Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of C. Ex. vs Gujarat Bottling Co. Ltd. on 23 October, 1998
Equivalent citations: 1999(110)ELT858(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The department is common appellant in each of the five appeals i.e. E/382/93, E/385/93, E/387/93, E/389/93 & E/390/93. The assessee had also appealed in appeal E/195/93 of the Collector (Appeals) which is the subject matter of the department's appeal No. E/389/93.
2. The assessee is a manufacturer of aerated waters and took pulp based beverages for the manufacture of these products wooden crates were one of the inputs. After glass bottles were notified in the relevant notification in the Rule 87 as inputs for aerated waters till 1-10-1987 and for food based beverages till 11-9-1991. On this date by amendment glass bottles were deleted from the table saying from the date onwards assessees will be eligible for taking credit as inputs. Therefore the assessee manufacturing the beverages as a franchisee of M/s. Parle Exports. In terms of the franchisee agreement it was required of the franchisee to use bottles of a particular shape and size, which were manufactured by a person approved by the franchisor. In order to ensure that there was uniformity in the packing of the bottles, the assessee was required to buy the bottles from any out of seven specified parties. The bottles so manufactured had printed logos and other information M/s. Arizons Printers and Packers (Pvt.) Ltd. and M/s. Glass & Ceramic Decorators, Mum-bai. The assessee received and took credit of the duty paid on such bottles. Credit was taken on the basis of gate passes on the manufacturers of bottles which were endorsed by the two consignees viz. Arizons Printers and Packers (P) Ltd. and Glass & Ceramic Decorators.
3. Notice was issued to assessee by the department proposing to recover the credit taken. On the notices sought reasons in the first part by printing on the bottles, there were subjected to forces of manufacture and therefore the goods which the assessee received were not glass bottles on which duty has been paid on manufacture. The second was that it cannot be shown bottles which the assessee received were the same bottles which were maufactured not because of the fact that the bottles were subjected to the printing process. A related contention was that the instructions of the Board permitting the credit on endorsed gatepasses do not apply becasue the bottles were not in original packing. The Assistant Collector whose order was confirmed by the Collector (Appeals) confirmed the proposal and denied credit.
4. The matter came up before the Tribunal in appeal. In its order passed on 21-5-1990 the Tribunal found that for the issue to be decided certain factual appreciation was needed of the position showing the continuity of the flow of duty paid goods from the manufacturers of glass bottles to the appellants and their identity being established. It said "only when the factual position is confirmed, the department can accept the endorsed gate passes and given the credit of duty as indicated in the gate passes. For giving the Modvat credit not only the duty paid nature of the goods should be established but also the quantum of duty credit which is to be given. Hence the sanctity of these documents both for purpose of establishing duty paid nature of the goods as also the extent of duty is to be given cannot be brushed aside. Only with this object, we directed the ld. advocate to produce the contract with the printers for supply of logo embossed glass bottles. If this contact could establish that the bottles are sought to be procured from the particular manufacturer of glass bottles by the printers and thereafter subject to logo embossing and supply under endorsed gate passes a liberal view is possible to extend the duty credit to the extent as indicated in the gate passes. In other words, the continuity of the movement of the duty paid glass bottles from the manufacturers of these bottles to the appellants even though through the medium of printers has to be established and this burden is squarely on the appellants. The department cannot be expected to make enquiry on this aspect especially when the printers of glass bottles can receive glass bottles from various manufacturers and supply such bottles to various customers after logo printing. Unfortunately, we find that the documents produced subsequent to the hearing are only the endorsed gate passes and the invoice cum delivery challans of the printers. With these documents we are unable to arrive at any firm conclusion regarding the origin of these glass bottles and the quantum of duty paid on these bottles. Since the ld. advocate indicated that the continuity of the movement and also the identity of the goods in relating to the gate passes can be established by other documentary evidence we gave him an opportunity to produce the same but the documents produced do not lead us to a firm conclusion on the factual position."
5. As to the question of goods being repacked, it indicated that looking into the original packing may not be relevant and form basis for arriving at the conclusion with regard to the identity of goods. It therefore, set aside the order of the Collector (Appeals). The continuity of the identity of the bottles was a matter for the Assistant Collector to decide.
6. The Assistant Collector after considering the evidence such as franchise agreements and other data produced by the assessee held that it has not been established that the identity of the bottles continued from their departure till their receipt in the assessee's factory. He therefore, confirmed the demand. Collector (Appeals) his appeal (sic) took a different view. He said that examination of the order placed by the assessee with printers of the bottles and the relevant gate passes manufacturer of bottles and the endorsement on the gate passes that the entire consignment has been delivered to the assessee that "one can reasonably notice the continuity of movement of goods (glass bottles) from the manufacturer to the logo printer and then to the appellant." He again repeated in para 13 of the order that "continuity of movement of duty paid glass bottles from the two manufacturers in Pune and Bombay respectively to the two printers located in the same station and thereafter to the appellant on the basis of gate passes endorsed in their favour can be said to have been reasonably established." Department has come up in appeal against this order.
7. The first ground in appeal is that the bottles change their identity as a result was not pressed by the departmental representative in view of the decision of the Supreme Court in the case of 1998 (97) E.L.T. 5 such printing of bottle design amounts to manufacture. On the question of identity it is contended further by the department that the mere fact that the assessee had to purchase bottles from one out of seven manufacturers were not by itself establish the identity. Departmental representative explains that the printers of the bottles numbered to purchase plain glass bottles from any other sources. It is also contended that the assessee had failed to establish the bottles it receives are those which are issued by their manufacturer and sent to the printers. It is further contended that gate passes are endorsed in pursuance of Board's instructions with necessary pre-conditons on credit to be taken on such cases that the goods must be received in original. Since the bottles are necessarily to be intact by the printers and repacked after this condition is satisfied.
8. The advocate for the respondent contends that the Collector (Appeals) has reasonably established co-relation between the empty bottles and the bottles received by the assessee. He says that this is what was contemplated in the order of the Tribunal and the order was never had contemplated the identity beyond doubt of each bottle yet to be established. He contends that the fact that there are limited number of users of the shape and size of the bottles rebuts the contentions of the department that any other manufacturer can make such bottles. He however, agrees that he is not in a position to say that there is any copyright on the proprietorship of the design. From the portion of the order of the Tribunal reproduced above, we are not able to accept that it contemplated that if reasonable correlation is to be established reasonable credit would be available. The order repeatedly emphasises the continuity that by the movement of the bottle, on which it indicates that a firm conclusion must be arrived. If the Tribunal had to decide the issue on probability of: reasonableness of the claim it had enough material to come to the conclusion without asking fresh evidence to such conclusion. The need for fresh evidence would only arise if it was considered necessary excluding the possibility that the assessee received goods other than which had manufactured by the bottle manufacturer and covered by the gate passes in question.
9. The Collector (Appeals) himself does not say that identity is beyond doubt. He says that identity can be reasonably established. Now the choice of words indicate that he does not exclude the possibility that goods other than those manufactured by the customers may have been received and in our view such possibility is not absurd or far removed from reality. We cannot agree that there would be no other buyers of these bottles than the franchisee of Parle in the absence of any proprietorship in the design of bottles under trade marks law bottles were of such unique or specialised design that no other manufacturer of goods could their use. The possibility distinctly remains that such bottles could be utilised by other manufacturer. It is also possible that such manufacturers may be having these bottles printed by the same or other printers. When the Collector (Appeals) himself does not say that identity of the bottles is established beyond doubt, the department's appeal succeeds on this point. We also emphasise that it [is] not within our scope to say whether the Tribunal's order was incorrect or modify it. We have taken into account what that order said. Department's appeals are allowed and impugned order set aside.
10. We have so far dealt [with] the department's appeal. What is in challenge by the assessee the eligibility of modvat credit under Rule 57A. Since we have held that the department's view that credit should not be taken on these, answer to this question is only academic. We, therefore, decline to go into assessee's appeal. Appeal dismissed.