Customs, Excise and Gold Tribunal - Delhi
Parle Beverages Ltd. vs Collector Of Central Excise on 25 June, 1998
Equivalent citations: 1998(61)ECC529, 1998ECR825(TRI.-DELHI), 1998(104)ELT72(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. The question involved in the present appeal is whether the value of straws supplied along with the beverage known as 'Frooti' is to be included in the assessable value of the later product. The adjudicating authority namely Additional Collector, Central Excise, Bombay-3 has held as follows :-
"The fact remains that without the straw these drinks are neither useable nor marketable."
On these findings the adjudicating authority has held that the value of straw should be included in the assessable value. Hence this appeal has been filed in this Tribunal.
2. Learned Advocate Shri Rohan Shah has assailed the above findings given by the adjudicating authority that without the straw, the drink 'Frooti' becomes non-marketable. He has drawn our attention to the packet of 'Frooti' which has on top of it a sealed small hole. According to him, with the help of the straw itself the aforesaid beverage is consumed. He, however, submits that one of the alternative method of consumption of the drink is also given on the packet. It indicates : "cut here to pour". He submits that a good percentage of consumption of 'Frooti' is by pouring in glass after cutting the 'Frooti packet' as mentioned above. He has drawn our attention to the appellants' reply to the show cause notice available at the pages of 50 and 51 of the appeal papers in which the figures of sale of straws as a percentage of the sale of the product 'Frooti' has been given. From the perusal of the figures we observe that sale of straws as percentage of sale of 'Frooti' varied from 7.17% to 53.50%. Learned Advocate submits that in view of the figures it is very clear that the product 'Frooti' can be sold in the market, and is actually sold and marketed, without straw. Therefore, it cannot be considered an essential part of the Frooti and hence he submits that value of straw should not be included in the value of the Frooti. This is only an optional product which the customer may buy or may not buy. He supported this proposition on the judgment of this Tribunal in the case of CCE, Pune v. Kishore Pump, Pune, 1997 (91) E.L.T. 91 (Tribunal). This judgment, he points out, has taken into account the case law available at that time. It has held that no doubt an electric motor is necessary for running a P.D. pump, it does not mean that electric motor is a part of P.D. pump and its value should be included in the value of the P.D. pump. It is the option of a customer of P.D. pump to take the electric motor from the P.D. pump manufacturer, or he may use his own motor which may be available with him previously or he may buy it from some other source or he may use another source of power to work the P.D. pump. In the same way, he submits a Frooti can be used without straw or by a straw purchased by the customer himself. He therefore prays to exclude the value of straw from the assessable value of the Frooti.
3. Opposing the contentions, learned SDR Shri Satnam Singh submits that the figures available at pages 50 and 51 shows the use of straw in the beginning when the product was launched at around 7% it rose to figure of 41% and then to 53% in the relevent period. It is therefore, reasonable to infer that by now straw has become the part and parcel of 'Frooti'. Its value should therefore, be included in the value of Frooti. He further submits that the facts of the case in the Tribunal's judgment in the Kishore Pumps Pvt. Ltd. (supra) do not apply in the case.
Facts and circumstances, submits the learned SDR, in that case are that if electric motor is supplied along with P.D. pumps there was an extra charge for electric motor but in the present case he submits, the value of straw is included in the value of 'Frooti' in that when straws are supplied along with Frooti no extra charge for straw is collected by the apellants. In this view of things he submits that value of straws should be included in the value of the Frooti.
4. In his rejoinder learned Advocate Shri Shah submits that the position stated by learned SDR is factually wrong inasmuch as, by way of an example, an invoice of the appellant dated 11-1-1986 was shown in which the value of the straw has been separately charged apart from the value of the Frooti. He therefore submits that plea of the learned SDR is of no significance.
5. We have carefully considered the pleas advanced from both sides. From the indications given on the packet itself, as rightly pointed out by the learned Advocate, as also from the figures given in reply to the show cause notice it is apparent that straws are not necessary for sale of Frooti. Hence vlaue of straw cannot be included in the assessable value of Frooti. Finding of the adjudicating authority that without the straw, 'Frooti' neither useable nor markektable is erroneous and without any evidence. On the other hand, appellants have convincingly proced that sale of straw is optional. Hence we set aside the impugned order and allow the appeal.