Custom, Excise & Service Tax Tribunal
(I) M/S. Vbc Industries Limited vs Commissioner Of Customs & Central ... on 19 June, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, BANGALORE
SOUTH ZONAL BENCH
COURT - I
Appeal Nos: E/973/2006 & E/984 to 988/2006
(Arising out of Order-in-Appeal No: 151 to 156/2005 (V-I) CE dated 8.12.2005 passed by the Commissioner of Customs & Central Excise (Appeals), Visakhapatnam.)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
(i) M/s. VBC Industries Limited
(ii) Hindustan Coca Cola Beverages Pvt. Ltd.
Appellant
Versus
Commissioner of Customs & Central Excise (Appeals)
Visakhapatnam.
Respondent
Appearance
Shri B. Venugopal and Shri K. Parameshwaran, Advocates for the appellants.
Shri N. Jagdish, Superintendent (AR) for the Revenue.
CORAM
SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL)
SHRI M. VEERAIYAN, HONBLE MEMBER (TECHNICAL)
Date of Hearing: 19.06.2012
Date of decision: 19.06.2012
FINAL ORDER Nos._______________________2012
[Order per: P. G. Chacko]. All these appeals are directed against demands of duty on treated water and penalty associated therewith. The relevant particulars of these demands of duty are:
Sl. No.
Appeal No.
Period of dispute
Duty demand (Rs.)
Penalty (Rs.)
1.
E/973/2006
September 1997 to October 1998
Rs.1,16,231/-
Rs.1,16,231/-
2.
E/984/2006
10.10.98 to March 2001
Rs.1,62,085/-
Rs.1,62,085/-
Rs.1,000/-
3.
E/985/2006
April 2001 to June 2001
Rs.13,876/-
Rs.13,876/-
4.
E/986/2006
July 2001 to February 2002
Rs.91,936/-
Rs.91,936/-
5.
E/987/2006
March 2002 to August 2002
Rs.39,328/-
-
6. E/988/2006 September 2002 to June 2003 Rs.72,499/-
Rs.2,000/-
The impugned demands of duty are on treated water brought from the assessees factory to their own vending outlets where the water was converted to aerated water through addition of syrup and the finished product was marketed. The question arising for consideration is whether the treated water was also chargeable to duty during the relevant periods. It is not in dispute that the treated water resulted from a process deemed, under the relevant chapter note, to be manufacture. Therefore, the question now to be considered is whether it was marketable for the purpose of levy of duty of excise. It is submitted by the learned counsel for the appellants that an identical issue for a later period was considered by this Bench in a case of the same assessee (Hindustan Coca Cola Beverages Pvt. Ltd.) and it was held that marketability of the treated water was not established by the Revenue vide CCE, Hyderabad vs. Hindustan Coca-Cola Beverages (P) Ltd.: 2010 (250) E.L.T. 85 (Tri.-Bang.). Para 9 of the cited order of this Bench is reproduced below:
9.?We have gone through the records of the case carefully. The issue involved is whether the treated water cleared by the respondents to the vending machine is liable to pay central excise duty. It is seen that the corporation/bore well water is purified and supplied to outlets selling beverage such as cococola, the treated water is supplied either through canisters or stainless steel tankers which do not contain any marking on the,. In order to charge to excise duty, the criteria of marketability of the product is to be established by the revenue. In other words, the burden is on the revenue to prove the marketability. It is seen that the department has not conducted any enquiry to show that the treated water was marketed because the said water has been supplied only to the vending machine outlets. This is the factual situation. The department is heavily relying on Note 2 to Chapter 22 which has already been reproduced in this order. In the present case, we cannot say that the processes mentioned in Note 2 to Chapter 22 such as filtration, purification, labeling or relabeling of containers and repacking from bulk packs to retail packs etc., render this treated water marketable in the absence of its actual sales to buyers. The treated water had not been sold with any profit motive. In the absence of the essential ingredient of sale, we do not agree that the said product is marketable. Moreover, the processes undertaken had not changed the nature and composition of water. Before the processes were undertaken, the product was water and afterwards also it remains water. The deeming provision, namely Note 2 to chapter 22 is not applicable in the absence of market enquiry and proof of sale of the treated water. The process of purification/filtration merely improved the quality of water. There is no evidence to show that the treated water had been supplied to any consumer. They were only sent to the vending outlets for producing the cococola. The fact that the canisters bore the name Cococola is not material. It is the brand name of a specified aerated water drink manufactured by the respondents. It was stated that only with a view to identify the canisters, the said name was embossed. In any case, the treated water is not sold by the brand name of cococola. In certain cases, the treated waters are supplied in stainless steel tanks. Surely it cannot be said that the treated water carried in stainless steel tanks are marketable when they are sent for the purpose of making cococola in the vending machine. It is seen that the respondents had stated that the value of post mix includes the element of cost of treated water and the post mix had discharged duty liability. There is always a distinction between packaged water and treated water. Packaged water has minerals added to it. The treated water cleared by the respondents are not marketable as such. We also find force in the contention that the name cococola is only a house mark of the company. It cannot be said that the treated water is marketed under the brand name of cococola in the light of the Honble Supreme Courts decision in the case of Crane Betel Nut Powder Works v. CCE cited (supra). The processes undertaken for treatment of water did not result in the emergence of new product. In these circumstances, we do not find any infirmity in the impugned order of the Commissioner (Appeals) setting aside the order of the Original Authority. The duty demand is not sustainable. Under these circumstances, no penalty is leviable. Hence we reject the revenues appeals.
2. It is further submitted by the learned counsel that the civil appeals filed by the department against the above order of the Tribunal were dismissed by the Honble Supreme Court vide Commissioner vs. Hindustan Coca Cola Beverages (P) Ltd.: 2011 (269) E.L.T. A148 (SC). The apex courts order reads thus: we find no infirmity in the impugned judgment and order. The civil appeals are dismissed.
3. The learned Superintendent (AR) has made a feeble attempt to distinguish the facts of the present case from those of the cited case. His submission is that, in the cited case of the assessee, there was no evidence of marketability of the commodity unlike in the present case. However, in reply to queries from the Bench, no evidence of such marketability has been disclosed on behalf of the respondent in this case. In other words, the departments case in this batch of appeals is no better than what was noted by this Bench in the earlier case of the main assessee. Therefore, we are constrained to follow our own earlier decision affirmed by the apex court. Accordingly, the demands of duty and the connected penalties are set aside and these appeals are allowed.
(Pronounced and dictated in open Court) (M. VEERAIYAN) Member (T) (P. G. CHACKO) Member (J) rv ??
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