LexM/S BILAG INDUSTRIES P. LTD. & ANR. versus COMMR. OF CEN. EXC. DAMAN & ANR.
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A B C D E F G H 618 SUPREME COURT REPORTS [2023] 3 S.C.R. M/S BILAG INDUSTRIES P. LTD. & ANR. v. COMMR. OF CEN. EXC. DAMAN & ANR. (Civil Appeal No (s). 9195-9196 of 2010) MARCH 22, 2023 [S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.] Central Tariff Act, 1985 – s. 4(4)(c) – In BIL, AgrEvo SA held 51% of the share capital initially (which was increased to 74% subsequently) and it continued to hold more than 51% – BIL thus became a subsidiary of AgrEvo SA – AgrEvo SA held 100% shares in Aventis CropScience (India) Ltd – Therefore, both BIL and Aventis CropScience (India) Ltd. became subsidiaries of AgrEvo SA (the name of which was changed to Aventis Crop Science SA around March 2000) during the relevant period – The dispute in this case arose as regards value of Esbiothrin – BIL was selling its manufactured products to various bulk formulators including Aventis CropScience (India) Ltd – The Esbiothrin purchased from BIL was sold by Aventis CropScience (India) Ltd., to various end- consumers – According to the CESTAT, these transactions between the foreign company (AgrEvo SA, later known as Aventis CropScience SA) and two Indian subsidiaries was a combined operation by which both benefited – Therefore, the price at which BIL sold the goods to Aventis Crop Science (India) Ltd., was to be treated as sales to a “related person” – Whether the price at which the appellant-BIL sold its products to the buyer, should be treated as a transaction with a “related person” u/s. 4(4)(c) of the Central Excise Act, 1944 – Held: In the instant case, undoubtedly AgrEvo SA/Aventis CropScience SA holds the entire shareholding in Aventis CropScience (India) Ltd. (the buyer) – It also is a shareholder in BIL – All of the latter’s products are sold to Aventis CropScience (India) Ltd. – However, this does not show that BIL has any business interest or interest in the affairs of Aventis CropScience (India) Ltd., nor, conversely, that Aventis CropScience (India) Ltd has any such interest, direct or indirectly in BIL – The revenue’s concern in examining whether the parties were related might be justified; however, it could not have concluded that such relationship, as is contemplated by Section 4(4)(c) could have been inferred, without [2023] 3 S.C.R. 618 618 A B C D E F G H 619 applying the proper test – Additionally, the revenue had the materials before it, in the form of documents which indicated the mark up towards profit margin, and other objective evidence to compare, if indeed, the cost of the goods sold, were depressed, or were comparable to the market price of the same or similar goods – There is no finding that the price of the goods was lower than what was the price of those goods, in the market – Therefore, the impugned order cannot be sustained – Appeals allowed. Union of India & Others v. Atic Industries Ltd. [1984] 3 SCR 930; Union Of India & Ors v. Hind Lamp Ltd. [1989] 2 SCR 1023; Commissioner of Central Excise, Hyderabad v. Detergents India Ltd. [2015] 6 SCR 886; Commissioner of Central Excise, Chandigarh v. M/s Kwality Ice Cream Co. [2010] 14 SCR 409 – relied on. Commissioner of Central Excise, Aurangabad v. Goodyear South Asia Tyres Pvt. Ltd. & Ors. (2015) 11 SCC 646; Supreme Washers Pvt. Ltd. v. Commissioner of Central Excise, Pune (2003) 1 SCC 142 – referred to. Case Law Reference [1984] 3 SCR 930 relied on Para 8 [1989] 2 SCR 1023 relied on Para 8 [2015] 6 SCR 886 relied on Para 8 [2010] 14 SCR 409 relied on Para 8 (2015) 11 SCC 646 relied on Para 14 (2003) 1 SCC 142 relied on Para 16 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9195- 9196 of 2010. From the Judgment and Order dated 23.04.2010 of the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in Appeal Nos.E/282 & 281 of 2007. V. Sridharan, Sr. Adv., Ms. Charanya Lakshmi Kumaran, Ms. Apeksha Mehta, Ms. Neha Choudhary, Ms. Falguni Gupta, R. Parthasarathy, Advs. for the Appellants. N. Venkataraman, ASG, Arihit Prasad, Sr. Adv., Chandrashekhar Bharti, Ms. B. Sunita Rao, Ms. Ruchi Gaur Narula, Vivasvan Guatam, B. Krishna Prasad, Advs. for the Respondents. M/S BILAG INDUSTRIES P. LTD. v. COMMR. OF CEN. EXC. DAMAN A B C D E F G H 620 SUPREME COURT REPORTS [2023] 3 S.C.R. The Judgment of the Court was delivered by S. RAVINDRA BHAT, J. 1. The question which arises for consideration in these appeals, directed against an order of the Customs, Excise and Service Tax Appellate Tribunal1 (hereafter ‘CESTAT’ or ‘tribunal’) is whether the price at which the
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