Customs, Excise and Gold Tribunal - Bangalore
Charminar Bottling Co. (P) Ltd. vs Commissioner Of C. Ex. on 27 December, 2005
ORDER T.K. Jayaraman, Member (T)
1. This is an appeal against Order-in-Original No. 07/2005, dated 31-3-2005 passed by the Commissioner of Customs and Central Excise, Hyderabad-I Commissionerate.
2. The brief facts are as follows:
The appellants are the manufacturers of aerated waters and also a franchise holders of M/s. Pepsi Foods Limited. Revenue conducted certain investigations, which revealed that the appellants were undervaluing the goods manufactured by them. The soft drinks manufactured by the appellants are promoted by M/s. Central India Marketing and Advertising (CIMA). CIMA undertakes advertisement for the soft drinks and collect certain amounts from the dealers towards royalty, advertisement and other promotional expenses. The total amount paid by the dealers to the appellants and CIMA is much more than the invoice price of the appellants. CIMA raised invoice on dealers for the differential amount between the invoice raised by the appellants and the actual cost of the soft drinks. After 1-4-1994, the dealers are paying the differential amount to CIMA without any invoice raised by the later. From the records, it was seen that an amount of Rs. 38,45,000/- was transferred from CIMA to the appellants out of total amount collected from dealers from 1-3-94 to 10-6-94. The above facts were not brought to the notice of the Department. An amount of Rs. 34,31,451/- appeared to have been collected by CIMA from the distributors of the appellants from 1-4-94 to 20-6-94. Statements of city dealers and various persons concerned were recorded under Section 14 of the Central Excise Act, 1944. Revenue proceeded against the appellants by issue of show cause notice. The Adjudicating Authority confirmed the demand of Rs. 49,53,192/- in terms of proviso to Section 11A of the C.E. Act, 1944. He confiscated the land building and plant and machinery used in relation to manufacture of excisable goods under Rule 173Q(2)(a) of the C.E. Rules, 1944. However, he gave the appellants an option to redeem the same on payment of a fine of Rs. 2,00,000/-. Equal penalty under Section 11AC was imposed. Further, a penalty of Rs. 5,00,000/- was imposed under Rule 52A of the C.E. Rules, 1944. Interest under Section 11AB was demanded. The appellants approached the CEGAT, Chennai. The CEGAT remanded the matter for de novo adjudication with certain observations. On remand from CEGAT, the case was adjudicated by the Adjudicating Authority vide Order OIO No. 27/2002, dated 1-10-2002. In the above Order, duty of Rs. 13,38,712/- was confirmed for the period from 1-3-1994 to 7-10-1994. Under Rule 7 of C.E. Rules, 2002, the provisional assessment for the period from 8-10-1994 to 31-10-1995 was finalised. Consequent to the finalisation, an excess payment of Rs. 33,74,574/- was found as excess payment. The above amount was ordered to be credited to the Consumer Welfare Fund as the incidence of the duty excess paid as already been passed on to the consumers through the dealers of the appellants. A penalty of Rs. 2,00,000/- was imposed under Rule 52A and Rule 173Q(1) of the C.E. Rules, 1944. The land, building and plant and machinery used in connection with the manufacture of the goods were confiscated with an option to redeem on payment of fine of Rs. 25,000/- only. Again, the appellants approached the CESTAT, Bangalore. The CESTAT, Bangalore in its final Order No. 441/2003, dated 26-3-2003 remanded the case for de novo adjudication with the following observations:
On a careful consideration of the submissions made by both sides, and on perusal of records we find that no opportunity has been given to the party to adduce evidence whether the duty has been passed on to the customers or not before arriving at the conclusion that the amount will have to be credited to the Consumer Welfare Fund. Hence we are of the view that the matter requires to be re-examined by the concerned adjudicating authority, in the view, we have taken we are remanding the matter to the concerned adjudicating authority to pass an appellant order in accordance with law on providing an opportunity to the party. The appellant may make use of this opportunity to substantiate their claim during the re-adjudication proceedings.
Consequent to the CESTAT Order, the adjudicating Authority has passed the impugned order ordering refund of an amount of Rs. 33,74,574/- being the excess duty paid during the period from 8-10-94 to 31-10-95. He has further held that the duty paid as per the approved price lists during the period from 1-3-94 to 7-10-94 is in order. He dropped further proceedings in the show cause notice in OR No. 369/95-ADG. The appellants are aggrieved over the Impugned order.
3. Shri K.K. Anand, learned Advocate appeared for the appellant and Shri Ganesh Havanur, learned SDR for the Revenue.
4. The learned Advocate adduced to the following arguments:
(i) When the remand order is an open remand, the Commissioner has held that the remand order was only in respect of an amount of Rs. 33,74,574/- and has not gone into other issue agitated by the appellants. In fact there was no specific finding in the remand order about the setting aside of the duty demand and about the availability of ex-factory price but still the learned Commissioner has gone into these aspects and has rightly dropped the duty demand. He has also gone into the aspect of ex-factory price. Therefore, the Commissioner is wrong in holding that there was a specific direction of the CESTAT only to deal with the refund claim of Rs. 33,74,547/-. In fact, the appellants had raised the quantum of refund claim and had substantiated the same with Chartered Accountant's Certificate which was part of the earlier appeal filed before the CESTAT. The finding of the learned Commissioner that he could not go into the quantum of refund claim again, since the assessments were finalised by his predecessors by the earlier OIO is also unsustainable as the order of finalisation was set aside by the CESTAT.
(ii) The Commissioner has committed a grave error in not adopting ex-factory price solely on the ground that CIMA had paid an amount of Rs. 35,45,000/- to the appellant. The finding of the Commissioner that the above amount is relatable to the assessable value of the goods in question is wrong. This amount is related to container hire charges which were being collected by CIMA from various distributors on behalf of the appellants and appellants had given trucks on hire to M/s. CIMA and a part of that amount represented truck hire charges. There is absolutely no evidence to show that this amount pertained to the price of the aerated waters. Revenue has not brought any evidence to show that the ex-factory price declared by the appellants on various facts of aerated waters was a depressed price.
(iii) The CESTAT in its remand order dated 18-4-2000 dealt with ex-factory price and held that when a factory gate price is available, it cannot be discarded on grounds of quantum of sales or on location of buyers, etc. it can be discarded only if it is proved that it is not a genuine price at arms length and normal course of trade. However, the order discards it only on the ground that the sales were only to a Maharastra located party. Section 4 nowhere allows such territorial discrimination as valid ground to discard the price at which the goods are sold at the factory gate. Therefore, this is yet another glaring instance of non-application of mind. The above findings of the CESTAT have become final, as department did not challenge them. The adjudicating authority committed contempt in not following the specific directions of the CESTAT.
(iv) In the earlier OIO 27/2002, CIMA has been held to be an independent entity. They were engaged in the distribution and sales promotional activity on behalf of the appellants, CIMA was engaged in post-manufacturing activities such as transporting the aerated waters from the appellants premises to various distributors, collecting container hire charges from the said dealers, arranging trucks, advertisements on behalf of their dealers and passing on the various types of discounts to the said dealers. For these purposes, they were issuing separate invoices on the dealers. In these circumstances, rejection of the ex-factory price is wrong. The following case laws were relied on:
(a) Indian Oxygen Ltd. v. Collector of C. Ex. reported in 1998 (36) E.L.T. 723 (S.C.).
(b) Century Laminating Co. Ltd. v. CCE, Meerut .
(c) CCE, Bangalore v. Tractor & Farm Equipments Ltd. .
(d) Kashmir Vanaspati Ltd v. CCE, Chandigarh .
(v) Alternatively the appellants may be allowed higher abatements than already allowed by the predecessors of the present adjudicating authority. Even if the submission of the appellant on merits is not accepted, they are entitled for the higher quantum of discount of Rs. 15.26 per crate. Further, in respect of container hire charges the Chartered Accountant's certificate indicates an expense of Rs. 16 per crate. Since the genuine of the said certificate has not been disputed, the discount of Rs. 16 per crate may be allowed.
5. The learned SDR reiterated the Order-in-Original.
6. We have gone through the records of the case carefully. The issue had already been considered by the Tribunal twice. In the impugned Order the Adjudicating Authority has given a finding that the appellants are entitled for a refund or Rs. 33,74,574/- being the excess duty paid during the period from 8-10-94 to 31-10-95. According to the appellants, the refund due to them for the above-mentioned period is Rs. 69,48,374/-. According to the Adjudicating Authority the terms of remand in the CESTAT order is only examining the issue whether the duty has been passed on to the customers or not before arriving at the conclusion that the amount will have to be credited to the Consumer Welfare Fund. He has observed that the refund of an amount of Rs. 69,48,374/- is not acceptable as it would amount to re-assessment of provisional assessments already finalised after taking into consideration all the facts and submissions by the then Commissioner which is beyond the scope of the present remand order. On the other hand, the appellants contend that the CESTAT Order has kept the issue or quantum or refund open as the order of finalisation made by the predecessors of the Adjudicating Authority has been set aside by the CESTAT. Moreover, the appellants have produced the certificate from Chartered Accountant which indicates that the excess duty paid during the relevant period is Rs. 69,48,374/-. The appellants have also invited our attention to the observations of the Tribunal regarding rejection of ex-factory price. So far on the same issue, three orders-in-original have been passed. The Tribunal has pointed out a number of defects in the Orders-in-Original. In the present order, the appellants are disputing the quantum of refund. They are also armed with the certificate from the Chartered Accountant. From the impugned order, we find that the Adjudicating Authority has taken a view that in terms of the CESTAT order, he is not supposed to re-open the assessment and re-quantify the refund of amount. We are afraid that such as understanding is not correct as it comes in the way of the deciding the exact quantum of refund, which is under dispute for the period from 8-10-94 to 31-10-95. Therefore, it is necessary on the part of the Adjudicating Authority to clearly indicate the method of arriving at the refund with the help of records available. Therefore, we have no option but to remand the matter to the Adjudicating Authority to indicate the method of working out the quantum of refund after giving an opportunity to the appellants and also after taking into account the records already available including the Chartered Accountant's Certificate. In other words, the Adjudicating Authority is at liberty to re-open the assessment during the period. He may keep the observations of Tribunal in the earlier orders while finalising the assessment. Only for this limited purpose, the issue is remanded to the Adjudicating Authority.
(Dictated and pronounced in open Court)