Indian Kanoon - Search engine for Indian Law

14. We have also heard the learned Departmental Representative Shri S. C. Sen who has strongly objected to rectify the order. According to him, the assessee-company did not produce evidence at the time of hearing the appeal to prove that it is a manufacturing company to claim 100% depreciation on the bottles, crates and wooden shelves and the depreciation at the prescribed rate on the plant and machinery. Depreciation is also claimed on the bottles, crates and wooden shelves trading (treating) as plant and the value of each item is below Rs. 5,000. Once having accepted that the bottles and wooden shelves constitute plant, depreciation cannot be disallowed. The said items cannot constitute stock-in-trade. The containers were returnable. The meaning of the assessee-companys affairs as understood that the assessee-company is bottling the concentrated chilled soft drinks supplied by M/s. Parle (Exports) Ltd., Bombay, and also purchased and sold Bisleri Club soda from the said company, is not a correct fact. This conclusion is not in consonance with the assessment order coupled with audited balance sheet and P&L account. The Notes attached to the account provided information as to consumption of various principal raw materials like, sugar, citric acid, carbon-di-oxide, crown corks and essence. Out of the above raw materials, only essence is supplied by M/s. Parle (Exports) Ltd., Bombay and other materials are procured by the assessee-company from the established sources. The assessee was sanctioned electrical power from the State Electricity Board to the tune of 245 K. V. A. The assessee paid power charges of Rs. 1,09,419 during the relevant accounting period under consideration. The assessee has also licence under the Central Excise & Salt Act., 1944. The assessee was paying the prescribed duty of excise of the appropriate authority.

4. To correct a mistake committed by the Court is an inherent power vested in the Court because the mistake committed by the Court cannot be allowed to perpetrate to the detriment of the parties that come before it for redressal of their grievances. I am approaching this problem keeping this wholesome principle in view.

5. The facts in issue are to too complicated to comprehend. The assessee is company engaged in bottling of soft drinks, which are marketed in the trade names of Gold Spot, Limca, Thums Up, Bisleri Soda, etc. There was another company called Parle Exports (P) Ltd. having its registered officer in Bombay. By a franchise agreement dt. 23rd March, 1984, the said Parle Exports (P) Ltd. had permitted and authorised the assessee-company to bottle, to sell and to distribute the beverages known and sold under the trade marks as mentioned above. The former company agreed to supply to the assessee, the bottler company, the essence for the beverages at the prevailing prices. In other words the Parle Export (P) Ltd. will supply the concentrate only to the bottler company for a price and the bottler company, i.e., the assessee will convert the concentrate into a drink by adding some more chemicals, water and sugar sell them in the market. Clause 6 of the agreement provided that the said beverages will be manufactured in a plant approved by the Parle Exports (P) Ltd. and located within the assigned territory by it to the assessee-company. The beverages will be manufactured only according to formula provided by the Parle (Exports) (P) Ltd. strictly in accordance with the sanitary conditions as recommended by it in compliance with the local and National Laws of West Bengal. It also provided that the samples of the finished beverage would be sent at bottlers expenses to the Parle (Exports) (P) Ltd. every month for approval and inspection. Under cl. 7, the assessee will have to keep complete records of all chemical tests made as specified by the Parle (Exports) (P) Ltd. and/or production, sale and distribution of the beverages and shall furnish to the company such reports monthly as are required. The assessee-company also covenanted with Parle (Exports) (P) Ltd. that at no time to manufacture, bottle, sell, deal in or otherwise be concerned with any product under any get up or container used by Parle (Exports) P. Ltd. or which is likely to be confused or used in unfair competition. There are several other clauses in the agreement with which I am not directly concerned in this matter.

(c) The Tribunal held that the assessee was bottling the concentrate chilled soft drinks supplied by Parle (Exports) (P) Ltd. and also produced and sold Bisleri Soda, which was not a fact at all. This is not a fact at all. The assessee was purchasing as shown to the Tribunal various raw materials like sugar, acid, carbon dioxide, etc., alongwith essence from the Parle (Exports) (P) Ltd. With the help of these raw materials it was preparing the drinks by using the essence, which was only one of the raw materials. It is not purchasing chilled soft drinks from Parle (Exports) (P) Ltd. This fact had weighed very heavily with the Bench in coming to the conclusion that the assessee-company was not manufacturing soft drinks and, therefore, not entitled to 100% deduction. It also showed to the Bench the electrical power of as high as 245 KWA and the licence it obtained under the Central Excise & Salt Act for paying excise duty on the soft drinks it manufactured. It also explained to the Bench the process involved in the manufacture of soft drinks. From this it could never be said that the assessee had been purchasing concentrated chilled soft drinks from Parle (Exports) (P) Ltd. but was not manufacturing itself the soft drinks. It also obtained licence under the Factories Act, 1948 and the Indian Boilers Act the Employees State Insurance Act, 1948, all go to show that the assessee was a manufacturer.

14. The second mistake crept into the order of the Bench was to hold that the business of the assessee was only bottling of soft drinks supplied by the principals, Parle (Exports) (P) Ltd. and that the assessee was not manufacturing any soft drinks. This is again a wrong fact. The assessee was only purchasing the essence from Parle (Exports) (P) Ltd. under the franchise agreements as seen earlier and was later on manufacturing the soft drinks by adding several chemicals and subjecting the essence to several processes and bottling the liquid so obtained into bottles. All this activity amounted to manufacture. The ITO also accepted this position and allowed investment allowance, which he could not have done unless he was satisfied that there was manufacturing process involved. This is also a mistake apparent from the record. The learned Judicial Member had referred to this aspect in his differing opinion and recorded a finding in favour of the assessee. I am inclined to agree with his view, which was supported by ample evidence on the record (Paragraphs 15 and 18 of the differing opinion of the learned Judicial Member).