Customs, Excise and Gold Tribunal - Delhi
Nasik Beverages (P) Ltd. vs C.C.E. on 29 June, 1998
Equivalent citations: 1998(61)ECC522
ORDER P.C. Jain, Member (T)
1. Briefly stated relevant facts of the cases for disposal of these appeals are as follows:--
1.1. The appellants herein are manufacturer of beverages "aerated water'. Apart from the manufacture of the' beverages, they have entered into a franchisee agreement for manufacture of Bisleri Club Soda with Aqira Minerals Pvt. Ltd. who are owner of the brand name. The latter have also entered into similar agreements with other manufacturers of beverages who also manufacture Bisleri Club Soda. The appellants were availing benefit of Notification No. 175/86-CE holding themselves out as small scale industrial unit.
1.2. A question was however, raised by the Revenue that the benefit of Notification No. 175/86-CE would be dependent upon the total clearances of the excisable goods (whether exempted or not exempted). Consequently three show cause notices were issued to the appellants by the Assistant Collector concerned. The said Assistant Collector held against the appellants and he directed that clearances of exempted as well as dutiable goods should be clubbed to determine the question of benefit of Notification No. 175/86-CE. The appellants herein filed 3 appeals against the 3 Order-in-Original passed by the Asstt. Collector. In one of the appeals, the Collector (Appeals) concerned set aside the corresponding Order-in-Original holding that clearances of exempted and non-exempted goods should not be clubbed. In other words", clearances of Bisleri Club Soda was not to be clubbed with the clearances of other dutiable beverages. In respect of remaining two appeals which came up before the same Collector (Appeals), the said Collector held that there is no reason to deviate from decision taken earlier as aforesaid but along with this finding the said Collector (Appeals) gave further directions as follows:--
The Assistant Collector should ascertain the value of clearances of all the manufacturers Bisleri Club Soda in the country and who have entered into a franchise agreement with M/s. Aqua Minerals Pvt. Ltd. and if the clearances of all such manufacturers is below Rs. 1.5 crores, the Assistant Collector should allow the benefit of Notification No. 175/86-CE to Bisleri Club Soda up to Rs. 15 lakhs. The order of the clearances of the two types of aerated waters is immaterial i.e. even if the value of the clearances of sweetened aerated waters has exceeded Rs. 30 lakhs the clearances of Soda up to Rs. 15 lakhs at the nil rate may be allowed. The matter is, therefore, remanded back to the Assistant Collector to consider the claim in the light of the above and in particular the Order-in-Appeal No. A-45/90.
It is these directions which make the appellants aggrieved and hence these two appeals before us.
1.3. Learned advocate has further submitted that consequent to the first Order-in-Appeal passed by the Collector (Appeals), the concerned Assistant Collector set aside 8 show cause notices because there was no such direction in the earlier order. Against the said orders of the Asstt. Collector the department filed an appeal under Section 35E of the Central Excise Act, 1944 and relied upon the directions of the Collector (Appeals) as extracted above. The concerned Collector (Appeals) held against the Revenue and rejected the appeal holding that these directions were beyond the show cause notices which were originally issued to the appellants. It was, therefore, held by him that the directions having travelled beyond the allegation in show cause notices are not correct and he set aside the said directions. Learned advocate points out trial the department has not come up in appeal against the said Order-in-Appeal No. A-207/94 dated 12.7.94. In other words, he submits that the order of the-Collector (Appeals) setting aside the direction has become final. He prays that similar view can be taken by the Bench.
2.1. On the merits of these directions learned advocate Shri D.B. Shroff points out that a series of judgments from various High Courts and various Authorities such as Govt. of India and Tribunal have been passed wherein it has been held all along that no clubbing of clearances can be made in respect of Franchise and Franchisor. He relies on the following case law:
Kamra Bottling Co. v. Asstt. Collector Central Excise Bikaner, :
Goa Bottling Co. (P.) Ltd. v. Union of India, ; Surat Bottling Co. Ltd., 1980 ELT 35,3 (G.O.I.); Punjab Beverages Ltd. Chandigarh. 1980 ELT 475 (G.O.I.); Poona Bottling Co. Ltd. v. Union of India. 1981 ELT 389; Stel City Beverages (P) Ltd. v. Union of India. .
2.2. He also relies upon Explanation IV to Notification No. 175/ 86-CE which states that merely because a small scale Industrial Unit affixes a brand name of another person, that person does not become the manufacturer. In any case he submits that this position is now well settled in the case of Cibatul and Foods Speciality . He therefore submits that the direction is clearly illegal be therefore set aside from the impugned order and allow the appeal.
3.1. Opposing the contention learned departmental representative Shri D.K. Nayyar reiterates the findings of the lower appellate authority.
4. We have considered the pleas advanced from both the sides. On the basis of case law cited above we agree with the submissions of the learned advocate that the directions given by the Collector (Appeals) in the impugned order are illegal. When the Courts have held that the clearances of a Franchisee and Franchisor cannot be clubbed, there is no justification for clubbing clearances of various Franchisee who have no connection with each other whatsoever. Therefore, we set aside the impugned direction and allow the appeal.
5. In the course of the arguments of the learned advocate, the necessity for taking on records the order passed in A-207/94. dated 12.7.94 passed by the Collector (Appeals) arose and therefore the Misc. application seeking the said additional evidence to be taken on record was allowed.