Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Brindavan Beverages (P) Ltd. on 11 August, 1997
Equivalent citations: 1999(106)ELT403(TRI-CHENNAI)
ORDER
V.P. Gulati, Vice President
1. The issue in the appeal relates to the demand of duty in respect of certain shortages which were alleged. The appellants manufactured aerated water as a franchise holder of M/s. Parle Exports Ltd. The authorities came across Sales Manager's Report (SMR) which were submitted monthly to M/s. Parle Exports Ltd., and discrepancies in figures between those reflected in the RG1 and in the SMRs were found. The shortage based on the SMR as alleged in the show cause notice were found to be 11,65,884 bottles. Statements were also recorded from the appellant company's officials. The explanation offered by the respondents was that during certain months depending upon the demand in the respondents area and also for the reason of the shut down at certain times, the wholesale distributors purchased the goods from other distributors. These figures are reported to the respondents and which they incorporated in their SMRs. The learned lower authority while adjudicating the case took note of the documents which have been produced before him and accepted the fact that there had been purchases from other franchise holders for sale in the territory assigned to the respondents and, therefore, he has dropped the proceedings initiated in terms of the show cause notice issued to the respondents. The learned lower authority has also held as it is there was no evidence of clandestine removal of th bottles and also that no exercise was done by the authorities to correlate the use of the flavours and the concentrates with the production in the respondents unit. He has in the absence of any such exercise, the charge against the respondents had not been brought home.
2. The revenue is in appeal against this finding of the lower authority and in the grounds of appeal the following has been urged :
Therefore, this application is accordingly made on the following grounds:
In his statement dated 8-2-1994 Shri Armugaswamy, General Manager of BBPL admitted that SMR were compiled on the basis of shipping details furnished from the factory and inter franchise purchase; that the information furnished in SMR and PMR formed the basis of incentive announced by M/s. PEL and that it also formed the basis for advertisement charged collected by them. Shri Armugaswamy vide his letter dated 2-5-1994 stated that they purchase soft drinks from other bottlers to meet the market requirement within their (BBPL's) franchise jurisdiction; that these purchases will not be reflected in their (BBPL's) PMR, however sales of these by them in their franchise jurisdiction will be reflected in their monthly SMRs : that their (BBPL's) wholesale distributors viz. M/s. Bangalore Marketing Services and M/s. Karnataka Marketing Services etc. also purchased soft drinks from other bottlers of Parle to meet the requirement within their (BBPL's) franchise jurisdiction and these sales made by their wholesale distributors will also reflect in their (BBPL's) SMR. Since they prepare one SMR for the franchise jurisdiction. However upon enquiry with Shri S. Armugaswamy vide summons dated 6-5-1994, regarding details of sales reports by various wholesale distributors, he has expressed his inability to supply the same. In his further statement dated 16-5-1994, Shri S. Armugaswamy has stated inter alia, in response to the department querry on details of inter-franchise purchased by various distributors of Parle products and sales made by them with reference to the SMRs prepared by M/s. BBPL, that with the records available with the department he was not in a position to clarify the total purchases and sales made by them month-wise. Shri S. Armugaswamy was further called upon to furnish the details of the sales reports of the various wholesale distributors vide summon dated 17-6-1994 and he failed to submit the same.
Shri Mahesh Yadav, Sales Manager of M/s. BBPL in his statement dated 8-2-1994 inter alia stated that SMRs were based on daily sales report of M/s. BBPL. He however stated in his statement that certain sales were not included in SMR when there was phenomenal growth in the market. Further certain difference were noticed in daily sales report and SMR for July' 1992 which was confirmed by Shri Pushpangadam, Computer Operator of M/s. BBPL who was preparing DSR and SMR etc. Shri Prakash Ladhani, Director clearly admitted the facts relating to difference in figures between SMR and RG1 in the statement recorded under Section 14. Not only that, the Investigating Officer showed him production figures as appearing in yield analysis report prepared for a month of 1993 which also showed production figures. This figure did not tally with RG 1 and PMR and it was admitted by Shri Ladhani that production was under reported to reduce their contribution to SAMS. This argument is not correct as SAMS contribution is based on sales volume and not on production.
That yield analysis report (Annexure B-50 to SCN) for April and May 1993, showed that actual production was more than normal yield i.e., 1 unit = 400 crates and at the same time RG1 figure was less than standard yield (Annexure-B-51).
Computer sheets were considered for working out difference during period April, 1993 to September, 1993 as SMR's were not available. As the computer sheets were based on sales report as sent by various bottlers of M/s. PEL including District Franchise Manager Shri Dhareshwar, the authenticity of sales figures taken as basis for comparison with statutory records has to be appreciated.
Despite repeated summons Shri S. Armugaswamy neither produced details of purchase by their distributor nor produced sales report of various distributor.
Based on statements of plant executive (para 16-2), it was observed that only such clearances which were being effected from the factory were reflected in SMR and not the sale effected by Bangalore Marketing Service and Karnataka Marketing Service.
For para 16.3 of the show cause notice, cogent reasons for non-acceptance of Shri Ladhani explanation have been given by the adjudicating authority. ' Vide para 16.4, it is clear that both SMR/Computer print out were taken as basis for comparison.
The Commissioner has held the demand based on SMR-1 figure to be a surmise and on assumption and held that "no evidence are forthcoming from the investigating officer to prove their above said allegation". The SMR-1 figure is based on the daily sales report of the factory as stated by Shri Pushpagadham, Computer Operator in the company on 11-2-1994. The daily sales reports have been relied upon for the show cause notice. The adjudicating authority has failed to substantiate his conclusion that the figures of removal from the factory are a surmise by backing it up by comparison with the daily sales reports.
In para 22 of the Order, the adjudicating authority finds a lack of supportive evidence for the allegation. However the statements of S/Shri Armugaswamy, Pushpagadham and Mahesh Yadav and their interpretation of the document have not been refuted and no finding has been given as to their admissibility. The demand was based on SMR-1 report read with the said statements.
Inter franchise purchases were enquired into in the course of the investigation. The company was asked to provide details of interfranchise purchases but failed to do so. In view of this and in view of statements that the SMR-1 report was based on daily sales report of the factory, the demand was proposed for the whole of the difference between SMR-1 figure and the RG 1 figure. The failure of the company to produce details of inter franchise purchases led to a reasonable inference that there had been no such purchases by this factory and that therefore the daily sales report translated as stated into the SMR-1 figure. However after issue of the show cause notice, the company has produced before the adjudicating authority some details of interfranchise' purchases. It is seen from the para 18 of the Order-in-Original that the adjudicating authority had relied upon the evidence produced by the party, which the party had not produced before the investigating officers in spite of summons. By relying on the above evidence, the Commissioner appears to have accepted documents at the back of the department. The adjudicating authority should have sent these documents back to the Investigating officers for its genuineness and further examination of witnesses and he has failed to allow the investigating authority to verify the said evidence.
In their Order No. 484/93 dated 27-9-1993, 1994 (69) E.L.T. 497 (Tribunal) passed by Hon'ble CEGAT, Western Regional Bench in the case of Commissioner of Central Excise, Bangalore-II v. Oswal Petro Chemicals, the CEGAT while remanding the case back to the Commissioner for de novo adjudication on the ground that Commissioner had relied upon certain evidence produced by the party i.e., M/s. Oswal Petro Chemicals and no opportunity was given to the department to verify the said evidence and cross examine of certain witnesses whose affidavit had been relied upon by the Commissioner in deciding the case.
Finally the adjudicating authority has given such weight to lack of evidence of excess purchases of essences, bottles etc. over and above the quantities accounted for, and also to the fact that Production Manager's report does not form the basis of the allegations. To quote "nothing prevented the bottlers to furnish the correct figures of production as the report is a confidential one and in other words it is their obligation to furnish the correct figures otherwise the excess/shortages has to be explained as to the standard formula of 400 crates of each per unit of concentrate/essences produced/utilised". In expressing this the adjudicating authority has ignored the evidence in paras 9.4,10.4 and 10.5 of the show cause notice dated 23-8-1994 wherein the fact of dilution being done by some bottlers is mentioned. Thus, it is possible that while the bottler reported the standard yield in the PMR to Parle the actual yield was increased by dilution and not reported in the said report. It is well known that this is the standard practice with bottlers in the peak season.
The adjudicating authority has also ignored vital evidence in the form of yield analysis report as to which actual production was more than the standard yield of 400 crates per unit whereas the production accounted in the RG-1 was much less.
As regards the lack of evidence regarding excess purchase of bottles, in view of the fact that the bottles in which aerated waters are sold are retrieved and re-used, the assessee could have used the same bottles again and again.
3. The learned JDR, for the department has reiterated the grounds of appeal.
4. The learned Advocate for the respondents has pleaded that the respondents had done an exercise and submitted correlation of figure with purchase from others and in the light of the same proceedings were dropped. The documents relied upon are still with the department. He, however, fairly concedes that the learned lower authority has not done a detailed exercise to correlate the shortages as had been alleged in the show cause notice with the purchases as have been pleaded by the respondents as having been made from the other distributors. He has pleaded, notwithstanding that, in the absence of any clandestine removal or any other corroborative evidence in this regard, the learned lower authority's order is sustainable in law.
5. We have considered the pleas made by both the sides. We observes that the learned lower authority in his order while he has approached the issue in the correct perspective, he has not entered into any detailed discussion as to how the total shortages as had been alleged had been accounted for based on the records which has been produced before him. What is required in such cases is that the figure as reflected in the SMR should be tabulated against the figures which are reflected in the RG 1 register and the figures of purchase stated to have been made from other franchise holders and which formed a part of the SMR for a particular month. Thereafter, the ld. lower authority should have arranged for verification for the actual fact of these purchases which were made from the other distributors and then come to his conclusions. This not having been done, we are of the view that a fresh exercise in this regard would have to be done. No doubt as observed by him some further investigation regarding the use of the concentrates purchased and the production emerging by use of the same could also have been done, but since it was not done, we cannot allow the scope of the enquiry to be enlarged now. The learned lower authority has given illustrations about the purchase of these goods in certain quantums, but in a case where large quantum of shortages are alleged, a detailed exercise with a chart appended to the order should have been done to support the conclusions that the SMR's did not reflect the production but also certain other figures of purchase made from outside.
6. We in the above view of the matter hold that for this limited purpose a fresh exercise would have to be done and we, therefore, set aside the orders of the learned lower authority and remand the matter to be adjudicated afresh. We make it clear that if the respondents are able to establish the correlation, no further enquiry would be called for and the conclusions could be reached based on this exercise.
7. The cross appeals being in the nature of comments is mis-conceived in law and are dismissed.