Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Sringar Cosmetics Pvt. Ltd. on 5 January, 1988
Equivalent citations: 1988(35)ELT581(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. The following order had been passed in connection with the first appeal and the cross-objection thereto :-
"Shri L.C. Chakraborty says that to comply with the practice and procedure followed in the Tribunal he may be granted time to file one supplementary appeal as the impugned order passed by the lower appellate authority had disposed of two appeals. Now that Shri Poch-khanawala Advocate for the respondent has come all the way from Bombay it is not considered prudent to adjourn hearing of the appeal opt this count. Shri Chakraborty may file supplementary appeal along with formal application for condonation of delay today itself. Shri Pochkhanawala says that he would not oppose the application for condonation of delay in the said supplementary appeal.
Parties also agree that the supplementary appeal as and when filed may be disposed of on the strength of arguments advanced during hearing of this appeal and on the same lines as the present appeal. Argument heard. Appeal dismissed. Reasoned order will follows".
2. The second supplementary appeal has since been filed alongwith the application for condonation of delay. In view of the aforesaid order dated 11.12.87, the application for condonation of delay is allowed. The order of dismissal in respect of a appeal No. 1241/84-C had been announced in the Court itself on 11.12.87. Supplementary appeal is, therefore, also dismissed accordingly. Detailed reasons for dismissal of both the appeals are given below :-
The respondent company filed classification list No. 1/79 for their products (Tariff Item 68) mentioned below :-
(1) Tips and Toes Nail polish of various varieties (2) D.Oder air freshner & meth repellant (3) D-Oderant Bails Range (4) Shingar Turmeric beauty cream The respondent company claimed exemption under Notification No. 89/79 for the year 1979-80 in November 1979. This classification list was not approved by the concerned Assistant Collector of Central Excise (Division 'P' Bombay I). Accordingly, a show cause notice dated 19th March 1980 was issued alleging that the respondent company was not entitled to the exemption notification 71/78 dated 1.3.78 and 89/79 dated 1.3.79 on the ground that similar goods of the same brand name were manufactured by three other concerns namely (i) M/s. Paramount Packaging Corporation (ii) M/s. Unique Beautycare and (iii) M/s. Elegent Packers and Screen Printers. It was also alleged that the respondent company was manufacturing goods on behalf of these three concerns. It was further alleged that the goods manufactured by all the aforementioned four concerns including that of the respondent company were marketed under the common brand name 'Shingar'. In view of the commonalty of brand name of various products manufactured by the aforesaid four concerns, it was alleged as to why the clearances of all the four units should not be taken into consideration for the purpose of computing the aggregate value and reject the exemption claimed by the respondent company under Notification No. 89/79 dt. 1.3.79 and 71/78. These allegations were upheld by the Assistant Collector in his order dated 4.10.80 denying exemption to the products above claimed by the respondent herein under two separate notifications 71/78 and 89/79. Other grounds of rejection apart from upholding the aforesaid allegations were as follows :-
(a) The respondent company have employed only two chemists in their factory and the entire work of manufacturing and clearance of the goods was done by the employees of Paramount Packaging Corporation or Paramount Products.
(b) There are evidences to prove that the workers are diverted to Shingar Cosmetics and Unique Beautycare Products from Paramount Packaging Corporation.
(c) The goods in bulk are manufactured by M/s. Paramount Products and sent to the four aforesaid concerns for packing in small saleable packing.
(d) After such packing as mentioned above the goods are cleared to M/s. Paramount Products to a common duty paid store-room at A-44, Virwani Indl. Estate.
(e) Similarly Shingar Brand Turmeric beauty cream is manufactured by the respondent company under a technical know-how agreement with Paramount Products cleared on payment of duty under gate pass to the same duty paid store-room of Paramount Products.
(f) Tips and Toes nail polish and allied items of Shingar Cosmetics Pvt. Ltd. (respondent herein) are also cleared to the duty paid stores of the Paramount Products.
3. The respondent company filed two appeals before the Collector of Central Excise (Appeals), Bombay who set aside the impugned order passed by the Assistant Collector of Central Excise. The learned lower appellate authority has held that there is no common interest between the respondent company and the other three concerns stated in the show cause notices; nor is the respondent company is a dummy company of the other three units. It is a distinct legal entity carrying on business on its own account and is not controlled by any other unit. The Collector of Central Excise (Appeals), therefore, held that the respondent company was eligible to the Notificiations No. 89/79 and 71/78 respectively. The Collector of Central Excise of Bombay-I has now filed the two appeals on the ground that the Collector (Appeals) has based his order merely on a few Court judgments and those of the Tribunal without apreciating the facts stated in the order of the Asstt. Collector of Central Excise which have been set out earlier as other grounds on which the Asstt. Collector rejected the exemptions claimed by the respondent company herein. It has, therefore, been urged by the appellant-Collector that the Collector (Appeals) ought to have either dealt with those other grounds stated in the order-in-original of the Asstt. Collector of Central Excise or if there was no evidence on record in respect of those ohter grounds, he ought to have remanded the case for de novo adjudication in respect of those other grounds.
4. Learned JDR appearing for the appellant-Collector has reiterated the aforesaid grounds of appeal. Learned advocate Shri 3. Pochkhanawala, on the other hand, has contended that even the other grounds, apart from the fact that they were not alleged in the show cause notice, do not entitle the department to club the clearances of the respondent company with those other of the three units mentioned in the show cause notice. He has stated that the respondent company is a Private Ltd. Company and is, therefore, a separate judicial person in its own right and it cannot be deemed to have any connection whatsoever with the other three units one of which is itself a Private Ltd. Company and the other two namely 'Elegent Packers' and Screen Printers' and 'Paramount Packaging Corpn.' are partnership concerns. He has also stated that the mere fact that a common storage is undertaken in respect of the finished goods by the four units, does not lead to the conclusion that they are connected with one another and therefore, their clearances could be clubbed. For this proposition, the learned advocate has relied upon Tribunal's decision in the case of Shree Packaging Corporation, Hyderabad v. Collector of Central Excise, Hyderabad [1987 (32) ELT 94 (Trib)]. Same decision was also relied upon by the learned advocate for another ground i.e. employment of work force of one firm in another. The Tribunal has held that the aforesaid factors by themselves cannot lead to the conclusion that such units are connected unless there is evidence to the effect that there is a common funding or financial flow back from one unit to another. Learned advocate has also relied upon Tribunal's decision in the case of Bhagwan Das Kanodia and Ors., Bombay v. Collector of Central Excise, Bombay [1987 (32) ELT 204] on the proposition that units selling the goods under the same brand name (unregistered) could not be held to be connected with one another. It was held by the Tribunal in the said case that the fact that the goods (fabrics) so manufactured were traded under the same name would not necessarily lead to the conclusion that the four units were functioning jointly. He has also relied upon another decision of the Tribunal in the case of Jagjivandas & Co., Thane v. Collector of Central Excise, Bombay -II [1985 (19) ELT 441 (Trib.)]. Apart from this learned advocate has also relied upon Supreme Court's decision in the case of Union of India v. Cibatul [1985 (22) ELT 302 (SC)] wherein it has been held that a brand name owner does not become the manufacturer of certain goods affixed with the brand name owned by such brand name owner.
5. We have carefully considered the pleas advanced on both sides. We observe that the two decisions, namely 1987 (32) ELT 94 (Trib.) and 1987 (32) ELT 204 of the Tribunal relied upon by the learned advocate for the respondent are very appropriate in the facts and circumstances of the case relied upon by the adjudicating authority in his impugned order even though some of the grounds mentioned in the impugned order are beyond the show cause notice and as such those grounds could have been set aside ex facie as such grounds were beyond the purview of the show cause notice. As urged by the learned advocate for the respondent we agree that there is no evidence whatsoever that the respondent company had any connection with any of the other three units mentioned in the show cause notice or that it was a dummy unit for any of the other three units whose clearances are sought to be clubbed with the clearances of the respondent company. The other two decisions relied upon by the learned advocate for the respondents are quite irrelevant to the facts and circumstances of this case. It is the admitted case of both sides that the trade name 'Shingar was unregistered and accordingly, no one unit in particular was the owner of this trade name during the relevant period. In view of the foregoing discussion, there is no substance in the two appeals of the appellant-Collector and are, therefore, rejected.
Cross-objection of the respondent in the first appeal is disposed of in the above terms.