Customs, Excise and Gold Tribunal - Mumbai
M/S Ma-Care, Shri K.K. Jhunjhunwala, ... vs Commissioner Of Central Excise, Pune on 19 September, 2001
Equivalent citations: 2002(79)ECC674, 2000ECR43(TRI.-MUMBAI), 2001(134)ELT535(TRI-MUMBAI)
ORDER
S.S. Kang, Member
1. Common issue involved in these appeals, therefore, they are being taken up together. Appeals No. E/4087-4092/98-Bom. were filed against the adjudication order passed by the Commissioner of Central Excise, Bombay whereas the duty has been demanded from M/s. TTK Pharma Limited on the ground that the product known as Woodward's Gripe water which is stated to be manufactured by M/s. Ma-Care was in fact manufactured by M/s. TTK Pharma Ltd. and, therefore, assessable value should be based on the price at which M/s. TTK Pharma Ltd sold the goods to its dealer. Personnel penalties were also imposed on the appellants under Rule 209 and 173Q of Central Excise Rules, 1944.Appeals No. E/1361 to 1364/2000-Mum. were filed against the order in appeal passed by the Commissioner (Appeals). In this case the adjudication authority held that M/s. Ma-Care and TTK Pharma Ltd. entered into an agreement so as to create a facade that the activities of M/s. Ma-Care and M/s. TTK Pharma Ltd. were at arms length and relationship between them were n principle to principle basis. The adjudicating authority also held that the value as declared by M/s. Ma-Care is not acceptable and for the purposes of assessment under Section 4 of Central Excise Act is the value of the goods (SIC) at which they were sold at the time in the whole sale market. The adjudicating authority confirmed the demand and imposed penalties. On appeal filed by the appellants vide impugned order the appeals were remanded by the Commissioner (Appeals).
2. Learned Counsel submits that grounds on which the present demand is made are that goods are manufactured as per the specification of M/s. TTK Pharma Ltd. and M/s. TTK Pharma Ltd. is exercising control over the production, M/s. Ma-Care is purchasing raw material as per the specifications of M/s. TTK Pharma Ltd, M/s. Ma-Care is producing the goods under the supervision of M/s. TTK Pharma Ltd, M/s. TTK Pharma Ltd. has right to recover the cost of defective goods and M/s. Ma-Care has no right to the ownership of the goods which were manufactured by them. On these allegations, the demands in the earlier show cause notices were made which were finally decided in favour of the appellants.
3. The contention of the appellant is that M/s. TTK Pharma Ltd. and M/s. Ma-Care entered into an agreement dated 4.9.89 for manufacture of Woodword's Gripe Water and the agreement was against renewed on 14.9.92. On the basis of the terms and conditions of the agreement a show cause notice was issued to the appellants on 4.6.90 for demanding duty for the period November, 89 to April, 1990. Another show cause notice dated 5.11.90 was issued for demanding duty for the period May, 1990 to September, 1990. The Assistant Commissioner in respect of both the show cause notices confirmed the demand. Appellants filed appeal and the Commissioner (Appeals) vide order dated 29.5.92 set aside the adjudication order and held that relationship between M/s. Ma-Care and M/s. TTK Pharma are on principle to principle basis. Appellant further contended that two more show cause notices were issued to the appellants demanding duty for the period October, 1990 to March, 1991 and April 91 to October, 1991 and the adjudicating authority dropped the proceedings after following the earlier order in appeal dated 29.5.92. The contention of the appellant is that no appeal is filed by the Revenue authorities against the above mentioned orders. Therefore, the findings that the relationship between M/s. Ma-Care and M/s. TTK Pharma Ltd. is on principle to principle basis becomes final. In these circumstances the submission of the appellant is that no suppression can be alleged against the appellants and no fresh enquiries can be made in respect of same agreement in respect of relationship between M/s. Ma-Care and M/s. TTK Pharma Ltd. The appellant also relied upon the decision of the Tribunal in the case of Commissioner of Central Excise, Meerut Vs. Pace Marketing Specialities Ltd., reported in 2000 (119) E.L.T. 77 (Tribunal).
4. Learned SDR appearing on behalf of the Revenue submits that the present proceedings were initiated as the factual position in respect of relationship between M/s. Ma-Care and M/s. TTK Pharma Ltd. was suppressed by the appellant in earlier proceedings and subsequently, when the Revenue came to know about the true state of affairs between them the present proceedings were started. His submission is that the agreement between the appellants was in order to satisfy the requirement of the Excise Department and was not genuine and the agreement was made to show their relationship to be on principle to principle basis just to evade the payment of duty. In fact M/s. Ma-Care is the hired labour to manufacture the goods under the direction and control of M/s. TTK Pharma Ltd. He reiterated the findings of the order dated 31.8.98 passed by the Commissioner (Appeals).
5. Heard both sides.
6. In this case M/s. Ma-Care is manufacturing Woodword's Gripe Water and were selling to M/s. TTK Pharma under the agreement. In respect of that agreement, earlier 4 show cause notices were issued to the appellants for demanding duty at the price at which the goods were sold by M/s. TTK Pharma Ltd. for working out the Central Excise duty. Two show cause notices dated 4.6.90 and 5.11.90 demanding duty for the period November, 1989 to September, 1990 were adjudicated by the Assistant Commissioner of Central Excise. The adjudicating authority held that price at which the M/s. TTK Pharma Ltd. sells the goods in the whole-sale market will decide the basis to assessable value and not the price at which M/s. Ma-Care sells the goods to M/s. TTK Pharma Ltd. An appeal filed by the appellant, the Commissioner (Appeals) vide order dated 29.5.92 after considering the terms and conditions of the agreement held that relationship between M/s. Ma-Care and M/s. TTK Pharma Ltd. are on principal to principal basis. No appeal has been filed by the Revenue against this order. Thereafter, two more show cause notices were issued on 5.4.91 and 4.11.91 demanding duty for the period October, 1990 to October, 1991 and the adjudicating authority vide order dated 27.12.93 after taking into consideration the terms and conditions of the agreement and the earlier order in appeal dated 29.5.92 dropped the proceedings. Against this order also Revenue had not filed any appeal. The present proceedings are initiated in respect of the same agreement and on the same grounds which were subject matter of earlier proceedings. The Tribunal in the case of Commissioner of Central Excise, Meerut Vs. Pace Marketing Specialities Ltd, (Supra) held as under:
"The relationship between the respondents, manufacturer of adhesives, and the purchase of the goods, namely, M/s. Vam Organic Chemicals Ltd. is covered by the agreement entered into between them. That agreement was with the Department right from the day it was entered into between the parties. It was on the basis of that agreement the earlier show cause notices were issued and adjudicated upon. All those allegations ended in favour of the respondents. Thereafter, according to us, another look into the same agreement for fishing out some new material is not permissible. In view of the earlier orders by the adjudicating authorities and the decision of this Tribunal, dated 10.7.1996, the Department was not justified in issuing the present show cause notice covering the substantial period dealt with in the earlier proceedings."
7. We find that the ratio of the above decision of the Tribunal is fully applicable on the facts of the present appeals. As earlier show cause notices were issued on the basis of similar allegations and adjudicated in favour of the appellants and no appeal was filed by the Revenue, therefore, the Revenue is not justified in issuing the present show cause notices.
8. Further, there is no evidence on record to show that M/s. Ma-Care are getting something over and above the terms of agreement or that M/s. Ma-Care is established by or at the behest of M/s. TTK Pharma Ltd. In these circumstances, the impugned orders are set aside and the appeals are allowed.