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PETITIONER: UNION OF INDIA AND OTHERS

       Vs.

RESPONDENT: ATIC INDUSTRIES LIMITED

DATE OF JUDGMENT22/06/1984

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. PATHAK, R.S. SEN, AMARENDRA NATH (J)

CITATION:  1984 AIR 1495            1984 SCR  (3) 930  1984 SCC  (3) 575        1984 SCALE  (1)931  CITATOR INFO :  R          1988 SC1154  (8)  D          1989 SC1555  (12)  R          1989 SC1733  (3,5,7)

ACT:      Central Excise  and Salt  Act, 1944-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-  Constitutional validity of.      Central Excise  and Salt  Act, 1944-The  words "related person" occurring in clause (c) of sub-section (4) of sec. 4 as it  stood after its amendment by sec 2 of the Central Act 22 of 1973-Definition and applicability of.      Bank Guarantee-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.

HEADNOTE:      The respondent-assessee, a limited company, was engaged in the business of manufacturing dyes. Its 50 per cent share capital was  held by Atul Products Ltd. and the remaining 50 per cent  by Imperial  Chemical Industries Ltd. London which also had  a subsidiary  company fully  owned by  it,  called Imperial Chemical  Industries (India) Pvt. Ltd. The Imperial Chemical  Industries  (India)  Pvt.  Ltd.  ceased  to  be  a subsidiary company  wholly owned  by the chemical Industries Ltd. London  on 13th  March 1978,  since 60 per of the share capital of  Imperial Chemical  Industries (India)  Pvt. Ltd, was offered  to the public in pursuance of the policy of the Government of  India requiring that not more than 40% of the share capital  of an  Indian company  should be  held  by  a foreign shareholder. Consequent upon this dilution o 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 large bulk of dyes  manufactured by  it in  wholesale to  Atul Products Ltd. and  Imperial Chemical  Industries (India) Pvt. Limited which subsequently  came to  be known  as Crescent  Dyes and Chemicals Ltd.  at a  uniform price applicable alike to both

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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 931 them as  also their  profit. The  transactions  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 assessee  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 31st July 1976 calling upon  the assessee  to show  cause why  the  earlier decision approving the price list should not be reviewed and the differential  duty worked  out on  the basis  of selling price charged  by Atul  Products Ltd.  and Crescent  Dyes  & Chemicals Ltd.  should not  be recovered w.e.f. 1st October, 1975 on  the ground  that the  assessee on  the one hand and Atul Products  Ltd. and  Crescent Dyes and Chemicals Ltd. on the other were "related 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 Ltd.  and Crescent Dyes and Chemicals Ltd. sold the Dyes to  the dealers  and the consumers. The assessee in 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 directed the assessee to  file a  fresh price  list on  the basis  of the selling price  charged by  Atul Products  Ltd. and  Crescent Dyes and Chemicals Ltd.      The assessee  thereupon filed  a writ  petition in  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  person" 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 assessee on the one hand and Atul Products Ltd. and Crescent Dyes  &  Chemicals  Ltd.  on  the  other  were  not "related persons"  and the  wholesale cash  price charged by the assessee  to Atul  Products Ltd.  and Crescent  Dyes and Chemicals Ltd.,  and not  the price at which the latter sold the dyes  to the  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 to the Revenue for paying the costs incurred by the assessee in 932 connection with  the bank  guarantee furnished  by it. Hence

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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)  On a proper interpretation of the definition of "related  person" in  sub-section (4)  (c) of sec. 4, the words "relative  and a  distributor of  the assessee" 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.  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. 4 as also the expression "the buyer is not a related person and"  in clause  (a) of sub-section (1) of sec. 4 and proviso (iii)  to that clause must consequently be set aside and  it   must   be   held   that   these   provisions   are constitutionally valid. [937 E-H]      Union of  India  v.  Bombay  Tyres  International  Ltd. [1984] 1 SCC 467 applied.      High Court  judgment in Special Civil Appln. No. 119 of 1976 decided on 20 21 February 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 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 interest,  direct   or  indirect  in  the  business  of  the assessee. To  attract the applicability of the first part of the definition,  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 quality 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 of  indirect in  the business  of  the other. [938 G-H; 939 A-B]      (3) (i)  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 assessee. But,  it cannot  be said that the assessee, a Ltd. company, has  any interest,  direct  or  in  direct  in  the business carried on by one of its shareholders, 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

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concerned whether  Atul Products  Ltd. sells  such dyes at a profit or at a 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. is not even a  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 in clause (c) of sub-section (4) of section 4 of the amended Act  is therefore  clearly  not  satisfied  both  in relations to  Atul Products  Ltd. as  also  in  relation  to Crescent Dyes  and Chemicals Ltd. 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 sec. 4 of the amended Act. Therefore, the assessable 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 purchasers but must be determined on the basis  of  the  wholesale  cash  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  the  assessee  in connection  with   the  bank   guarantee  furnished  by  the assessee. The bank guarantee was required to be furnished by the assessee  as a  condition of  grant of  interim stay  of enforcement of the demand for differential duty and if it is ultimately 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 to  the assessee. This direction of the High Court which  directs the  revenue to pay to the assessee the costs in  connection with the bank guarantee furnished by it in pursuance  of the  interim order of the High Court is set aside. [940 H; 941 A-B] 934

JUDGMENT:      CIVIL APPELLATE  JURISDICTION; Civil Appeal No. 3260 of 1979      From the  Judgment and  Order dated  the 22/23rd day of February, 1972  of the  Gujarat High  Court  in  Spl.  Civil Appln. No. 52/77.      R.N. Poddar for the Appellants.      N.A. Palkhivala,  Atul Setalved,  F.H.J.  Talyar  Khan, Ravindar Narain,  Kamal Mehta,  A. Manjra,  T.M. Ansari  and Miss Rainu Walia for the Respondents.      The Judgment of the Court was delivered by      BHAGWATI, 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 as it stood after  its amendment by section 2 of Central Act 22 of 1973 which  came into  force with  effect from  1st October,

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1975. The  facts giving  rise to this appeal are few and may be briefly stated as follows:      The assessee  is  a  limited  company  engaged  in  the 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  times sold the large bulk of  dyes  manufactured  by  it  in  wholesale  to  Atul products Limited  and Imperial  Chemical Industries  (India) Private Limited  at a 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, 6  per cent  of the  share capital of  Imperial  Chemical  Industries  (India)  Private Limited was offered to the public, with 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 Chemicals  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 the  sole consideration  for the sale and  no   extra-commercial  considerations  entered  in  the determination of  such  price.  Atul  Products  Limited  and Crescent Dyes  and Chemicals  Limited, of  course, sold  the dyes purchased  by them  from the assessee at a 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 of the 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  Superintendent  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  in formation was  furnished by the assessee by its letter dated 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

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assessee thereafter  went on  clearing the dyes manufactured 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  by the  Central  Excise Authorities 936 was supplied  by the assessee. The Superintendent of Central Excise, however,  issued a  notice to  the assessee  an 31st July, 1976  calling upon  the assessee to show cause why the earlier decision  of the  Assistant Collector  approving the price list  should not  be reviewed  on the  ground that the assessee on  the one  hand and  Atul  Products  Limited  and Crescent Dyes  and  Chemicals  Limited  on  the  other  were "related 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 Limited should not be recovered from the assessee with effect from 1st October, 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 of that term contained in sub-clause  (c) of  sub-section (4)  of section  4 of the amended Central  Excise and  Salt Act,  1944. The  Assistant Collector was,  however, not  satisfied with the explanation offered by  the assessee 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  1st  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  October,  1975  to  31st December,  1976   came  to   an  aggregate   amount  of  Rs. 1,17,77,737,65. The assessee thereupon filed a writ petition in the High Court of Gujarat challenging the validity of the demand made  by the Assistant Collector and in the meanwhile also preferred 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. 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 assessee 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

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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  India  v.  Bombay  Tyres  International Limited where  an identical  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 "On a  proper  interpretation  of  the  definition  of  "related person" in  sub-section (4)  (c)  of  section  4  the  words "relative and a 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. So  read, 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  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  not a 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 938 related to  applicability  of  the  definition  of  "related person" in clause (c) of sub-section (4) of section 4 of the amended Act.  The Assistant Collector took the view that the assessee on  the one  hand and  Atul  Products  Limited  and Crescent Dyes  and  Chemicals  Limited  on  the  other  were related persons  within the meaning 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  Atul Products Limited and Crescent Dyes and Chemicals Limited. This view taken by the Assistant Collector was set aside by the High Court on the ground that the assessee  on the  one hand and Atul Products Limited and Crescent Dyes  and Chemicals  Limited on  the 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 dyes  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 definition of "related person" in  clause (c) of sub-section (4) 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 was admittedly not

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applicable,  because   neither  Atul  Products  Limited  nor Crescent Dyes and Chemicals Limited was a holding company or 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 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  allotted 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 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, 939 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. 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 carried on by the assessee. But it is not possible to say that the assessee has any interest in the  business of  Atul Products  Limited. There  are  two points of  view from  which  the  relationship  between  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 carried  on by one of its shareholders, even though the shareholding  of such  shareholder may  be 50  per cent. Secondly, Atul  Products Limited is a wholesale buyer of the dyes manufactured  by the  assessee but even then, since the transactions between  them are 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 Limited.  Atul Products 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 concerned whether Atul Products Limited sells or does not sell the dyes purchased by it from the assessee  nor is  it  concerned  whether  Atul  Products Limited sells  such dyes  at a  loss. It  is  impossible  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  stronger then  that in regard to Atul Products  Limited. Crescent  Dyes and Chemicals Limited is not  even a  shareholder of  the  assessee  and  it  has, therefore, no interest direct or indirect in the business of the assessee.  It is  Imperial Chemical  Industries Limited,

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London which  holds 50  per cent of the share capital of the assessee and  this foreign company also holds 40 per cent of the share capital of 940 Crescent Chemicals  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 share holder  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  whole sale  on principal to principal basis. It  is obvious  that for  the same reasons which have prevailed with us while discussing the case of Atul Products Limited, the  assessee 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 also  in 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 value  of the  dyes manufactured  by the assessee cannot be  determined with  reference to  the selling  price charged by  Atul Products  Limited  and  Crescent  Dyes  and Chemicals Limited to their purchasers but must be determined on the  basis of  the wholesale  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, be held to be rightly quashed by the High Court.      But there  is one  small matter on which the High Court has, in  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  it  in 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  furnished  by  the assessee  as  a  condition  of  grant  of  interim  stay  of enforcement of the demand for differential duty and if it is ultimately found  that the  demand for differential duty was not 941 justified, the  bank guarantee  would certainly  have to  be discharged, but  it is  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 order  made by the High Court which directs the  Revenue  to  pay  to  the  assessee  the  costs incurred in  connection with the bank guarantee furnished by it in pursuance of the interim order of the High Court.      The appeal,  therefore, fails  except in  regard to the direction for  payment of  costs of  the bank guarantee. The Revenue will pay the costs of the appeal to the assessee. S.R.                                       Appeal dismissed. 942

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