JUDGMENT 1. - Challenge in this appeal is to the order dated January 6, 1994 of learned Single Judge whereby the additional demand of excise duty raised by appellants against the respondent was held without legal sanction. 2. Contextual facts depict that the respondent company, having its unit in RIICO Industrial Area Bhiwadi, Alwar, was manufacturing medicines containing alcohol from August 27, 1987 and was paying excise duty to the State of Rajasthan. The products of the company were liable to excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (for short `1955 Act') and rules made thereunder. The company functioned under physical control of the Excise Officer posted there and clearance of the products was made on realisation of excise duty under 1955 Act on the issue of prescribed transport permit in Form TPI. The company stopped manufacturing medicines for the time being from August, 1992. The Demand notice (PIA) dated July 9, 1993 was served on the company on July 12, 1993 showing a short payment of duty to the tune of Rs. 3,06,60,870.89 by declaring wholesale price at lower rates than the actuals. The Company contended that prior to raising demand no show cause notice was issued, there was no determination or calculation of the deficiency in duty and the demand was raised in an arbitrary manner in violation of principles of natural justice. There were many grounds to challenge the demand including that of limitation. 3. The appellants filed reply to writ petition and stated that show cause notice was issued on May 27, 1993, but no representation was submitted by the company, after issuing show. cause notice enquiry was conducted by the Committee constituted by the Excise Commissioner, thereafter the demand notice dated July 9, 1993 was issued in accordance with the principles of natural justice. It was also contended that the company had deliberately concealed the show cause notice. 4. Learned Single Judge having heard rival submissions considered the ratio indicated in M/s. McDowell & Company Ltd. v. Commercial Tax Officer ( AIR 1986 SC 649 ) and Commissioner of Wealth Tax Gujarat v. Arvind Narottam (Indl.) ( AIR 1988 SC 1824 ) and made following observations in the impugned judgment : (Para 21) "The above two judgments reflect judicial attitude towards the tax avoidance device or tax evasion cases. If proper and requisite material had been brought on record by the revenue to establish the plea that the assessee deliberately mis-stated less price of the goods than the actuals charged from M/s. Alchem Laboratory Ltd. and M/s. Anglomad Pvt. Ltd. and by this device it avoided payment of full excise duty, the same would have been examined by this court and relief might have been refused to the petitioner in case that situation was found to exist. However, no such facts are on the record except the oral argument made by Mr. Rathore that it was a case of mis-statement of the price than the actuals charged by the assessee at the time of sale of the goods and by this device it paid less excise duty. If the revenue feels that the present case of this type, it shall be free to make necessary enquiry in the matter, if it so desires in accordance with law." 5. We have heard learned counsel for the parties. 6. During the pendency of appeal this Court on May 21, 2007 directed as under : "We have noticed that the learned Single Judge, while quashing the demand notice, had left the liberty to the respondent/appellant state herein to make necessary inquiry in the matter if it is so desires in accordance with law. The appellant, instead of holding an inquiry in the matter has preferred this appeal against the order of learned Single Judge and after hearing the counsel for the parties in the matter, we feel that no useful purpose would be served by remanding the matter. The competent authority to inquire into the matter as that liberty had already been granted to the appellant to cut short the controversy and to come to just conclusion. We therefore, deem it appropriate to defer the matter till 4.8.2007 and the appeal be listed again on 7.8.2007 on which date the appellant state shall inform the outcome for inquiry and its opinion whether the demand was justified or not. The inquiry be conducted after hearing the representative of the respondent company and a date in this regard be communicated to the respondent by the appellant." 7. The inquiry be conducted after hearing the representative of the respondent company and a date in this regard be communicated to the respondent by the appellant." 7. Pursuant to the directions inquiry was conducted and report was submitted to the effect that the appellant being sole distributor comes within the category of `Related Person' and additional demand of excise duty was rightly made from him. 8. Their Lordships of the Supreme Court in UOI v. Bombay Tyre International Ltd. ( AIR 1984 SC 420 ) had occasion to consider the definition of `Related Person' and it was held thus : [Para 48(v)] "On a proper interpretation of the definition of `related person' in sub-section (4)(c) of Section 4, the words "a 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. 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. It is only when an assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through such a related person that the price at which the goods are ordinarily sold by the related person in the course of wholesale trade at the time of removal to dealers. (not being related persons) or where such goods are not sold to such dealers, to dealers, (being related persons) who sell such goods in retail is a liable to be taken as the excisable value of the goods under proviso (iii) to sub-section (1) (a) of Section 4." 9. In UOI v. ATIC Industries Ltd. (1984) 3 SCC 575 , the Apex Court held thus : (Para 5) "It is essential to attract the applicability of the first part of the 4 definition of `related person' in Section 4(4)(c) 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. That would not make any difference, so long as each has got some interest, direct or indirect, in the business of the other." 10. In Commissioner of Central Excise Mumbai v. Damnet Chemicals (P) Ltd. (2007) 7 SCC 490 , it was held thus : (Para 38 and 40) "There was no evidence available on record that the respondent assessee received something further from B other than the price changed. There was no evidence to suggest that the profit made by B had flown into the respondent Company. B obviously was distributor and not a relative within the meaning of Section 4(10)(a) and 4(3)(b) of the Act. Therefore, it could not be said that the respondent assessee and B were related persons." 11. In Ranbaxy Laboratories Ltd. v. Municipal Council Ropar (2006) 8 SCC 637 , the Apex Court held that burden to prove that a certain item is exigible to tax or falls under a certain taxable entry is always on the Revenue. 12. In WT Commissioner Ahmedabad v. Ellis Bridge Gymkhana (AIR 1998 SC 120) it was held : (Para 5) "The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all." 13. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all." 13. Bearing the ratio indicated in the afore quoted decisions when we scan the material on record we find that the demand of Additional Excise duty was made on erroneous assumption that M/s. Alchem Laboratory Ltd. and M/s. Anglamade Pvt. Ltd., who used to purchase the entire product of the company and acted as its distributary undertaking all post manufacturer activity connected with sale, were covered in the definition of `related person' and the value of the medicines for the purpose of levy of duty was the price at which they were sold by them in the course of whole sale trade. It appears to us that the above two firms were in fact wholesale buyers. There is nothing on record to show that the above two firms were related to the assessee to fall within the definition of `related persons'. In our opinion learned Single Judge rightly quashed the notice for demand of additional excise duty. 14. Having closely scanned the Enquiry Report submitted by the Revenue we find that proper opportunity was not afforded to the respondent. No enquiry as directed by this Court was actually made. The Enquiry Report appears to us as `written arguments' filed by the Revenue in support of the appeal. 15. As a result of above discussion we find no merit in the appeal and it accordingly stands dismissed without any order as to costs.Appeal Dismissed. *******