K.L. Rekhi, Member (T)

1. The main controversy in these appeals is whether M/s. Crompton Greaves Ltd. (hereinafter referred to as 'Crompton') were a "related person" of M/s. Kerala Electric Lamp Works Ltd. (hereinafter referred to as 'assessee') within the meaning of Section 4(4)(c) of the Central Excises and Salt Act, 1944. There are certain other subsidiary issues also. But since the issues are common and inter-connected and related to the same assessee, they were argued together before us. This combined order will dispose of all the 15 aforesaid appeals, 14 of the department and one of the assessee.

2. The essential facts are that the assessee manufacture electric bulbs, fluorescent tubes and MV lamps. The dispute before us is regarding valuation of their goods for the purpose of assessment of central excise duty. The period of dispute is from 18-3-1978 onwards. Daring this period, Crompton were the principal distributor of the assessee. They lifted around 80% of the assessee's production. As per agreement between the two parties, Crompton kept Rs. 15 lakhs with the assessee as a security deposit. During the period from 18-3-1978 to 13-8-1978, the assessee was manufacturing two types of goods -

(1) Crompton branded goods which were sold only to Crompton; and

(2) Toshiba branded goods which the assessee sold to others through its own marketing organisation.

Crompton never purchased any Toshiba branded goods. During 1975-78 disputes arose between Crompton and the assessee. Crompton stopped purchasing goods from the assessee. The assessee suffered heavy losses. There was litigation between the two parties and ultimately the dispute was referred for arbitration where it is now pending. because of the losses, the assessee became a sick unit. Public financial institutions, ICICI IDBI, stepped in and at their instance the assessee company under-went a major re-structuring. Crompton acquired 10% shares of the assessee company. Thereafter, from March, 1978 Crompton re-started bulk purchases of the goods manufactured by the assessee at mutually agreed prices. With effect from 14-8-1978, four Directors nominated by Crompton were appointed on the Board of Directors of the assessee Company; no Managing Director was appointed but instead 2 employees of Crompton took over as the Chief Executive and Works Manager, respectively, of the assessee company. From the same date, i.e., 14-8-1978, the assessee wound up its own marketing organisation and started manufacturing only Crompton branded goods which were sold to Crompton at prices fixed in consultation with public financial institutions. On 25-3-1982, Crompton's control over the assessee company became full when Crompton acquired the share holding of the Toshiba Company of Japan in the assessee company. Crompton now became the holding company of the assessee unit. Crompton now held about 56% shares in the assessee company.

3. In the background of the above facts, the Collector (Appeals) has held and ordered as follows :-

(1) Till 24-3-1982, i.e., prior to 25-3-1982, Crompton was not a related person of the assessee. The Assistant Collector should re-determine the assessable values under Section 4(1)(a) but refund payable to the assessee should be restricted to six months period only, refund for the earlier period being time barred under Section 11(B) as the assessments were provisional only for the disputed issue of post-manufacturing expenses and not for the disputed point of related person.

(2) From 25-3-1982, Crompton, in their capacity as the holding company of the assessee unit, were a related person of the assessee.

(3) The Asstt. Collector should go into the question of abatements admissible from Crompton's re-sale price from 25-3-1982 onwards after hearing the assessee.

The assessee informed us that no orders in remand had been passed by the Assistant Collector in pursuance of the above directives of the Collector (Appeals).

4. The department's prayers in their 14 appeals as now presse