| Case ID |
39c08a3e-153f-46f9-9aef-c4ad07473355 |
| Body |
View case body. Login to View |
| Case Number |
Civil Appeals Nos. 1938-39 of 1987 |
| Decision Date |
Mar 28, 1988 |
| Hearing Date |
|
| Decision |
The Supreme Court upheld the decision of the Appellate Collector, concluding that the distributors were not considered 'related persons' under the Central Excise and Salt Act. The ruling emphasized that the relationship between the manufacturer and distributor did not meet the criteria for mutual business interests as defined in the Act. The Court reiterated that to establish relatedness, there must be direct or indirect interests in each other's business, which was not demonstrated in this case. The ruling clarified that expenses incurred by the manufacturer for promotional activities and distributor operations could not be included in the assessable value for excise duty. Consequently, the sales pattern indicated that these transactions were conducted at arm's length, validating the Appellate Collector's decision to reject the claim of related persons, thereby affirming the independence of the distributors in the business dealings. |
| Summary |
In the case of Collector of Central Excise, Madras vs. T.I. Millers Ltd., the Supreme Court of India addressed key issues regarding the interpretation of 'related persons' under the Central Excise and Salt Act, 1944. The judgment focused on the relationships between manufacturers and distributors and the criteria of mutual business interests required to establish this connection. The Court found that the distributors did not meet the statutory definition of related persons, as they operated independently and did not have direct or indirect interests in the business of the manufacturer. This decision is significant as it clarifies the legal framework governing excise duties and the importance of maintaining arm's length transactions in commercial relationships. The ruling underlines the necessity for clear evidence of mutual interest to substantiate claims of relatedness, thereby impacting future cases concerning excise valuation and related person determinations. This case highlights the evolving landscape of tax law and its implications for corporate practices in India, making it a critical reference for legal practitioners and businesses alike. |
| Court |
Supreme Court of India
|
| Entities Involved |
T.I. Millers Ltd.,
M/s. Tube Investments of India Ltd.
|
| Judges |
Sabyasachi Mukharji,
S. Ranganathan
|
| Lawyers |
M.K. Banerjee, Solicitor-General,
A.K. Ganguli,
P. Parmeshwaran,
A.T. M. Sampath
|
| Petitioners |
Collector of Central Excise, Madras
|
| Respondents |
T.I. Millers Ltd., Madras,
T.1. Diamond Chain Manufacture Cycle Lamps and Automotive Chains
|
| Citations |
1989 SLD 1032,
1989 MLD 1781
|
| Other Citations |
Union of India v. Atic Industries Ltd. (1984) 3 SCR 930,
Bombay Tyre International Ltd. etc. (1984) 1 SCR 347
|
| Laws Involved |
Central Excise and Salt Act, (I of 1944)
|
| Sections |
4(4)(c)
|