Custom, Excise & Service Tax Tribunal
M/S. Agra Baverages Corporation Ltd vs C.C.E. Delhi-Ii on 26 September, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. I
Date of Hearing:04.09.2014
Date of Pronouncement: 26.09.2014
Appeal No. E/1640/2005 - EX[DB]
[Arising out of Order-in-Original No.CCE(Adj) 32/2005,dt.11.04.2005, passed by Commissioner of Central Excise (Adj)- New Delhi]
For approval and signature:
Honble Mr. Justice G.Raghuram, President
Hon'ble Mr. Rakesh Kumar, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Agra Baverages Corporation Ltd. Appellants
Vs.
C.C.E. Delhi-II Respondent
Appearance:
Sh. L.P. Asthana, Advocate - for the Appellants Sh. M.S. Negi, DR - for the Respondent Coram:
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO:- 53753 /2014 Per Rakesh Kumar:-
The facts leading to filing of this appeal are in brief as under:-
1.1 The appellant are engaged in the manufacture of aerated waters Lehar Pepsi, Lehar Mirinda & Lehar Team etc. chargeable to Central Excise duty under heading 2201 or 2202 of the Central Excise Tariff. The period of dispute in this case is from 01.04.1994 to 31.10.1995. During this period the aerated waters, in question, were being sold by them to their dealers at Rs.93.90 per crate while the assessable value of the goods on which duty was being paid was Rs. 44 per create. The difference between the sale price to dealers and the assessable value was accounted for as Rs.22.00 per crate as excise duty, Rs.9.90 per crate as sales tax, Rs.11.00 per crate as freight and Rs.7.00 per crate as rent on containers. The freight charges and rent on containers at the above mentioned rates of Rs.11.00 per crate and Rs.7.00 per crate respectively were being recovered separately by debit note issued to dealers.
1.2 The officers of the DGCEI searched the factory and the office premises of the appellant on 31.08.1994 and resumed certain relevant records including the Balance Sheet for 1994-95. The Balance Sheet for 1994-95 gave the breakup of the total expenses of Rs.3,93,35,456/- incurred during 1994-95 under the heading Transportation, Handling and Distribution. According to the investigating officer among these expenses, the expenses incurred on Advertisement and Publicity, incentive and discount to dealers, vehicle and handling staff cost and empties sorting charges have to be part of the assessable value of the goods, but have not been included. The total of these expenses for1994-95 period was Rs.1,08,71,593/-. Similarly the total of these expenses for the period 01.04.1994 to 31.10.1995 of 1995-96 was Rs.26,02,524/- which according to the Investigating Officers was includible in the assessable value but had not been included. Accordingly, the Investigating Officers were of the view that the assessable value of the goods to the extent of Rs.1,34,74,417/- has escaped excise duty. The duty at the applicable rate on this amount was worked out as Rs.64,76,956/-. Accordingly a Show Cause Notice dt. 31.01.1997 was issued to the appellant for demand of allegedly short paid duty amount to Rs.64,76,956/- from the appellant and also for imposition of penalty on them under Rule 173Q(1) and 52 of the Central Excise Rule, 1944 and also under section 11AC of the Central Excise Act, 1944. Besides this the Show Cause Notice also sought confiscation of the land, building, plant & machinery of the Appellant Company, under Rule 173Q(2) of the Central Excise Rules, 1944.
1.3 The Show Cause Notice was adjudicated by the Commissioner Central Excise (Adj) vide Order-in-Original dt. 02.02.2001 by which the duty demand of Rs.59,68,534/- was confirmed against the appellant and penalty of equal amount imposed on them under section 11AC. The Commissioner also demanded interest on the duty demand confirmed under the Provisions of Section 11AB besides imposition of penalty of equal amount on them under section 11AC. Penalty of Rs.2000/- was also imposed on the appellant under Rule 52A of the Central Excise Rules. The land, building, plant & machinery of the appellant was, however, not confiscated.
1.4 The appellant filed an appeal to the Tribunal which was disposed off vide Order-in-Appeal No.429/01A dt.19.12.01 passed by the Tribunal by which the matter was remanded to the Commissioner for de-novo decision with reference to correct factual details and legal position during the period of dispute. The Tribunal while remanding also observed that the appellants grievance that the impugned order does not consider the factual position, in detail, in respect of each item of expenditure is seen to be well founded.
1.5 Accordingly the matter was adjudicated de-novo. In de-novo proceedings the Commissioner vide Order-in-Original dt.21.04.2005 confirmed the duty demand of Rs.59,68,534/- and proviso of section 11A(1) of the Central Excise Act,1944 and besides this imposed penalty of Rs.60,00,000/- on the appellant under section 173 Q(1) of the Central Excise Rules, 1944. Against this order of the Commissioner, this appeal has been filed.
2. Heard both the sides.
3. Sh. L.P. Asthana, Advocate, the learned counsel for the appellant, pleaded that the appellant, a franchisee of M/s. Pepsi Foods Ltd. manufacture aerated waters in their factory at Delhi Agra Highway, and they supplied aerated waters to their dealers in Delhi, Rajasthan and U.P., that the duty is sought to be charged by the Department on the expenses shown in the Balance Sheet for the year 1994-95 and 01.04.1994 to 31.10.1995 period of 1995-96 on Advertisement and publicity, incentive and discount to dealers and vehicle and handling staff cost to the extent of 75%, that incentive and discount to the dealers is the discount given on purchase of certain quantity of crates in form of certain number of bottles of aerated waters being supplied free, that this is nothing but trade discount which was being given as per the discount policy of the appellant, that since it was known and was available to all the dealers prior to sale, in terms of the Apex Courts judgment in case of Union of India Vs. Bombay Tyre International Ltd. (1983 ELT 1896), its deduction has to be allowed, that expenses on Advertisement and Publicity are, in fact the expenses on painting of name and logo of Pepsi on the vans and trucks in which the crates of Lehar Pepsi, Lehar Mirinda and Lehar Team are delivered to the dealers, that these are not advertisement expenses and, in fact, are transport expenses which are not includible in the assessable value, that vehicle and handling staff cost include salaries to the staff, drivers, helpers of vans/trucks and also loading/unloading charges, that among these expenses, since loading and unloading takes place outside the factory, the charges for the same would not be includible in the assessable value, that salaries to the driver, helpers etc. are clearly the expenses On running and maintenance on vehicle which is charges relating to transportation, that in view of this, there is no justification for including 75% of these charges in the assessable value, that in any case, duty demand has been raised by invoking longer limitation period under proviso to section 11AC for which there is no justification and therefore the same is time barred, that there is no absolutely no justification for alleging fraud, mis-statement, suppression of facts with intent to evade duty on the part of the appellant and that in view of the above submissions, the impugned order is not sustainable.
4. Sh. M.S. Negi, learned DR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that the bulk of the disputed amount-discounts to dealers is not admissible for deduction and has to be part of the assessable value, that these discounts were not known prior to sale, that expense incurred on advertisement and publicity as shown in the Balance Sheet have to be part of the assessable value, that similarly the vehicle maintenance cost, loading/unloading charges and handling staff cost is also required to be part of the assessable value, that the extended period has been correctly invoked by the Commissioner as the relevant facts have been suppressed by the appellant from the Department and that in view of the above submissions, there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records. The dispute in this case is only about inclusion in the assessable value of the expenses incurred on advertisement and publicity, incentive and discount to dealers and vehicle and handling staff cost as shown in the Balance Sheet of 1994-95 & 1995-96.
6. Coming first to the expenses shown in the Balance Sheet under the heading incentive and discount to dealers, there is no dispute that this expense is on account of giving to free duty paid bottles of aerated waters to the dealers on purchase by them of certain quantity of the crates. The appellant thus give discount in form of free duty paid bottles of aerated waters instead of reduction in price. In terms of Apex Court judgment Bombay Tyre International Ltd.(Supra), trade discount is not to be included in the assessable value if it is known price to sale. Some view has been expressed by the Apex Court in case of Union of India Vs. Madras Rubber Factory Ltd., reported in 1995(77) ELT-433(SC). In this case from the records it is clear that discount policy was known to the dealers and discount in form of free duty paid bottles of aerated waters were given to the dealers in accordance with the discount policy. Therefore it cannot be said that the discount was not known prior to sale. In view of this, the impugned order dis-allowing the deduction of this trade discount given in form of free duty paid bottles of aerated waters is not correct.
7. As regards the expenses shown in the Balance Sheet under the Heading for Advertisement & Publicity the appellant plea is that this is the expense incurred on painting on the vehicles, the name and logo of M/s. Pepsi Food and this fact is not disputed. There is no evidence to show that this expense had been incurred on Advertisement & Publicity Campaign organized by the appellant. Even if this is so, since this expense has been incurred by the Appellant, it is deemed to be included in the assessable value. Therefore, the impugned order confirming the duty demand on the expenses shown in the Balance Sheets on Advertisement and Publicity, is not correct.
8. As regards the expense shown in the Balance Sheets under the heading Vehicle and Handling Staff Cost, appellants plea is that this expense includes the salaries to the drivers and helpers and expenses on maintenance of the vehicles being used for transportation and also expense incurred on loading/un-loading of the goods. It is also appellants plea that the loading of the goods has taken place outside the factory. The above submissions of the appellant are not disputed by the Department by producing cogent evidence in this regard. Since these expenses represent the expense incurred on the salaries of the drivers/helpers of the vehicles for transport of the goods to the dealers premises and also the expense incurred on maintenance of the vehicle and loading/un-loading of the goods outside the factory, in our view, these expenses would not be includible for the assessable value and as such the impugned order confirming duty demand on these expenses is not correct.
9. In view of the above discussions, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
(Justice G.Raghuram) President (Rakesh Kumar) Member (Technical) S.Kaur 1