Customs, Excise and Gold Tribunal - Mumbai
Goa Bottling Co. Ltd, N.R. Prabhu ... vs Commissioner Of Customs & Central ... on 15 June, 2001
Equivalent citations: 2001ECR44(TRI.-MUMBAI)
ORDER
Gowri Shanker, Member(Technical)
1. Goa Bottling Company Ltd is a manufacturer of aerated beverages. This appeal is against the order of the Commissioner of Central Excise, Goa adjudicating upon a notice issued to it and to its employees. The notice alleged short levy of duty by the manufacturer on two counts.
The first was that, production of beverages entered in the RG1 register on which manufacturer paid duty fell short of the ratio arrived between the quantities of beverage base and the beverage. The ratio indicated that one of the beverage base would yield 400 crates of the soft drink. The actual production of beverage fell short of this ratio varying from of 0.4% for Limca, one of beverages, to 2.5% for Gold Spot. The second ground for demand of duty is that, in the monthly sales report that the manufacturer furnished to the supplier of the beverage base, it indicated quantities which were often higher than the quantities of production recorded in the RG1 register. The third ground related to wrong taking of the modvat credit, and is mentioned only for the sake of completeness as it is not a ground in the appeal before us. In the impugned order, the Commissioner has confirmed the proposal in the notice on all three grounds and confirmed the demand for duty and imposed penalty.
2. The Tribunal has considered more than once the validity of demands based upon the theoretical ratio of production between raw material and finished product. In Parle Beverages Ltd. & others vs. CCE 1994 (114) ELT 872, the Tribunal did not find it possible to sustain the demand for duty issued to the three manufacturers of bevarages, arrived at only by applying the theoretical ratio of the quantity of beverage base and the quantity of beverage to be obtained from that base. It noted that the formula was theoretical and did not take into account various factors on account of which waste could arise. It also said that applying such a formula mean applying rule 173E. It therefore set aside the demand. The ratio of this decision has been followed in Pepsico India Holding Ltd. vs. CCE 1999 35 RLT 654. This latter decision also referred to one unreported decision where it has applied. The Commissioner in his order has not dealt with this contention that was raised before him, that the formula only indicated what can be the expected yield in the ideal condition and the condition under which the appellant manufactured the beverages were not ideal. The difference found by the department between notional production and the actual production is also not substantial as to warrant suspension. It ranges less than half to one half percent. Applying the ratio of the decision referred to earlier, we hold that demand on this ground was not sustainable.
3. The appellant was sending monthly figures of its sales to Parte Expots Ltd. under whose franchisee it manufactured the beverages. The show cause notice found that, often, the figures in this reprots showed sales of certain beverages to be higher than the quantity of production recorded in the RG1 register, and concluded from this that the quantity shown in the RG1 register was deliberately kept lower to evade duty.
Representative of the appellant has two (sic) in this regard. The sales register did not accurately portray the figures of the quantity of beverge sold. The figures were often inflated so as to give a misleading picture to the franchisee. He attempts to establish this point by saying that the appellant did not at any time manufacture Maaza, sales of which beverage invariably found mentioned in the sales report and the further fact that, sometimes the figures of sales of beveage shown in this report were lower than the figures of production entred in the RG1 register. He next contends that it is settled that such a report by itself is not enough to justify the conclusion of production and clearance without payment of duty.
4. We do not find the first explanation really very convincing. If the object of the sale report were, as is claimed, to keep the franchisor notified of the actual production, there is no reason why the franchisee should indicate in that report higher sales that actually took place. No franchisee would like to mislead the franchisor without any motive, and the existence of a motive is not shown. At the same time however we have to accept that there is a reasion to believe that the sales figures does not really represent the actual figures of production. If they did, there would be no reason for the manufacturer to pay duty, on various accounts, on quantities of production recorded by him in the RG1 register higher than the quantity shown in the sales report. For example figures for the following beverage entered in the RG1 register were higher than the figures shown in the sales register.
Gold Spot- Jun and November 1989, Jan and April 1990 Limca - June & November 1989, December 1992, April may 1993 Thums Up- June & November 1989, February to June 1993 Citra- Aril 1991, February to July 1993.
5. Further, the fact that the appellant did not manufacture Maaza, whcih often in the sales register has also been shown to supports this view. In this background, we find it appropriate to rely upon the decision of this Tribunal holding that mere report or private record by itself is not enough to justify the conclusion of manufacture and clearance without payment of duty. (See Moon Beverages vs. CCE 1999(33) RLT 153) The demand for duty and consequent imposition of penalty therefore have to be set aside.
6.Appeal allowed. Impugned order set aside.