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PETITIONER: CALCUTTA CHOROMTYPE LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, CALCUTTA

DATE OF JUDGMENT:       31/03/1998

BENCH: SUJATA V. MANOHAR, D. P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T D.P. Wadhwa. J.      M/s. Calcutta  Chromotype Ltd.  has filed  this  appeal against the  order dated  October 30.  1989 of  the  Custom, Excise and  Gold (Control)  Appellate Tribunal,  New  Delhi, (for short  ‘Appellate  Tribunal’).  By  this  judgment  the Appellate  Tribunal   while  upholding   the  order  of  the Collector of  Appeals observed  that  though  there  was  an identity of interest between the appellant, manufacturer and M/s. Ganga Saran & Sons Pvt. Ltd., its sole distributor, the Assistant Collector  had not  considered the break up of the shares of  each member of the family of the manufacturer and distributor. The  Appellate Tribunal held that the fact that there was identity of interest was the determining factor in holding whether  a person  is a  related person  within  the meaning of  Section 4(4)  (c) of the Central Excise and Salt Act,  1944  (for  short  ‘the  Act’).  Since  the  Assistant Collector had  not considered  the break up of the shares of each member of the family comprising the two companies being the manufacturer  and the distributor, the Tribunal remanded the matter  to the Assistant Collector to consider the break up of  the shares  of each  member of  the family and if the "test of  identity" was  satisfied, he  should  confirm  the order.      The appellant  manufactures playing cards. it sells the entire stock of playing cards manufactured by it to its sole distributor M/s.  Ganga Saran & Sons Pvt. Ltd. The Assistant Collector, Central  Excise under  the Act levied duty at the price at  which the  playing cards  were sold  by M/s. Ganga Saran &  Sons  Pvt.  Ltd.  as  according  to  the  Assistant Collector it  was  related  person  within  the  meaning  of Section 4(4)  (c) of  the Act of the appellant. Collector of Appeal confirmed  the order  of the Assistant Collector also holding that  M/s. Ganga  Saran &  Sons Pvt.  Ltd.  was  the related person  of the  appellant. Against  the order of the Collector the  appellant filed  a revision application under Section  36   of  the  Act,  prior  to  its  amendment,  and thereafter the  revision application  was transferred to the Appellate Tribunal and heard as appeal.      The Assistant Collector, Central Excise found that both

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the  appellant   and  its   sole  distributor  were  limited companies registered under the Companies Act, 1960. He found that the  Board of  Directors of  both these  companies were constituted:      "Appellant      1.   Shri Narendra Sharma, managing           Director      2.  Smt. Brahma Devi, Director      3.  Smt. Indu Sharma, Director      M/s. Ganga Saran & Sons Co.      1.   Shri Narendra Sharma, Managing           Director      2.  Smt. Brahma Devi, Director      3.  Shri Brajendra Sharma, Director      4.  Shri Rajendra Sharma, Director"      Assistant Collector  also  found  that  shares  of  the appellant and  its sole distributor were held by the members of the Sharma family, i.e., persons who were related to each other and  that both  the companies  were having  the common Managing Director and further that the appellant was selling the goods with the brand name of its distributor, namely M/s . Ganga  Saran &  Sons Pvt. Ltd. It was contended before the Tribunal that  both the  companies were registered under the Companies  Act   and  were   separate  legal   entitles  and therefore, could  not be  considered as  related persons. It was submitted  that having  the common  Director was not the determining factor to hold that M/s. Ganga Saran & Sons Pvt. Ltd. was a related person and further that the fact that the manufacturer was  printing the  name of  the buyer  and  was selling the  entire product  to the  buyer also did not make the buyer  a related  person. It was also submitted that the authorities below  had failed  to establish  that M/s. Ganga Saran &  Sons Pvt.  Ltd.  had  been  accorded  a  favourable treatment and  that, in  fact, low price had been charged on that account.  The appellant said that in the absence of any such evidence  it was  not correct to hold that the price at which M/s. Ganga Saran & Sons Pvt. Ltd. sold the product was the price  for the  purpose of  determining  the  assessable value.      The Appellate  Tribunal  was  also  of  the  view  with reference to Section 4(4) (c) of the Act that if a person is so associated  with the  assessee that they have interest in the business  of each  other then  the person  was a related person of  the other  within the  meaning  of  the  Section. Appellate Tribunal  noted that  Collector (Appeal)  had held that the  appellant as  well as M/s. Ganga Saran & Sons Pvt. Ltd. were  started and  established by  G.S. Sharma  and his family members  and further  that  Assistant  Collector  had found that the shares of the appellant and the shares of the buyer company  were held  by the  members of the same Sharma family and,  thus, by  the persons  that who were related to each other.  The Appellate Tribunal referred to the decision of this  Court in  Mohanlal  Magan  Lal  Bhavsar  (Deseaced) through LRs.  and Ors.  vs. Union of Indian and Ors. [(1986) 23 ELT  3] and  also to  tits own  decision in Diamond Clock Manufacturing Co.  Ltd. vs  CCE. Pune  [(1988) 34  ELT  662] where it  interpreted  the  definition  of  related  person. Relying on these two decisions as applicable to the facts of this case, the Appellate Tribunal was of the view that there was identity  of interest  and M/s.  Ganga Saran & Sons Pvt. Ltd was related person within the meaning of Section 4(4)(c) of the  Act. The  Appellate Tribunal  disposed of the appeal with the directions aforesaid.      Mr. Dave,  learned counsel for the appellant, contended that the  Appellate  Tribunal  erred  in  holding  that  the

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appellant and M/s. Ganga Saran & Sons Pvt. Ltd. were related persons or  that there  was an  identity of interest between the two.  He said  the two  judgments, one  of Supreme Court and other  of the  Appellate Tribunal  itself on  which  the Appellate Tribunal  relied were  not applicable  inasmuch as facts in  the said  two cases  were entirely  different  and decisions were  clearly distinguishable.  he  said  that  in order to  be a  related person within the meaning of Section 4(4) (c)  of the  Act the  person alleged to be related must have interest,  direct or  indirect, in  the business of the assessee and that in the present case both the appellant and its buyer  were private  limited companies  established much before the  imposition of  the excise  duty on playing cards and had  been dealing  with each  other at  arm’s length. He said there  was no evidence before the Appellate Tribunal as to the  shareholding in each of the two companies and to say that shareholdings were held by Sharma family was a misnomer and that  such a  fragile test  could not be applied to test the identity or mutuality of interest.      Mr. Dave  said that  the Appellate  Tribunal came  to a wrong conclusion  on prima  facie holding that Sharma family controlled both the companies. Sharma family is a vague term and did not reflect as to what was the exact shareholding of the members  in both the companies and how they were related to each  other. Lastly, Mr. Dave submitted that there was no allegation and  no finding  ever recorded  that the dealings between the  appellant and its distributor were not at arm’s length or  that prices  at which  the goods were sold to the distributor were  exceptionally low,  having been influenced by some  extra commercial  consideration. Mr. Dave said that the Appellate  Tribunal did  not examine  the whole facts of the case  and law  applicable thereto  in proper perspective and that  led it  to give directions which are incorrect and these were now being impugned.      Mr. Dave  also submitted  that for subsequent years the Department took  the view  that the  buyer was not a related person. He  also cited  a few  judgments of  this  Court  in support  of  his  submissions.  Before  we  refer  to  these judgments, we  may  reproduce  the  relevant  provisions  of Section 4 of the Act:      "4. Valuation  of  excisable  goods      for purposes of charging of duty of      excise.-      (1) Where  under this Act, the duty      of  excise  is  chargeable  on  any      excisable goods  with reference  to      value, such value shall, subject to      the  other   provisions   of   this      section be deemed to be-      (a) the  normal price thereof, that      is to  say, the price at which such      goods are  ordinarily sold  by  the      assessee to  a buyer  in the course      of wholesale  trade for delivery at      the  time  and  place  of  removal,      where the  buyer is  not a  related      person and  the price  is the  sole      consideration for the sale:      Provided that-      (i) ...      (ii) ...      (iii)where the assessee so arranges           that the  goods are  generally           not sold  by him in the course           of wholesale  trade except  to

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         or through  a related  person,           the normal  price of the goods           sold by  the  assessee  to  or           through  such  related  person           shall  be  deemed  to  be  the           price  at   which   they   are           ordinarily sold by the related           person  in   the   course   of           wholesale trade at the time of           removal, to dealers (not being           related persons) or where such           goods are  not  sold  to  such           dealers,  to   dealers  (being           related persons) who sell such           goods in retail ;      (b)  ...      (2) ...      (3) ...      (4)  or   the   purpose   of   this           section,-      (a) "assessee" means the person who           is liable  to pay  the duty of           excise  under   this  Act  and           includes his agent;      (c) "related person" means a person           who is  so associated with the           assessee   that    they   have           interest,     directly      or           indirectly, in the business of           each  other   and  includes  a           holding company,  a subsidiary           company,  a   relative  and  a           distributor of  the  assessee,           and  any   sub-distributor  of           such distributor.      Explanation.-   In    this   clause "holding   company",    "a    subsidiary company" and  "relative" have  the  same meanings as in the Companies Act, 1956;      (d) ...      (e) ...      Negatively put, it will not, therefore, be normal price for the  purpose of  valuation, if  the buyer  is a  related person and the price is not the sole consideration for sale. Both the conditions must co-exist so that the price at which the manufactured goods are sold by the assessee to the buyer is taken  as the value for the purpose of assessment of duty of excise.  As to  who is  a  "related  person"  within  the meaning of  clause (c)  of Section 4(4), this Court in Union of India  & Ors. vs. ATIC Industries Ltd. [(1984) 3 SCC 575] said:      "What  the   first  part   of   the      definition  requires  is  that  the      person who  is sought to be branded      as a  ‘related person’  must  be  a      person who  is so  associated  with      the   assessee   that   they   have      interest, directly  or  indirectly,      in the  business of  each other. It      is not enough that the assessee has      an interest  direct or indirect, in      the business  of the person alleged      to be  a related  person nor  is it      enough that  the person  alleged to      be  a   related   person   has   an

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    interest, direct  or  indirect,  in      the business of the assessee. it is      essential    to     attract     the      applicability of  the first part of      the definition  that  the  assessee      and the  person  alleged  to  be  a      related person  must have interest,      direct or indirect, in the business      of each  other. Each  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 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 or indirect,      in the business of the other."      This was  followed in  subsequent cases in Collector of Central Excise,  Madras vs.  T.I. Millers  Ltd.. Madras  and T.I. Diamond Chain, Madras [1988 (Supp) SCC 361]; Snow White Industrial Corporation vs. Collector of Central Excise [1989 (41) ELT  360 (SC)]. It was also pointed out that this Court in a  special appeal  ( Civil Appeal No. 9850/95, decided on April 4,  1996) filed  against the  order of  the  Appellate Tribunal had dismissed the same where the Appellate Tribunal had held  that mere  commonness of  partners  and  Directors between the buyer and seller was not sufficient to treat the buyer as  a ‘related  person’ even  if entire production was sold through  them.  We  have  examined  the  file  of  C.A. 9850/95. What  was find  is that the appeal was filed by the Revenue  which  was  barred  by  limitation  and  delay  was condoned subject to payment of cost Rs. 500/- payable within four weeks  to the  counsel for  respondents. Since the cost had not  been paid  the appeal  was dismissed by order dated April 4, 1996. This dismissal of the appeal, therefore, does not help the appellant. The Appellate Tribunal in the order, which was  impugned in  CA 9850/95,  found that the assessee had sold 95 out of 96 are lamps to a company of which one of the partners  of the  assessee firm  was a director. On this Department took  the view  that the  company was  a  related person and  sought to  assess the goods at a higher price at which the  assessee sold  the goods  to the  buyer  company. Appellate Tribunal was of the view that merely because there was some  common directors  between  the  assessee  and  the company that  itself would  not  be  sufficient  ground  fro holding that  both were  related persons. Appellate Tribunal found that  no evidence  regarding mutuality of interest had been brought  on record  except the  sale of  goods  by  the assessee to  the buyer company. It said that while this fact of sale  may create  one way  interest of the company in the business of  the assessee  firm it was not indicative of the interest of  the assessee  in  the  business  of  the  buyer company.      Reference was  also made to two orders of the Appellate Tribunal in  Mahalakshmi Glass  Works Ltd., vs. Collector of Central Excise  [1991 (53) ELT 120 (Tribunal)] and Weikfield Products Co.  (India) vs.  Collector or Central Excise [1993 (63) ELT  672 (tribunal)].  In the  first case, three out of four Directors  of the  assessee were  also the Directors of its whole  sale buyer  M/s. Western  India Class  Works. The

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Tribunal noticed  that it was not the case of the department that sales  to customers  other than  to M/s.  Western India Glass Works were at prices different from prices of sales to M/s Western  India Glass  Works. The Appellate Tribunal held that in  the absence  of any  other factor like mutuality of interest, commonness of some Directors was not sufficient to constitute relationship between the two companies which were common independent  corporate legal  entitles. In the second case,  the   assessee  sold  its  goods  through  two  broad channels, viz., directly to Canteen Stores Department and to the Weikfield  Central  Marketing  Organisation.  While  20% discount was  allowed  to  Canteen  Stores  Department,  30% discount  was   allowed  to   Weikfield  Central   marketing Organisation. Assessee  justified  the  reason  for  allowed higher discount  in one  case because  the department was of the view  that transaction  between  the  assessee  and  the Weikfield  Central   Marketing  Organisation  could  not  be treated as  at arms  length in view of the fact that most of the partners  in  the  firm  were  close  relatives  of  the Directors of  the assessee which was a company company under the Companies  Act, 1956.  The appellate Tribunal was of the view  that  the  assessee  being  a  corporate  concern  and Weikfield  Central   Marketing  Organisation  a  partnership concern, the  latter could  not be  called a relative of the assessee  and   to  consider   Weikfield  Central  Marketing Organisation as  a favoured  buyer, there must be sufficient proof to show that specifically low price was charged.      Mr. Sharma,  counsel for  the Revenue,  referred  to  a decision  of   this  Court   in  Mohanlal  Maganlal  Bhavsar (Deceased) through  LRs. &  ors. vs.  Union of  India & Ors. [1986 (23) ELT 3 (SC)]. IN this case one of the pleas raised by the  appellant was that the High Court was not correct in holding that  the wholesale  price of the preparation of the appellant could  not be  taken for  the purpose of valuation under Section  4 of the Act at the price at which these were supplied to  M/s M.B.  Bhavsar &  Sons, Chief Distributor of the appellant. This Court observed as under:      "The   next   contention   of   the      Appellants,    which    was    also      negatived by  the High  Court,  was      that in  determining the  value  of      the medicinal  preparations for the      purpose  of   levying  excise  duty      thereon the  authorities  erred  in      taking the  wholesale price  of the      said preparations and not the price      at  which  these  preparation  were      supplied by  the said firm to their      Chief  distributor   Messrs.   M.B.      Bhavsar &  Sons. In  order to  test      the correctness  of this contention      it is  necessary to  set out  a few      facts which  are material  to  this      aspect of  the case.  The  firm  of      Messrs. M.B. Bhavsar & Sons, though      a separate  partnership fir, was in      fact a  firm in  which not only the      original  a   First  Appellant  and      Appellants   Nos.2   and   3   were      partners but  a son of each of them      was also  a partner. There was thus      identity to  interest  between  the      firm of Messrs. M.B. Bhavsar & Sons      and the  firm M/s. Bhavsar Chemical      Works. Both  these firms  had their

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    offices in  the same  premises  and      under the partnership agreement the      sons   of    the   original   First      Appellant   and   the   other   two      Appellants were  to share  only  in      the profits of Messrs. M.B. Bhavsar      & Sons but not to be liable for any      losses. These two firms, therefore,      cannot  be  said  to  be  at  arm’s      length or  independent parties  and      the prices  at which  the medicinal      preparations   were   supplied   by      Bhavsar Chemical  Works to  Messrs.      M.B. Bhavsar & Sons cannot be taken      to be  the real  value of  the said      preparations. The  High Court  was,      therefore, right  in rejecting this      contention also."      The principle  that a  company under the Companies Act, 1956  is   a  separate  entity  and,  therefore,  where  the manufacturer and  the buyer are two separate companies, they cannot, than  anything more, be ‘related persons’ within the meaning of clause (c) of sub-section (4) of Section 4 of the Act is not of universal application. Law has travelled quite a bit  after decision  of the  House of Lords in the case of Salomon vs.  Salomon [1897  AC 22].  This is  how this Court noticed in  Tata Engineering and Locomotive Company Ltd. Vs. State of Bihar & Ors. [(1964) 6 SCR  885]:      "The true  legal position regard to      the character of a corporation or a      company     which      owes     its      incorporation   to    a   statutory      authority,  is   not  in  doubt  or      dispute. The  corporation in law is      equal to a natural person and has a      legal entity of its own. The entity      of  the   corporation  is  entirely      separate   from    that   of    its      shareholders; it bears its own name      and has  a seal  of  its  own;  its      assets are  separate  and  distinct      from those  of its  members; it can      sue and be sued exclusively for its      own purpose’;  its creditors cannot      obtain satisfaction from the assets      of its  members; the  liability  of      the  members   or  shareholders  is      limited to  the capital invested by      them; similarly,  the creditors  of      the members  have no  right to  the      assets  of  the  corporation.  This      position has  been well-established      ever  since  the  decision  the  of      Salomon vs. Salomon & Co. [] (1897)      A.C. 22  H.L. ]  was pronounced  in      1987; and  indeed,  it  has  always      been the  well recognised principle      of  common  law.  However,  in  the      course of  time, the  doctrine that      the corporation  or a company has a      legal and  separate centity  of its      own has  been subjected  to certain      exceptions by  the  application  of      the fiction  that the  veil of  the      corporation can  be lifted  and its

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    face  examined  in  substance.  The      doctrine of the lifting of the veil      thus marks a change in the attitude      that law  had originally    adopted      towards the concept of the separate      entity  or   personality   of   the      corporation. As  a  result  of  the      impact   of   the   complexity   of      economic   fac    tors,    judicial      decisions have sometimes recognised      exceptions to  the rule  about  the      juristic   personality    of    the      corporation.  It  may  be  that  in      course of time these exceptions may      grow in  number  ant  to  meet  the      requirements of  different economic      problems,  the   theory  about  the      personality of  the corporation may      be confined more and more. In life  Insurance Corporation  of India  vs. Escorts Ltd. & Ors. [(1986)  1 SCC  264), this  Court again considered this question and said:       "While  it is  firmly  established      ever since Salomon vs. A, Salomon &      Co. Ltd.  [(1897)  AC  22  HL]  was      decided  that   a  company  has  an      independent and  legal  personality      distinct from  the individuals  who      are its  members, it has since been      held that the corporate veil may be      lifted, the  corporate  personality      may be  ignored and  the individual      members recognised for who they are      in       certain        exceptional      circumstances.  Pennington  in  his      Company Law (4th Ed.) states:                "Four inroads  have  been           made  by   the  law   on   the           principle  of  separate  legal           personality of  companies.  By           far  the   most  extensive  of           these   has   been   made   by           legislation imposing taxation.           The   government,    naturally           enough,  does   not  willingly           suffer   schemes    for    the           avoidance  of  taxation  which           depend for  their  success  on           the    employment    of    the           principle  of  separate  legal           personality,   and   in   fact           legislation has  gone  so  far           that in  certain circumstances           taxation  can  be  heavier  if           companies are  employed by the           taxpayer in  a  n  attempt  to           minimise  his   tax  liability           than if he uses other means to           give  effect  to  his  wishes.           Taxation  of  companies  is  a           complex   subject,    and   is           outside  the   scope  of  this           book. The reader who wishes to           pursue the subject is referred           to  the   many  standard  text

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         books  on   Corporation   Tax,           Income Tax,  Capital Gains Tax           and Capital Transfer Tax.                The other  inroads on the           principle     of      separate           corporate   personality   have           been made  by two  sections of           the Companies  Act,  1948,  by           judicial  disregard   of   the           principle where the protection           of  public   interests  is  of           paramount importance, or where           the company has been formed to           evade obligations  imposed  by           the law,  and  by  the  courts           implying certain  cases that a           company is an agent or trustee           for its members.      In Palmer’s Company Law (23rd Ed.),      the present  position in England is      stated and  the occasions  when the      corporate veil  may be  lifted have      been enumerated and classified into      fourteen categories.  Similarly  in      Gower’s Company  Law (4th  Ed.),  a      chapter is  devoted to ‘lifting the      veil’  and  the  various  occasions      when   that   may   be   done   are      discussed. In  Tata engineering and      Locomotive Co.  Ltd. [(1964)  6 SCR      885],  the   company   wanted   the      corporate veil  to be  lifted so as      to sustain  the maintainability  of      the petition,  filed by the company      under    Article    32    of    the      Constitution, by treating it as one      filed by  the shareholders  of  the      company. The request of the company      was turned  down on the ground that      it was  not possible  to treat  the      company  as   a  citizen   for  the      purposes of  Article 19. In CIT vs.      Sri Meenakshi  Mills Ltd. [AIR 1967      SC 819],  the  corporate  veil  was      lifted and  evasion of  income  tax      prevented by  paying regard  to the      economic realities  being the legal      facade. In  Workmen vs.  Associated      Rubber Industry  Ltd. [(1985_ 4 SCC      114],  resort   was  had   to   the      principle of  lifting the  veil  to      prevent devices  to  avoid  welfare      legislation. It was emphasised that      regard must be had to substance and      not  the  form  of  a  transaction.      Generally and  broadly speaking, we      may say that the corporate well may      be lifted  where   a statute itself      contemplates lifting  the veil,  or      fraud  or   improper   conduct   is      intended  to  be  prevented,  or  a      taxing  statute   or  a  beneficent      statute is  sought to  be evaded or      where  associated   companies   are      inextricably connected as to be, in

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    reality, part of one concern. It is      neither necessary  nor desirable to      enumerate  the   classes  of  cases      where   lifting    the   veil    is      permissible,   since    that   must      necessarily depend  on the relevant      statutory or  other provisions, the      object sought  to be  achieved, the      impugned conduct,  the  involvement      of  the   element  of   the  public      interest, the effect on parties who      may be affected etc."      In M/s  Mcdowel and  Company Ltd.  vs.  Commercial  Tax Officer [(1985)  3 SCC 230 = (1985) 154 ITR 148], this Court examined  the   concept  of  tax  avoidance  or  rather  the legitimacy of  the art   of dodging tax without breaking the law. This  Court stressed  upon the need to make a departure from the Westminster principle based upon the observation of Lord Tomlin  in the  case of  IRC   vs. Duke  of Westminster [(1936) AC 1] that every assessee is entitled to arrange his affairs as  to not  attract taxes.  The Court  said that tax planning  may  be  legitimate  provided  it  is  within  the framework of  law. Colourable  devices, however,  cannot  be part of  tax planning. Dubious methods resorting to artifice or subterfuge  to avoid  payment of  taxes on what really is income can today no longer be applauded and legitimised as a splendid work  by a  wise man  but has  to be  condemned and punished with  severest of  penalties.  If  we  examine  the thrust of  all  the  decisions,  there  is  no  bar  on  the authorities to  lift  the  veil  of  a  company,  whether  a manufacturer or a buyer, to see it was not wearing that mask of not being treated as related person when, in fact,  both, the manufacturer  and  the  buyer,  are  in  fact  the  same persons. Under  sub-section (1)  of Section  4 of  the  Act, value of  the excisable  goods shall  not be  deemed  to  be normal price  thereof, i.e.,  the price  at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale  trade for  delivery at  the time  and place of removal, if  the buyer  is a related person and price is not the sole  consideration for  sale. As  to who  is a  related person, we have to see its definition in Section 4(4) (c) of the Ac t. It is not only that both, the manufacturer and the buyer, are  associated with  each other  for which corporate well may be lifted to see who is being it but also that they should  have   interest,  directly  or  indirectly,  in  the business of  each other.  But once  it is found that persons being the  manufacturer  and  the  buyer  are  same,  it  is apparent that  buyer is  associated with  the  manufacturer, i.e., the  assessee and  then regard being had to the common course of  natural events,  human  conduct  and  public  and private business it can be presumed that they have interest, directly or indirectly, in the business of each other (refer Section 114  of the Evidence Act). It is, however, difficult to lay down any broad principle to hold as to when corporate veil should  be lifted or if on doing that, could it be said that the  assessee and  the buyer  are related persons. That will depend  upon the  facts and  circumstances of each case and it will have to be seen who is calling the shots in both the assessee  and the  buyer. When it is the same person the authorities can  certainly fall back on the third proviso to clause (a)   of  Section 4(1)  of the  Act, to arrive at the value of  the excisable  goods. It  cannot be  that when the same person  incorporates two  companies of which one is the manufacturer of  excisable good  and other  is the  buyer of those goods, the two companies being separate legal entities

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the excise  authorities are  barred  from  probing  anything further to  find out  who is  the  person  being  these  two companies.  it   is  difficult   to  accept  such  a  narrow interpretation. True  that shareholdings  in a  company  can change by  that is the very purpose to lift the veil to find out id the two companies are associated with each other. Law is specific  that when  duty of  excise is chargeable on the goods with  reference to  its value than the normal price on which the  goods are  sold shall  be deemed  to be the value provided (1)  the buyer  is not a related person and (2) the price is  the sole  consideration. It is a deeming provision and the  two conditions have to be satisfied for the case is to fall  under clause (a) of Section 4(1) keeping in view as to who  is the  related person  within the meaning of clause (c) of  Section 4(4)  of the  Act. Again if the price is not the sole  consideration, then  again clause  (a) of  Section 4(1) will  not be  applicable to  arrive at the value of the excisable goods for the purpose of levy of duty of excise.      In the present case, we do find that the authorities of and the  Appellate Tribunal  did address  themselves to  the basic question as to the shareholdings of both, the assessee and the  buyer, inasmuch  as they  found that  the  Managing Director of  both the  companies was  the same  and one more director was  common. It  was also  found that the shares of both the  companies were  held by the members of the ‘Sharma family’ but that is quite a vague expression and, therefore, in our  view, the  Appellate Tribunal  was partly  right  in giving the direction to ascertain the break-up of the shares of each  member of  the family in the two companies. To lift the veil  the actual  shareholding of both the companies and the persons  in  control  of  the  management  of  both  the companies needed  to be ascertained to consider the identity of interest  of both  the companies  in the business of each other. No  presumption of  such mutuality of interest in the business of  each other  could have  been drawn  without the factual data.      However, in  the present  case, we  are told  that  for subsequent years,  the authorities  have  not  treated  M/s, Ganga Saran  & Sons  Pvt. Ltd.,  the sole distributor of the appellant, as  a related  person which  fact  has  not  been controverted by  the respondent  and have accepted the price at which  the goods  are sold  by the  assessee to  the sole distributor as  the sole  consideration for sale. The matter pertains to  the year 1976. Order of the Assistant Collector is of  the year 1978. We do not think at this late stage any purpose will  be served to inquire into the shareholdings of the assessee,  the appellant  and its  sole  distributor  as directed by  the  Appellate  Tribunal.  We  are,  therefore, inclined to  hold that no effect be given to the judgment of the Appellate Tribunal.      Accordingly, the  appeals are  allowed and the impugned judgment of  the Appellate Tribunal is set aside. There will be no order as to costs.