemicals Ltd. and neither of them can be said to be a“related person’ vis--a—vis the assessece within the meaning of the definition of that term in clause, (c) of sub-section (4) ~of sec. 4 of the’ amended Act. Therefore, theassessable value of the dyes. manufactured by the assessee cannot be determined with reference to the . selling price charged by . Atul Products Ltd. - and Crescent Dyes and Chemicals Ltd. to their pruchasers but must be determined on the basis of the wholesale
_eash price charged by. the assessee to Atul Products Ltd. and Crescent
Dyes and Chemicals Ltd. The demand made by the Asstt. Collector for differential duty must therefore be held to be rightly quashed by the High Court. [940 D-F]
(4) The High Court was not right in giving direction to the Revenue to pay costs incurred by ths assessee in connection with the bank. guarantee furnished by the assessee, The bank guarantee was required to
‘be furnished ° by the assessee asa condition of grant of ‘interim stay of enforcement of the demand for differential duty and if it is yltimately found that the demand for differential duty was not justified, the bank guarantee would certainly have to be discharged. But, it is difficult to see how the costs of furnishing the bank guarantee could be directed to be paid by the
Revenue tothe assessee, This direction of the High Court which directs the revenue to pay to the assessee the costs in connection withthe bank guarantee furnished by it in pursuance of the.interim order of the High Court is set aside. (940 H; 941 A—B]
934 SUPREME COURT REPORTS [1984] 3 s.c.R. Civ. APPELLATE JURISDICTION ; Civil Appeal No. 3260 of 1979
From the Judgment and Order dated the 22/23rd day of . February, 1972 of the Grjarat High Court in Spl. Civil Appli. No. 52/77. . ,
__R.N. Poddar for the Appellants.
N.A. Palkhivala, Atul Setalved, FHJ. Talyar Khan, Ravindar Narain, Kamal Mehta, A. Manjra, TM. Ansari and Miss Rainu Walia for the Respondents. .
” The Judgment of of the Court was delivered by
. Boacwati, J. This appeal by certificate granted under ~ Articles 132 and 133 (1) of the Constitution raises a short question relating to the applicability of the definition of “related person” contained in clause (c) of sub-section (4) of section 4 of the Central. Excise and Salt Act, 1944 asit stood after its amendment by section 2 of Central Act 22.of 1973 which came into force with effect from 1st October, 1975. The facts giving tise to this appeal are few and may be briefly stated as follows :
The assessee is a limited company engaged inthe business of manufacturing dyes and it has its factory situate in Atul near Bulsar in the State of Gujarat. The share capital of the assessee is held by two limited companies; Atul products Limited holds 50 per cent of the share capital while the remaining 50 per cent of the share capital is held by Imperial Chemical Industries’ Limited, London. The assessee at all material tithes sold the large bulk of dyes manufactured by it in wholesale to Atul products Limited and
Imperial Chemical Industries (India) Private Limited ata uniform |
Price applicable alike to both these wholesale ‘buyers and these wholesale buyers in their turn sold the dyes purchased by them from the assessee to dealers as well as consumers. Now, until 13th March 1978, Imperial Chemical Industries (India) Private Limited . was a subsidiary company wholly owned by Imperial Chemical
Industries Limited, London. But, in pursuance of the policy of the |
Government of India requiring that not more than 40 per cent of the share capital of an Indian company should be held by a foreign
* share-holder, 60 per cent of the share capital of Imperial Chemical .
Industries (India) Private Limited was offered to the upblic, with
YO
¥
UNION y. ATIC INDUSTRIES (Bhagwati, J) 935 the result that since 13th March, 1978 only 40 per cent of the share capital of Imperial Chemical Industries (India) Private Limited was held by Imperial Chemical Industries Limited, London and 60 per cent came to be held by Indian citizens and. Imperial Chemical Industries (India) Private Limited ceased to be a subsidiary company wholly owned by the Imperial Chemical Industries Limited, London. Consequent upon this dilution of foreign share holding, the name of Imperial Chemical Industries (India) Private Limited was changed to Crescent Dyes and Chemicals Limited. Atul Products Limited and Crescent Dyes and Chemicals . Limited continued’to be the wholesale dealers of the dyes‘manufactured by the assessee throughout the relevant period with which we are concerned in this appeal. It was common ground between the parties that the transactions between the assessee on the one hand and Atul Products Limited and Crescent Dyes and Chemjeals Limited on the other were as principal to principal and the wholesale price charged -by the.assessee to. Atul Products Limited and’ Crescent Dyes and Chemicals Limited was thesole consideration for the
* gale and no extra-commiercial considerations entered in the deterima- tion of such price. Atul Products Limited and-Crescent Dyes and Chemicals Limited, of course, sold the dyes purchased by them. from the assessee ata higher price which inter alia included the expenses incurred by them as also their profit. .
, On 15th September, 1975 the assessee submitted a price list showing the assessable value ofthe dyes manufactured by it on the basis of the wholesale price charged by it to Atul Products
. Limited and Crescent Dyes and Chemicals Limited. The Superin- -tendent of Central Excise demanded certain information from the assessee with a view to satisfying himself as regards the correctness of the price list submitted by the assessee and the requisite information was furnished by the assessee’ by its letter sdated 23rd September, 1975. Thereafter correspondence ensued between the assessee on the one hand and the Superintendent of Central Excise -— on the other and ultimately on 29th October, 1975 the Assistant Collector of Central Excise. approved the price list submitted by the assessee. The assessee thereafter went on clearing the dyes
’ manufacthred by it after payment of excise duty on the’ basis of the price list submitted by the-assessee and approved by the Assistant | Collector. Then again some further correspondence took place between the assessee and the Central Excise Authorities by which certain information demanded bythe Central Excise Authorities
936 SUPREME COURT REPORTS. _—- {1984} 3 s.c.r.
was supplied by the assessee. The Superintendent of Central
Excise, however, issued a no‘ice to the assessee an 31st July, 1976- .
calling upon the ssessee to show cause why the earlier descision of the Assistant Collector approving the price list should not be _ reviewed on the ground that the assessee on the one hand and . Autal Products Limited and Crescent Dyes and Chemicals Limited ‘on the other were ‘‘reldted persons” and the assessable value of the dyes manufactured by the assessee ‘was, therefore, liable to be calculated on the basis of the price at which Atul Products Limited and Crescent Dyes and Chemicals Limited sold the dyes to the ‘dealers and the consumers, The assessee was required to show cause why the differential duty worked out on the basis of the selling price charged by Atul Products Limited and Crescent Dyes and Chemicals Lurited should not be recovered from the assessee - with effect from 1st Octobcr, 1975. The assessee in its reply dated 31st August 1976 raised several contentions in answer to the show cause notice and pointed out inter alia that the assessee-on the one hand and Atul Products Limited and Crescent Dyes and Chemicals
Limited on the other were not “related persons” within the meaning of ‘the definition ofthat term contained in sub-clause ©) of sub-section (4) of section 4 of the amended’ Central Exclse “and Sait Act, 1944. The Assistant Collector was, however, not satisfied with the explanation offered by the assesee and he ultimately by an order dated 10th December, 1976 reviewed his earlier order of approval of the price list and confirmed the demand. differential duty with retrospective effect from Ist October, 1975.
and directed the assessee to file a fresh price list on the basis of the selling price charged by Atul Products Limited and Crescent Dyes and Chemicals Limited. The demand for differential duty computed. :
by the Superintendent of Central Excise for the period from 1st Ooto- ber, 1975 to 31st December, 1976.came to an aggregate amount of |
Rs. 1 ,17,77,737,65. The assessee thereupon filed a writ petition inthe ' High Court of Gujarat challenging the validity of the demand made by the Assistant Collector and in the meanwhile also perferred an appeal before the Appellate Collector. The Appellate Collector rejected the appeal of the assessee without examining the merits of the grounds raised by the assessee since he took the view that all these grounds would be decided in the writ petition pending before the High Court and no useful purpose would be served by his considering the self-same ‘grounds, ae
N
UNION ¥. ATIIC INDUSTRIES (Bhagwati, J.) 937
The assessee urged several grounds in support of the writ petition before the High. Court but it is not necessary to refer to them in detail, because the High Court ultimately decided the writ petition in favour of the asséssee only on two grounds and it will, therefore, be enough if we refer to those two grounds alone and consider whether the decision of the High Court, is correct in so for as it decided those two grounds in favour of the assessee. The first ground was that the concept of “related person” occurring in clause (c) of ‘sub-section (4) of section 4 of the amended Central Excise and Salt Act, 1944 was outside the legislative competence of Parliament under Article 246 read with Entry 84 in the Union List and was, therefore, unconstitutional and void. This ground found favour with the High Court in view of the earlier decision given by the same Bench on 20/21 February, 1979 in Special Civil Application No. 119 of 1976. But, this decision of the High Court striking down clause (c). of sub-section (4) of section 4 of the amended Act cannot stand in view of the decision of the Court in Union of Indiav. Bombay Tyres International Limited(*) where an {dentical challenge to the constitutional validity of the definition of the term “related person” was negatived by this Court. The definition of the term “related: person’ was read down and it was held
‘by this Court that “Ona proper interpretation of the definition of “related person” in sub-section (4) (c) of section 4 the words ‘‘ralative anda distributor of the asssesee” do not refer to any distributor but they are limited only to a distributor who is. a relative of the assessee within’ the meaning of the Companies Act, 1956. Soread, the definition of “related person” is, not unduly wide and does not suffer from any constitntional infirmity. It is within the legislative’ competence of Parliament. The decision . of the High Court holding that “the concept. of .related person occurring in amended section 4 is vitra vires the legislative competence of Parliament under Article 246. read with Entry 84 in the Union List” and striking down clause (c) of sub-section (4) of section 4 as also the expression “‘the buyer is nota related person , and”. in clause (a) of sub-section (1) of section 4 and proviso (iii) to that clause must consequently be set aside and it must be held that these provisions are constitutionally valid,
* The second ground on which the’ assessee assailed the validity of the demand made by the Assistant Collector for differential duty
{1) (1984) S.C.C. 467,
938 . SUPREME COURT REPORTS 11984] 3 S.c.R.
related to applicability of the definition of “‘related person” in clause
-(c) of sub-section (4) of séction 4 of the amended Act. The Assistant
Collector took th « vicw that the a:sessee on the one hand and Atul | Products Limited and Crescent Dyes and Chemicals Limited on the other were related persons whithin the meanirg of the first part of the definition of the term “related person” and the assessable value of the dyes manufactured by the assessee for the purpose of: excise duty was, therefore, liable to be determined with reference to the . price at which the dyes were ordinarily sold by Attul Products . Limited. and Crescent Dyes and Chemicals Limited. This veiw taken by the Assistant Collector was set aside by the High Court on the ground that the assess¢e on the one hand and Atul Products Limited and Crescent Dves and Chemicals Limited onthe other were not “related persons” and the wholesale cash price charged by the assessee to Atul Products Limited and Crescent Dyes and. Chemicals Limited and not the price at which the latter sold the
_dycs to the dealers'or the consumers, represented the true measure.
of the value of the dyes for the purpose of chargeability to excise duty. This conclusion reached by the High Court was assailed . before us by the learned Attorney General appearing on behalf of
.the Revenue. He fairly conceded that the only part of the defi- nition of ‘ ‘related person” in clause (c) of sub-section (4) 0 section 4 on which he could rely was the first part. which defines “related person” to mean “‘a person who is, so associated with the assessee that they have interest directly or indirectly in the business of each other.” The second part of the definition which adds an inclusive clause wes adimittecly not applicable, because neither Atul Products Limited nor Crescent Dyes and Chemicals Limited
_was a holding companyor a subsidiary company nor was either of them a relative of the assessee, so as to fall within the second part of the definition. But we do not think that even the limited. contention urged by the learned Attorney General on behalf of the Revenue based on the first part of the definition can succeed. What .the first part of the definition requires is that the person: whois sought tobe branded asa ‘related person” must be a person whois so associated with the assessee that they have interest, directly or indirectly, in the business of each other. It is not enough that the assesse has an interest, direct, or indirect in the business of the person alieged to be a related person nor is it enough that the person alleged to be a related person has an interest, direct or indirect, in the business of the assesee. Jt is essential to attract the applicabillty of the first part of the definition that the assescee and the person alleged to be a related person must have interest,
UNION ¥. Aric INDUSTRIES. (Bhagwati, Jy 939
“direct or : indirect, in 1 the business of each other. “Bach of ‘them
_ must have a direct or indirect interest in the business.of the other. The equality and degree of interest which each has.in the bussiness’
of the other may be different; the interest of one in the business
- of the other may be direct, while the interest of the latter in the business of the former may be ‘indirect. That would not make any difference, so long as eachi has got some interest, direct or indirect, — - in the business of the other. Now, in the present case, Atul, Products
~ Limited has undoubtedly interest in the business’ of the assessee, since Atul Products Limited holds 50 per cent of the share: capital of the assessee and has interest as shareholder in the business cattied onby the assessee. But it is not possible to say thatthe . assessee has any interest in the business of. Atul Products. Limited. © There are two points of view from which the relationship -bétween the assessee and Atul Products Limited may be considered. First, ‘it may be noted that Atul Products Limited is a shareholder of the :
assessee to the extent of 50 per.cent of the share capital. But we :
fail to see how it can be said that a limited company has any
’ \interest, direct or indirect, in.the business catried on by one of its r sharcholders, even though the shareholding of such sharebolder. "may be 50 per cent. Secondly, Atul Products Limited is a wholesalé buyer of the dyes manufactured by the assessee but even. then,
* gitice the transactions between them are ‘principal to principal, itis © difficult to appreciate how the assessee could be said. by virtue of
_ that cricumstance to have any interest, direct or indirect, in the.
business of Atul Products Limited. Atul Produets Limited’ buys dyes from the assessee in’ wholesale on principal to - principal basis —
‘and then sells such dyes in the market. The assessee is not coticerned whether Atul Products ‘Limited «sells or does not sell the i:
dyes purchased by it from the assessee nor is. it concerned whether. _ Atul Products Limited sells such dyes at a loss.
to contend that the assessee has any direct or indirect interest in
_the business of a wholesale dealer who. purchases dyes’ from it on principal to principal basis. The same position obtains in regard to Crescent Dyes and Chemicals Limited. Perhaps the position in regard to Crescent Dyes and Chemicals Limited is much stronget ” then that in regard fo Atul Products Limited. Crescent Dyes dnd . ‘Chemicals Limited is not even a shareholder of . the assessee and it | has, therefore, no interest ditect or indirect in the bussiness of the . " assessee. It is Imperial
‘Chemical Industries Limited; London which holds 50 rer cent of the share capitel of the assessee and this foreign company also holds 40 per cent of the. share capital of
It is impossible.
8B wn
-¢ a
940 «ss SUPREME. COURT REPORTS - [1984] 3s.cr.
” Crescent -Cheniicals and Dyes ' Limited: Imperial Chemicals .-’ _ Industries Limited, London would admittedly have an interest in ~ the business of the assessee in its capacity as a shareholder, but how.
can Crescent Dyes and Chemicals Limited of which 40 ‘per cent of
’ the shares are held by Imperial Chemical Industries Limited}
‘London which in its turn is a shareholder of the assessee, can not be
" said to have any ‘interest, direct .or indirect, in the business of the assessee, Equally the assessee has no-interest direct or indirect in the business of Crescent Dyes and Chemicals Limited, which is just. a wholesale dealer purchasing dyes. from the assessee in wholesale on principal to principal basis. It’ is obvious that for the same - - “seasons which have prevailed with us while. discussing the case of Atul Products Limited, the assessce has no direct or indirect interest. _ in the business of Crescent Dyes and Chemicals Limited. The first part of the definition of. related person in clause (c) of sub- section
- (4) of section 4° of the ‘amended Act is, therefore, clearly not | satisfied both in relation to Atul Products Limited as.alsoin relation to Crescent - Dyes and Chemicals Limited and neither of © ' them can be said to be a “related person” vis-a-vis the assessee
‘within the meaning of the definition of ‘that term in clause (c) of ‘sub-section (4) . of section 4 of the amended Act: We, therefore, affirm the view taken by the High Court and hold that the assessable
~ yalue of the dyes manufactured by the assessee cannot be determined with reference to the selling: price charged by Atul: Products.
‘Limited and Creséent Dyes and Chemicals Limited: to their purchasers but must be determined’ on the basis of the wholesable 7 cash price charged by the assessee to Atul Products Limited and
Crescent Dyes and Chemicals Limited. ‘The demand made by the . Assistant Collector for differential duty must, therefore, he held .
to be rightly quashed by the High | Court..
“But there i is one small matter. on ‘which the High. Court. has,
- jn our. view, erred in giving direction and it'is in regard’ to payment of the costs incurred by. the assessee in connection with the bank
- guarantee furnished by itin ‘pursuance: of the interim order made by the High Court. We do not think the High Court was right in giving this direction. The - bank guarantee was required to be
_ farnished by the assessee asa condition of grant of interim stay. _ of enforcement of the demand for differential duty and if it is - ‘yltimately found that the demand for. differéntial duty was not tin met
UNION ¥, ATIC INDUSTRIES (Bhagwati,.J.) 94)
justified, the bank guarantee would certainly have to be discharged, but itis difficulty to see how ‘the costs of furnishing the bank
* guarantee could be directed to be paid by, the Revenue to the " assessee. We would, therefore, set aside that part of the. otder made by the High Court which directs the Revenue to pay to the assessee the costs -incurred in conection with the bank guarantee furnished by it in pursuance of the interm order of the High
The appeal, therefore, fails except in ‘regard t to.the direction “for payment of costs of the bank guarantee, The Revenue will pay the costs of the appeal to the assessee.
SR. ; 7 | Appeal dismissed