Custom, Excise & Service Tax Tribunal
Dhilon Kool Drinks And Beverages Ltd vs Rohtak on 28 August, 2018
1
Appeal No. E/2286/2006
Customs, Excise & Service Tax Appellate Tribunal
SCO 147-148, SECTOR-17-C, CHANDIGARH-160017
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Appeal No. E/2286/2006
[Arising out of OIA-12-COMMR-CEX-2006 dated 30/03/2006 passed by the
Commissioner (Appeals) of Central Excise-ROHTAK]
Dhilon Kool Drinks And Beverages Limited : Appellant (s)
Vs
CCE & ST- Rohtak : Respondent (s)
Represented by:
For Appellant (s) : Shri Kamaljeet Singh, Advocate For Respondent (s): Shri Atul Handa, AR CORAM :
Mr. Ashok Jindal, Hon'ble Member (Judicial) Mr. Anil G. Shakkarwar, Hon'ble Member (Technical) Date of Hearing/Decision: 28.08.2018 ORDER No. A/63099 / 2018 Per : Mr. Ashok Jindal The appellant is in appeal against the impugned order wherein the demand of duty of Rs. 1,75,40,033/- has been confirmed against them along with interest and equivalent amount of penalty is also imposed.
2. The facts of the case are that the appellant were engaged in the manufacture of aerated water. The Central Excise Officers visited the factory premises of the appellant on 22.11.1996 and found that the production of different brands of aerated water, namely, Pepsi, Mirinda and Team as entered in statutory records & RG-I register, was less than the deemed production of aerated water of the above said brands worked out on the basis of number of Crown Corks issued for production during April, 1996 to September, 1996. During the course of investigation, certain statements were recorded and it was alleged by way of show cause notice 2 Appeal No. E/2286/2006 dated 04.06.2001, the appellant is clearing goods clandestinely on the basis of Crown Corks/Caps issued for production and quantity of finished goods entered in RG-I register was much less than the quantity of Crown Corks issued for production. The matter was adjudicated, the demand of duty was confirmed alleging clandestine removal of goods on the basis of uses of essence/concentrate to be used for manufacture of aerated water and non-accountal of Crown Corks. Therefore, the appellant is in appeal.
3. Ld. Counsel appearing on behalf of the appellant submits that the sole base for the demand raised against the appellant is that the appellant has shown excess quantity of using of crown corks whereas less quantity of finished goods/aerated water found entered in RG-I register. The said demand is without any basis only on the basis of assumptions and presumptions. It is submitted that it has been presumed that there may be some shortages during the manufacture of goods, but, no evidence has been brought on record by the Revenue. In support of their allegation, in the light of the decision of this Tribunal in the case of Commissioner of Central Excise, Chandigarh vs. Ludhiana Bottling Company 1996 (17) RLT 650 (CEGAT-NB) and in the case of Varanasi Bottling Company (P) Limited vs. CCE, Allahabad 2000 (37) RLT 150 (CEGAT), the demand is not sustainable.
4. On the other hand, the Ld. AR supported the impugned order.
5. Heard the parties and considered the submissions.
6. On careful consideration and submissions made by both sides, we find that the sole allegation made against the appellant is that the 3 Appeal No. E/2286/2006 appellant has issued a particular quantity of crown corks for manufacture of aerated water, but, quantity of aerated water shown in the RG-I register is less than the quantity of crown corks issued by the appellant, therefore, the appellant has clandestinely removed the finished goods. On being query made by the Bench that whether it has been found that the bottles in which the aerated water was packed were also issued in excess and quantity of bottles of finished goods entered in RG-I register is less. For that query, no answer was given by the Ld. AR. In fact, for manufacture of aerated water, the essential inputs are essence/concentrate, crown corks and empty bottles. Revenue on the basis of formula has deemed that to manufacture one bottle of aerated water, a particular quantity of essence/concentrate is required and number of Crown Corks issued by the appellant for production are more than as per the formula of concentrate production of essence/concentrate, but the essential input i.e. bottles in which the aerated water is to be sold, no effort was made to ascertain the fact how much bottles were sent for production and how much bottles of finished goods were received. The whole case is made out against the appellant only on the basis of assumption and presumption, therefore, the demand is not sustainable. A similar view was taken by this Tribunal in the case of Varanasi Bottling Company (P) Limited (supra) wherein this Tribunal again examined the issue of issuing of essence/concentrate and this Tribunal observed as under:-
5. We find that this position has been analysed by the Tribunal in the case of M/s. Parle Beverages Limited referred to above particularly in Para 103 and 1.4 of the said order. The relevant paras are as under:-4
Appeal No. E/2286/2006 1.3. It is also not possible to accept the contention of the departmental representative that the franchise agreement stipulates production of the quantity as specified in the formula since clause (3) of the agreement provides that the beverages should be manufactured only in accordance with the formula and procedure provided with the company. Acceptance and application of a particular formula for a product mix does not necessarily lead to an inevitable production of a pre-determined quantity of goods formula. There is no contention that the franchisee in any case were held accountable for contravention of the agreement by not having produced according to the formula. Nor was the contention of the Voltas that it has not been established or suggested that there has been any flow back to it of money but on account of production in excess of the quantities show rebutted.
1.4. The essence of Rule 173E is that the norm of the production to be complied must be on the fixed at a time when the production was considered normal having regard to the various factors mentioned there. It may be possible that not all the factors can be taken into account. There is in the present case however, no attempt to consider any of the factors other than raw material before arriving at the norm.
It cannot therefore be held that the formula by itself, without consideration of any of the other factors would not amount of determination of a norm under Rule 173E. It has, therefore, to be held that there is insufficient basis for the demands of duty. In view of this, we do not propose to answer the question as to whether the demands were barred by limitation. The demand of duty and penalty is set-aside. Further, in the case of Ludhiana Bottling Company (supra), this Tribunal again examined the issue of issuing of non-accountal of crown corks and this Tribunal observed as under:-
2. We have heard Shri Jangir Singh, Ld. DR and Shri V. Kohli Ld. Counsel for the respondent. Although the dismissal of the appeal is on technical ground taken by the Commissioner (Appeals), yet without going into justification for such a dismissal, we find on the basis of ld.
Counsel's submission before us that even on merits, the issues are covered in favour of the respondents by two Tribunal's decision in the case of Punjab Beverages vs. Collector of Central Excise reported in 1996 (62) ECR 510 where the Tribunal in similar circumstances has held that the allegations of manufacture of aerated water of such quantity as would correspond with the quantity of crown corks which are held to have been not accounted for is not supported by any fact or established by any inquiry with regard to the procurement and utilisation of other materials required for the product and clearance of the final product without payment of duty. The Tribunal observed that it is an acceptable position that crown corks do get damaged during the course of filing up of aerated water in bottles. On the basis the Tribunal held that the demand of duty based on percentage of wastes of crown cork or their non-accountal is not sustainable. Ratio thereof would apply to the facts of the present case and the same result as in the Tribunal's order would follow. In respect of the other demand relating to the denial of modvat on the crown corks there is another Tribunal's decision in the case of present respondents themselves reported in 1992 (41) ECR 455 wherein 5 Appeal No. E/2286/2006 the Tribunal had held that the provisions of Rule 57D have to be applied with reference to the nature and description of the inputs and the Tribunal held that on these consideration inputs which are in nature of discrete articles like crown corks when damaged or rendered unfit for use during the manufacture of the final product will constitute waste which no doubt, may comprise of a part of the total quantity of the particular duty paid input received by the manufacturer. Following this decision, which is applicable to the facts of these cases, the demand on this quantity of crown corks is also not sustainable. Therefore even on merits there is no need to interfere with the order of the lower authority. In this view of the matter, we see no reason to interfere with the impugned order and appeals are therefore rejected. We find that in this case also, no effort was made to ascertain the fact that how much crown corks were wasted during the manufacture of finished goods and how much bottles were issued for production and how much bottles of finished goods were received. It is a fact on record that aerated water cannot be sold without packed in bottle on which the crown corks is affixed, therefore, the investigation conducted by the Revenue is faulty and Revenue has alleged allegation of clandestine removal against the appellant on the basis of assumption and presumption. In that circumstances, the demand against the appellant is not sustainable. Therefore, we set-aside the impugned order and the appeal is allowed with consequential relief, if any.
(Dictated & pronounced in the Court)
(Anil G. Shakkarwar) (Ashok Jindal)
Member (Technical) Member (Judicial)
G.Y.