R. Sudhakar, J. - (1.)AGGRIEVED by the order of the Appellate Tribunal in allowing the appeals filed by the assessee, the Revenue is before this Court challenging the said order by filing the present appeal.
(2.)THE appeal was admitted by this Court on the following substantial questions of law:
"1. Whether the transaction existing between a proprietor concern where wife is the proprietrix and the marketing concern where the husband was Manager Partner/ Managing Director, who actually controls the sale price of the manufacturing unit, could be considered as a transaction within the meaning of the proviso (iii) to Section 4(1)(a) reads with explanation to 'related person' as envisaged under Section 4(4)(4c) of the Central Excise Act, 1944?

2. Whether the Tribunal is right to single out the show cause notices to hold that the Appellate Authority has traversed beyond the confines of the notices, when the doctrine of merger is applicable as the orders -in -original merged with the order -in -appeal as held by Apex Court in the decision reported in, 2005(185) ELT 199?

Whether the Tribunal is right in rejecting the order -in - appeal when the findings that were not challenged by the respondent either before the original authority or before the Appellate Authority could not be agitated before the Appellate Authority for the first time as held by the Apex Court reported in, 1998(104) ELT 198(SC) -

3. The brief facts of the case are as follows:

The respondent is engaged in the manufacture of electronic fluorescent lamps falling under Heading 84.13 of the CETA Schedule. The respondent unit is a Proprietary concern of Smt.G.R. Rani, W/o Shri G.Radhakrishnan. The entire quantity of the said electronic fluorescent lanterns manufactured by the unit was sold to M/s. Rolls Marketing Agency, partnership concern and the partners were Mr.G.Radhakrishnan, husband of Smt.G.R. Rani and Shri.Raja Chakravarty, brother of Smt. Rani. Subsequently, from August, 1995 onwards, the marketing firm was converted into a private limited company in the name of M/s. Rolls Appliances (P) Ltd. with Shri G.Radhakrishnan as the Managing Director and Shri.Raja Charavarty as Director. Thereafter, another marketing concern by name M/s. Emergency Power & Electronics Ltd. was created. The respondent sold the major quantity of the goods manufactured by them to the said marketing concern at the rate of Rs. 860/ - per lamp, whereas the marketing firms were selling the same to the dealer at Rs. 1,280/ - per lamp. Therefore, the Revenue proceeded against the respondent with regard to the value of the goods cleared by them to the marketing firm. The original authority held that the wholesale price of the electric fluorescent lamp prevailing at 2 marketing firms should be considered as normal price of the goods manufactured and cleared by the respondent and demanded the differential duty of Rs. 46,598/ - in Order -in -Original No. 412/96 dated 04.12.1996. The adjudicating authority authority demanded a differential duty of Rs. 1,05,850/ - in Order -in -Original dated 30.09.1997. On appeal by the assessee, the Commissioner (Appeals) confirmed the orders of the Adjudicating Authority, holding that the respondent and the two marketing units are related person in terms of Clause (c) of sub -section (4) of Section 4 of the Central Excise Act, 1994.

(3.)AGGRIEVED by the order of the Commissioner (Appeal), the assessee once again pursued the matter before the Tribunal. The Tribunal, after hearing both sides, allowed the appeals holding as follows:
"5. We have gone through the records of the case carefully. Even though the Commissioner (Appeals) has held that the appellants' firm and the other two units are related persons, there is nothing in the show -cause notice which indicates the same. In fact, the show cause notice states that the appellants are clearing the goods to their sister concerns. Prima facie we find that the impugned order is beyond the scope of the show -cause notice. In the case of CCE Vs Electro Services (P) Ltd. ( : 2001 (127) ELT 828(Tri.Del)) it was held that assessee should not be treated as related person merely because partners of the assessee are the Directors of the buyer company. Nothing on record to substantiate that there was mutuality of interest of money or money flow back in between the two concerns. Buyers cannot be said to be sole selling gent, in absence of any allegation in the show cause notice or in the impugned order. In the case of Mineral Wool Mfg. (I) Pvt.Ltd. Vs CCE, Patna (1999 (109) ELT 228(T)) it is held that a private limited company and its buyer a partnership firm whose partners were sons of two of the Directors of the manufacturer company. Company does not consist of only the Directors. It has a distinct identity. No financial involvement or profit flow back or any special arrangement between the buyer and the seller. Selling price to the buyer is not low, after making allowance for excise duty and normal trading profit and in fact found to be comparable to sale price of other manufacturers. Buyer is not a related person of manufacturer. (Section 4(4)(c) of Central Excise Act, 1944.. In Cooper Pharma Vs CCE, New Delhi (2004 (174) ELt 143 (Tri.Del)), it is held that manufacturer and limited Company cannot be treated as 'related persons' as having interest in business of each other since share -holders/directors of limited company were blood relations of manufacturing partnership firm. No evidence brought on record that an artificial legal arrangement was created in order to evade duty. Limited Company is a juridical person separate from its share - holders and directors. Such a juridical person cannot be treated as a related person. Penalty set aside. In another case Weikfield Products Co.(India) Vs CCE ( : 1993 (63) ELT 672(T)) it is held that when goods are sold to two buyers only viz. Canteen stores department (CSD) and Weikfield central Marketing Organisation (CMO) and price is same in both cases, partners of CMO although close relatives of Directors of appellant company can be considered neither related person nor favoured buyer, one being a corporate concern and other being a partnership concern section 4(4)(c) of Central Excise Act, 1944.

6. In view of the above decisions, we are inclined to allow the appeals."