http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

CASE NO.: Appeal (civil)  3821-3823 of 2005

PETITIONER: Commissioner of Central Excise,Mumbai-IV

RESPONDENT: M/s. Damnet Chemicals Pvt. Ltd.  Etc

DATE OF JUDGMENT: 10/09/2007

BENCH: Tarun Chatterjee & B. Sudershan Reddy

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOs. 3821-23 OF 2005

B. SUDERSHAN REDDY, J.  

1.      These appeals preferred under Section 35L(b) of the  Central Excise Act, 1944 (hereinafter referred to as ’the  Act’)  are directed against a common order dated  22.12.2004 passed by the Customs, Excise and Service Tax  Appellate Tribunal  (hereinafter referred to as ’CESTAT’)  West Regional Bench, Mumbai by which Appeal Nos.  E/304/2004, E/314/2004 and E/315/2004  filed by the  respondent-assessee   were allowed.  2.      The facts briefly stated are as follows:  3.      The respondents - M/s. Danmet Chemicals Pvt. Ltd.   (hereinafter referred to as ’DCPL’) were manufacturing the  products ’CRC 2-26 Aerosol’ and ’CRC Acryform Aerosol’  since 1983.  They were claiming exemption under  Notification No. 120/84-CE dated 11.5.1984 for the product  ’CRC 2-26’  and SSI exemption under Notification No.  175/86-CE dated 1.3.1986 for the product ’CRC Acryform’.   In their declarations they claimed the classification of the  products ’CRC 2-26’ under Chapter 2710.99 and ’CRC  Acryform’ under Chapter 3203.40.  

4.      On the basis of the material gathered during the  routine transit checks and other information the  Department issued show cause notice dated 12.2.1993 to  the respondent-assessee calling upon it to show cause as to  why Central Excise duty  of Rs. 56,69,872.80p should not  be demanded and recovered for the period  26.2.1988 to  24.10.1992.  In the said show cause notice mainly 4 issues  were raised, namely: (i)     That the product ’CRC 2-26’ was not a blended  lubricating oil and was, therefore, not entitled to  the benefit of Notification No. 120/84-CE dated  11.5.1984;  (ii)    That the product ’CRC Acryform’ was not entitled  to the benefit of Notification No. 175/86\026CE  dated 1.3.1986 inasmuch as the product carried  on it the brand name/trademark of a person not  entitled to the benefit of the Notification;  (iii)   That the respondent-assessee was a dummy or a  fagade of Bharat Bijlee Ltd. (for short ’BBL’)  and  also that the respondent and BBL were related  persons and that therefore the price at which  BBL sold the respondent’s products should be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

taken as the assessable value;  (iv)    That the respondent-assessee had suppressed  the facts with intent to evade duty and therefore  the proviso to Section 11A (1) of the  Act had  been invoked. 5.      The Department issued 12 six-monthly show cause  notices between 27.10.1997 to 3.4.2003 for the period  April, 1997 to 31.10.2002, demanding an aggregate  amount of Rs. 22,55,444/-

6.      The matter was initially adjudicated by the  Commissioner (Adjudication) vide order dated 31.8.1998  which was challenged by the respondent-assessee in appeal  and the Tribunal having set aside the order of the  Commissioner remitted the case to the Commissioner for de  novo adjudication. Accordingly, the Commissioner  adjudicated all the show cause notices  vide his order dated  31.10.2003 whereby and whereunder it was held that the  respondent-assessee is not entitled to exemption of duty  under Notification No. 120/84-CE for the product ’CRC 2-26’  and exemption under Notification No. 175/86-CE in case of  product ’CRC Acryform’.  

7.       Aggrieved by the said decision the respondent- assessee filed an appeal against the aforesaid order dated  31.10.2003 passed by the Commissioner, Central Excise,  Mumbai-IV.  The CESTAT decided all the issues that had  arisen for its consideration and accordingly allowed the  appeal preferred by the respondent-assessee.  We shall  refer to those issues adjudicated by the CESTAT in detail  appropriately.  Being aggrieved by the decision of the  Tribunal, Commissioner of Central Excise, Mumbai-IV   preferred these appeals.  

8.      We have heard Shri Vikas Singh, learned Additional  Solicitor General for the appellant and Shri D. B. Shroff,  learned Senior Counsel for the respondent-assessee.  

9.      Elaborate submissions were made by both the  counsel.  We have perused the orders passed by the  Commissioner as well as the Tribunal.  We have also gone  through the material available on record.  

10.     The learned Additional Solicitor General  mainly  contended  that the product ’CRC 2-26’ manufactured by  the respondent-assessee cannot be characterized as  lubricating oil as it was predominantly anticorrosive  in  nature and was used for air conditioners,  panel boards and  other electrical and electronic gadgets primarily to prevent  corrosion  and  for improving electrical properties.  It was  also submitted that the respondent-assessee was not  entitled to SSI exemption for ’CRC Acryform’  since the  respondent-assessee manufactured and cleared goods in  the brand name of M/s. BBL and also the logo of M/s. CRC  Chemicals Europe.  Further submission was that DCPL and  BBL are related persons and relation led to under valuation  of the goods.  The respondent-assessee is guilty of  suppression of facts warranting invocation of the extended  period.  

11.    Shri D.B. Shroff, learned senior counsel for the  respondent-assessee supported the findings and conclusion  recorded by the Tribunal and reiterated the case of the  respondent-assessee that he is entitled for the benefit of  both the Notifications referred to hereinabove.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

12.     Broadly, the following issues arise for our  consideration in these appeals namely:  1.       Whether the product ’CRC 2-26’ is a blended  lubricating oil and thus is entitled to exemption under  Notification No. 120/84? 2.      Whether the respondent is entitled to the benefit of  Notification No. 175/86  in respect of the product ’CRC  Acryform’? 3.      Whether there was any willful misstatement or  suppression of facts with intent to evade duty with  regard to the products ’CRC 2-26’ and ’CRC Acryform’  or about the relationship between the respondent and  BBL so as to enable the Department to invoke the  proviso to Section 11A(1) in show cause notice dated  12.2.1993 and whether the demand raised in the said  show cause notice is substantially time-barred? 4.      Whether the Department can impose any penalty? 5.      Whether the respondent was a fagade or dummy of  BBL and/or whether the respondent and BBL are  related persons within the meaning of Section 4 (a)  and 4 (3) (b) of the Act?

ISSUE NO.1:     Whether the product ’CRC 2-26’ is a  blended lubricating oil and thus is entitled  to exemption under Notification No.  120/84?

13.     The material available on record suggests that ’CRC 2- 26’ mainly contains petroleum base oil 25%, mineral oil  72% and rust preventives 3%.  It is the case of the  respondent-assessee that these ingredients are blended  together with a stirrer until thoroughly mixed.  This blended  lubricating oil is sold and used as a penetrating lubricating  oil by many industries including government owned for the  purposes of lubricating the ball and roller bearings, circuit  breakers, connectors, switches, push buttons etc.   The  petroleum base oil undisputedly is also mineral oil has  lubricating properties and is the most important ingredient  in ’CRC 2-26’.  Its main function is lubrication. It is  explained that when it is sprayed on moving parts, the  product forms a thin film on the surface and this film  lubricates the parts.  The film forming property is called  lubricity. As corrosion and rust increases friction amongst  moving surfaces, a small percentage of proprietary rust  preventives is also added so as to keep the surface rust free  as far as possible for effective lubrication by the film. The  certificates issued by various industrial concerns including  the government industries are part of record.  Their  genuineness is not put in issue.  The test report on ’CRC 2- 26’ carried out by Prof. M.C. Dwivedi, Professor  of IIT    categorically states that ’CRC 2-26’ is a blended lubricant  and that the lubricating oil used in the formulation conforms  with the requirements of the Bureau of Indian Standards  requirements.  The Department did not controvert the  expert opinion given by the Professor.  

14.     Be that as it may, the Department itself drew samples  on the said products on more than one occasion i.e. in  1984, 1990 and 1993.  The Deputy Chief Chemist has   given the test reports and communicated the same vide  letter dated 3.5.1985 stating that the sample which forms  of a liquid is composed of mineral oil and small amount of  additives; 1990 analysis has been communicated vide   letter dated 15.4.1991 stating that the sample is composed  of mineral oils and additives, the percentage of mineral oil

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

is more than 70% and the result of 1993 analysis was  communicated vide letter dated 10.1.1994 specifically  stating that it is a product  primarily used as lubricant  though it has anticorrosive properties also.  It is well settled  and needs no restatement at our hands that the test  reports given by the Chemical Examiner are binding upon  the Department in the absence of any other acceptable  evidence produced by it in rebuttal. In the present case, the  Department has neither produced any evidence to rebut the  reports of the Chemical Examiner nor impeached the  findings of the test reports.  

15.     Much reliance was sought to be placed by the  Department on the label affixed on the container which says   that " ’CRC 2-26’  is a precision blended multi purpose  lubricating oil that prevents malfunction due to the  deteriorating effects of moisture and corrosion, extends  operational life, claims, protects metal, reduces downtime  and maintenance." Under the heading Directions, it is  mentioned that ’CRC 2-26’ is to be used to clean, lubricate,  protect precision mechanism.  We fail to appreciate as to  how this information contained in the label supports the  plea of the Department.  It is true that the product in some  measures contains anti-corrosive properties. The HSN   explanatory notes  specifically declares  that oils classified  under the head remain classifiable if various substances  have been added to render them suitable for particular  uses, provided the product contains by weight 70% or more  of petroleum oil or oils obtained from bituminous minerals  as the base and that they are not covered by a clear   specific heading.  There is no dispute whatsoever the  product in question to be a preparation containing 70% or  more of mineral oil apart from 20% petroleum oil.  The  product is predominantly a blended lubricating oil.   Negligible percentage of rust preventives does not make  the product in question to be a rust preventive one.  The  plea of the Department that the product is not a lubricating  oil is untenable.  There is no material or evidence in support  of the said plea.  The findings recorded by the Tribunal  based on material and evidence available on record  in our  considered opinion  do not suffer from any error requiring  our interference in exercise of our appellate jurisdiction.  

ISSUE NO.2 :    Whether the respondent is entitled to the  benefit of Notification No. 175/86  in  respect of the product ’CRC Acryform’ ?

16.     The contention of the Department in this regard   mainly was that  labels ’CRC Acryform’  carried the logos  "B" of BBL and ’CRC’  of CRC Chemicals Europe, who  admittedly are not entitled to the benefit of notification.   It  was submitted, in the circumstances ’CRC Acryform’ is not  entitled to the benefit of Notification No. 175/86.  There is  no dispute that the respondent-assessee has been using the  trademark ’CRC Acryform’ as its own ever since 1987.  It  had applied to the Trademarks Registrar for registering the  trademark  as early as in the year 1992.  The Trademark  Registrar has registered ’CRC Acryform’ as respondent’s  trademark on 14.10.1992 with retrospective effect from the  date of use  in the year 1987.  It is true the registration of  the trademark on 14.10.1992 after the commencement of  lis between the parties by itself may not be binding on the  Department but its evidentiary value cannot be altogether  ignored.   So far as the CRC Chemicals Europe  is concerned  it had given an affidavit and a certificate specifically stating

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

that they do not manufacture and have not manufactured  or sold any product under the name and style "Acryform" or  "CRC Acryform"  either in India or abroad and they have  not claimed any  title, right or ownership in the aforesaid  names. This affidavit has been ignored altogether by the  Commissioner on the ground that it was procured by the  respondent-assessee and it was a false document.  There is  no evidence made available by the Department that the  same trade name or brand name is used by some other  company apart from the respondent-assessee.  There is  also no evidence available on record indicating any  connection between the ’CRC Acryform’ and CRC Chemicals  Europe.  In the absence of any specific statement in the  show cause notice to this effect burden in this regard  cannot be cast on the respondent-assessee.  Admittedly the  use of the logo was discontinued from 1990 and the same  was informed to the Department. So far as the ’CRC  Acryform’ is concerned it bears the mark ’CRC Acryform’  which is registered and shown in the trademark certificate.  We are also not impressed by the submission made on  behalf of the Department that ’CRC Chemicals Europe’ could  not have permitted the manufacture of the product and  supply the concentrate without having title to the  trademark for the simple reason that the licence agreement  referred to and relied upon by the Department merely  permits the respondent-assessee to manufacture ’CRC  Acryform’ from the concentrate supplied by ’CRC Chemicals  Europe’.  The Commissioner mis-interpreted the clause in  the agreement relating to the product ’CRC 2-26’ and made  it applicable to ’CRC Acryform’.   The licence agreement  dated 30.9.1986  is nothing but extension  to the license  agreement dated 1.10.1983  for ’CRC 2-26’ of course in  addition permitting the manufacturer of ’CRC Acryform’ to  label it as such.  It is nowhere mentioned in the original  license agreement and in the subsequent agreement dated  30.9.1986 that ’CRC Acryform’ is a trademark or brand  name of  CRC Chemicals Europe.  The Tribunal upon  appreciation of the evidence available on record came to  the correct conclusion that respondent-assessee  continues   to  be a small- scale industry and entitles to the benefit  of  Notification No. 175/86 in respect of ’CRC Acryform’.  We  find no error in the conclusion so arrived at by the Tribunal.  

ISSUE No. 3:    Whether there was any willful  misstatement or suppression of facts with  intent to evade duty with regard to the  products CRC 2-26 and CRC Acryform or  about the relationship between the  respondent and BBL so as to enable the  Department to invoke the proviso to  Section 11A(1) of the Act, in the show  cause notice dated 12.2.1993 and whether  the demand raised in the said show cause  notice is substantially time-barred?

17.     The classification lists filed by the assessee from time  to time categorically mention in the column relating to the  process of manufacture as "blending of various anti- corrosive chemicals and solvents with mineral turpentine".   It is mentioned that the product is a blended lubricating oil  manufactured by blending mineral turpentine oil with anti- corrosive in a base of corrosive oil.  The stand taken by the  assessee is consistent  as is evident from the letter dated  20.3.1985 addressed to the Superintendent of Central  Excise that they were the manufacturers of ’CRC 2-26’

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

which was a blended lubricant comprising of various  anticorrosive oils and mineral turpentine oil and that the  same was fully exempted under Notification No. 120/84.   The required information was supplied to the  Superintendent of Central Excise when he visited the  factory of the respondent-assessee.  Samples were again  drawn in 1990 and 1993 to determine whether the product  was not a lubricating oil.   We have already referred to the  analysis of the Deputy Chief Chemist  who opined that the  samples contained mineral oil which was more than 70%  and additives.  The chemical test reports so obtained by the  Department were never put in issue.  No dispute has been  raised in this regard. The declarations furnished by the  respondent-assessee were totally inconformity with what  has been stated in the test reports of the Deputy Chief  Chemist.  It is true that the exemption under Notification  No. 120/84 was applicable to lubricating oil and greases  which had a primary  and permanent function of lubrication  and not for the product having a primary function of anti- corrosive protection.   But the evidence available on record  reveals that the quantum of rust preventives  in ’CRC 2-26’  is only 3% whereas mineral oil is 70%.  The evidence of the  people in the trade, testimonials  given by them including  various government bodies reveal  that the product ’CRC 2- 26’ is primarily used as a lubricating oil.  The test reports of  the Deputy Chief Chemist coupled with the evidence  referred to hereinabove lead to one and only one irresistible  conclusion that the product was primarily used for the  lubricating purposes. No evidence has been produced by  the Department to rebut the voluminous evidence made  available by the respondent-assessee.  

18.     In the circumstances, we find it difficult to hold that  there has been conscious or deliberate withholding of  information by the assessee.  There has been no willful  misstatement much less any deliberate and willful  suppression of facts.  It is settled law that in order to  invoke the proviso to Section 11A(1) a mere misstatement  could not be enough.  The requirement in law is that such  misstatement or suppression of facts must be willful. We do  not propose to burden this judgment with various  authoritative pronouncements except to refer the judgment  of this Court in  Anand Nishikawa Co. Ltd.  Vs. CCE [   2005 (188) ELT 149 (SC)]  wherein this Court held:

"We find that "suppression of facts" can  have only one meaning that the correct  information was not disclosed  deliberately to evade payment of duty,  when facts were known to both the  parties, the omission by one to do what  he might have done not that he must  have done would not render it  suppression. It is settled law that mere  failure  to declare does not amount to  willful suppression.  There must be some  positive act from the side of the  assessee to find willful suppression."  (emphasis supplied)  

19.     It is clear from the material available on record that  the Excise Authorities had inspected the manufacture  process, collected the necessary information and details  from the respondent-assessee and even collected the  samples and sent to chemical analysis.  The Authorities

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

were aware of the tests and analysis reports of the products  manufactured by the respondent-assessee.  The relevant  facts were very much within the knowledge of the   Department Authorities. The Department did not make any  attempt to lead any evidence that there was any willful  misstatement or suppression of facts with  intent to evade  payment of duty.  

20.     For the reasons aforesaid, we are of the view that the  Tribunal did not commit any error in holding that the  extended period of limitation was not available to the  Department for initiating the recovery proceedings under  Section 11A (1) of the Act.  

21.      So far as ’CRC Acryform’ is concerned, the allegation  was that the respondent-assessee did not mention about  the license agreement in the classification lists.  But the fact  remains the copies of the labels on the product which were  furnished to the Department at the time of filing  declarations and  classification lists contain information that  ’CRC Acryform’ was manufactured under the license of CRC  Chemicals Europe.  The Department had even taken  samples of ’CRC 2-26’ which had contained labels of the  aforesaid product.  This Court in O.K. Play (India) Ltd.    vs. Commissioner of Central Excise, Delhi-III,  Gurgaon      [2005 (188) ELT 300 (SC)] while dealing with  the effect of approval of the classification lists observed:  

"The classification lists were duly  approved by the department from time  to time.  All the facts were known to the  department, whose officers had visited  the factory of the assessee on at least  12 occasions.  In the circumstances, we  do not find any infirmity in the reasoning  given by the Tribunal in coming to the  conclusion that there was no willful   suppression on the part of the assessee  enabling the department to invoke the  extended period of limitation under the  proviso to Section 11A (1) of the 1944  Act."

22.     The same principle is reiterated in Commissioner of  Central Excise, Jamshedpur Vs. Dabur India Ltd. [  2005 (182) ELT 308 (SC)].  

23.     On the facts of the case, we hold that non-mentioning  of the license agreement in the classification lists does not  lead to the conclusion that there has been willful  suppression of facts with intent to evade duty.  The demand  in respect of ’CRC Acryform’ is, therefore, totally time  barred.  

ISSUE NO. 4:    Whether the Department can impose any  penalty? 24.     The only ground for levying the penalty is that the  respondent-assessee had suppressed the facts and had  evaded the payment of duty.  In view of our conclusion that  there has been no suppression whatsoever, the question of  imposition of penalty does not arise.  The duty demanded  by invoking the extended period of limitation itself is  untenable and unsustainable  for the aforesaid reasons.  In  such view of the matter no elaborate discussion on this  aspect is necessary.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

ISSUE NO. 5:    Whether the respondent was a fagade or  dummy of BBL and/or whether the  respondent and BBL are related persons  within the meaning of Section 4 (a) and 4  (3)  (b) of the  Act? 25.     The Department in the show cause notice dated  12.2.1993 alleged that: (i)  the assessee-respondent is a  dummy/facade of BBL; (ii) the assessee-respondent and  BBL are related persons.  The assessee in response to show  cause inter alia contended that it is a wholly independent  and separate company incorporated under the Companies  Act, 1956 as early as on 21.5.1983 having two directors,  namely Mr. N.J. Danani and his wife.  A manufacturing unit  was registered as a small-scale unit.  It has no borrowings  or loans from BBL or any other manufacturing unit. The  machineries required for the purposes of manufacturing the  products are purchased and owned by the respondent- company.  The required raw materials and packing  materials for manufacturing and packing the products were  always purchased from its own resources and BBL in no  manner exercises any supervision or control over the affairs  of the respondent-company.   

26.     It is no doubt true that the registered office of BBL  and the respondent-company was located in the same  premises.  The BBL owns the industrial gala in which  respondent’s factory exists for which the respondent- company pays market rent for its operation. The BBL before  entering into a lease agreement on each occasion obtained  a valuation report from an independent Valuer for the  purposes of fixing the quantum of rent.  The BBL entered  into a lease agreement with the respondent-company under  the Board Resolution of the company. Mere fact that both  the registered offices are situated in the same premises and  the manufacturing unit of the respondent-company is  situated in the industrial gala owned by the BBL would not  make both the companies are related to each other. There  is no mutuality of interest between both the companies.  

27.     BBL admittedly does not hold any shares in  respondent-company nor the respondent-company owns  any shares in BBL.  One of the Directors in both the  companies appears to be common.  The respondent- company was incorporated in 1983 and at that time Mr. N.J.  Danani was only an employee of BBL and became its  Director  in June, 1988 and was one out of seven Directors.   It is required to appreciate that the respondent first started  manufacturing ’CRC 2-26’ in the year 1984. The  manufacture of ’CRC Acryform’ was started after  September, 1986 but well before Mr. N.J. Danani became  Director of BBL.  

28      There is no evidence on record in support of the  allegation that the transactions between the respondent- company and BBL were not on a principle to principal basis.   The Commissioner found that the transaction between both  the companies was not a simple relationship between  manufacturer and seller, because respondent-company  manufactured the product but did not mention its name on  the product or carton, but mentioned that the product was  marketed by BBL and put the logo of BBL thereon and that  BBL did not pay any consideration to the respondent- company in that regard. This is totally contradictory to the  evidence available on record as held by the Tribunal.  The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

name of the manufacturer is also mentioned on the  product.  There is no evidence to arrive at any conclusion  that there was a hidden flow back of money between both  the companies.  The respondent did not take any loan or  advances from BBL.  The appellant did not produce any  evidence to show that BBL has an interest in the  respondent-company’s business.  The appellant however,  placed much reliance upon the finding of the Commissioner  which is as follows:  

"The respondent had a list price beyond  which BBL could not sell and the  arrangement between the parties was  that BBL would be billed at 60% of the  list price and that the difference in the  prices would recover the cost incurred  by BBL for providing security services,  and for expenses incurred by respondent  for putting the logo and the name of BBL  as also the cost of printing the leaflets,  advertisement material provided to  BBL."

29.       The Tribunal after elaborate consideration of the  matter and upon appreciation of the evidence found that  BBL was a bulk buyer of the product manufactured by the  respondent-assessee and there is nothing wrong in giving  40% discount.  It was a normal trade practice. This Court in   Metal Box India Ltd.  Vs. Collector of Central Excise,  Madras [ 1995 (75) ELT 449 (SC)] held that:

"If a special trade discount is given to  such a customer who is a buyer of 90%  of goods, it would amount to a normal  trade practice.  At any rate it would not  be an impermissible trade practice.  In  fact such type of concessions are usually  given by manufacturers whose goods  are lifted by whole-buyers whose  availability avoids  lot of marketing and  advertising costs for the manufacturer  and also ensures a guaranteed quantity  of sales year after year.  In order to  keep such a wholesale monopolistic  buyer attached to it, if under such  circumstances by way of business  expediency, the manufacturer offers him  a special trade discount, it cannot be  said that it is not in accordance with  normal practice of wholesale trade."

30.     There is no evidence available on record that the  respondent-assessee  received something further from BBL  other than  the price charged. There is no evidence to  suggest that the profit made by the BBL had flown into the  respondent-company.  BBL obviously is a distributor and  not a relative within the meaning of Section 4 (a) and 4 (3)  (b)  of the Act.           31.     This Court in Union of India Vs. Atic Industries  [  1984 (17) ELT 323 (SC)] held that:   "For treating the customer as a related  person, the first part of the definition of  ’related person’ as given in Section 4 (4)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

(c)  requires 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. Thus, it is not  enough that the assessee has an  interest directly or indirectly  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 any interest directly or indirectly 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.   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, but that would not make any  difference so long as each has got some  interest direct or indirect in the business  of the other.  In cases, where 50%  share of the manufacturing company is  held by7 the customer company, the  customer company can be said to be  having interest in the manufacturing  company as a shareholder but for this  reason, it cannot be said that the  manufacturing company has any interest   direct or indirect, in the business carried  on by one of its shareholders even  though the shareholding of such  shareholders may be 50%.  In the  absence of mutuality of interest in the  business of each other, the customer  company holding shares in the  manufacturing company cannot be  treated to be a ’related person’."  (Emphasis supplied)

32.     In such view of the matter it cannot be said that the  respondent-assessee and BBL were related persons.  The  finding arrived at in this regard by the Tribunal is correct.  No interference is called for.  

33.     In view of our findings, it is not necessary to go into  the various alternative submissions made during the course  of hearing of these appeals.  

34.     The appeals fail and are accordingly dismissed with no  order as to costs.