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2010 Supreme(SC) 1208
2010 (8) Supreme 577
SUPREME COURT OF INDIA
Dr. Mukundakam Sharma and Anil R. Dave, JJ.
Parle Bisleri Pvt. Ltd. — Appellant
versus
Commr. of Customs & Central Ex., Ahmedabad — Respondent
Civil Appeal No. 1160 of 2006
Decided on : 15-12-2010
IMPORTANT POINT
Two basic features which prima facie show interdependence are pervasive financial control and management control.
Headnote:(a) Circular 6/92 r/w Notification No. 1/93 – Essential ingredient for clubbing together the value of clearances is inter-dependence and inter-relationship of the companies in question – Two basic features which prima facie show interdependence are pervasive financial control and management control. (Para 12)
2004 (171) E.L.T. 155 (S.C.) – Relied upon
(b) Notifications No. 175/86 and No. 1/93, Explanation VIII – Does not refer only to brand names – Can be used to determine whether code names fall into category of brand names – Appellant manufacturing flavours which fall within the ambit of the ‘code names’ – these codes are key to identifying the flavours which are commercially transferable. (Para 14)
(c) Notifications No. 175/86 and No. 1/93 – Flavours developed, researched and concocted by M/s. PEL Ltd in its research labs – Hence they are the owners of the code names – Users of the flavours, i.e. M/s PEL Ltd., M/s PIL Ltd. and specified bottlers are all interconnected – Appellant not entitled to benefit of the Notifications. (Para 15)
Facts of the case:
1. M/s. Parle Bisleri Pvt., the appellant, manufactures soft drink flavours which are assigned ‘code names’, namely G-44T, L-33A, T-11PC, T-11P, R-66M, K-55T and L-22L. During the period from years 89-90 to 93-94, the appellant availed of the benefit of Notifications 175/86 & 1/93 as an SSI unit. It is the holding company of M/s. Parle Exports Ltd. (PEL). The appellant sells its product to PEL, Parle International Ltd. (PIL) and franchise bottlers of M/s. PEL.
2. The allegations against the appellant before the CESTAT were that the clearances of the appellant during the period from 1989 to October 1993 must be clubbed with that of M/s PEL and M/s PIL as they are effectively one and the same company, and thus the appellant is not entitled to the benefit of the aforesaid Notifications.
3. It was also an issue of appeal before the CESTAT that the appellant herein was using the brand name belonging to another person (M/s PEL) who was not entitled to the benefit of the said Notifications.
4. The third and final issue concerned the allegation of undervaluation of flavours by the appellant, which resulted in an inaccurate assessment and hence the differential duty should be extracted.
5. The CESTAT rejected the Revenue’s claim of undervaluation. However the Tribunal came to the conclusion that M/s. PEL did in fact, own the brand name and rejected the defence of the appellant that the flavours were marked only by virtue of a code and not identified as a brand.
Finding of the Court:
M/s PEL Ltd. and M/s PIL Ltd. are intertwined in their operation and management.
Result : Appeal dismissed.
JUDGMENT
Dr. Mukundakam Sharma, J. —
1. This appeal is preferred by M/s Parle Bisleri Pvt. Ltd (formerly known as M/s Limca Flavours and Fragrances Ltd and appellant herein) and is directed against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai which set aside the order of Commissioner of Central Excise, Ahmedabad. The Commissioner vide order-in-original No.11/Commr/96 dated 16.9.1996, dropped all proceedings initiated against the respondents in the Show Cause Notice F. No. V/22/15-18 DA 94 dated 24-2-94. However, on appeal, the CESTAT partly allowed the claim of the Revenue, and aggrieved by the same, the appellant has approached this Court.
2. The facts may be stated in brief here. M/s. Parle Bisleri Pvt., the appellant, manufactures soft drink flavours which are assigned ‘code names’, namely G-44T, L-33A, T-11PC, T-11P, R-66M, K- 55T and L-22L. During the period from years 89-90 to 93-94, the appellant availed of the benefit of Notifications 175/86 & 1/93 as an SSI unit. It is the holding company of M/s. Parle Exports Ltd. (PEL). The appellant sells its product to PEL, Parle International Ltd. (PIL) and franchise bottlers of M/s. PEL. It maybe stated at the outset that the changes the appellant underwent in its transformation from ‘M/s Limca Flavours and Fragrances Ltd’ to ‘M/s Parle Bisleri Pvt. Ltd’ bear no significance to the outcome of this appeal.
3. M/s. PEL uses the products sold by the appellant to manufacture Non-alcoholic Beverages Base (NABB). In addition to NABB, M/s. PEL also manufactures flavours as the appellant does. During the same period mentioned above, M/s PEL enjoyed the benefit of Notification No. 175/86 and 1/93 for the year 92-93 and 93-94. (Oct. 93). The flavours named above are researched and developed by PEL, but were allowed to be manufactured by the appellant with the code names given by PEL. The flavours are used in the manufacture of beverages like Gold Spot, Limca, Rimzim etc.
4. Consequent upon the visit to the factory premises and office premises of Parle Group of Companies at Ahmedabad and Bombay on 20.03.93 by the officers of the Directorate General of Anti Evasion (Central Excise), New Delhi on the basis of the information that M/s PEL and their Group Companies were indulged in evasion of Central Excise Duty, various documents were seized and the statement of key personnel recorded. As we have mentioned earlier, the order-in-original passed by the Commissioner of Central Excise and Customs withdrew the demand for differential duty and found no case for imposition of penalty for any of the companies in question.
5. Before we move on to the appeal as it unraveled before the CESTAT, it is pertinent to note here that Notification No. 175/86 and 1/93 require that the aggregate value of clearances of all excisable goods from a factory by one or more manufacturer should not exceed Rs. 150 lakhs and Rs. 200 lakhs respectively in the preceding financial year. The allegations against the appellant before the CESTAT, then, were that the clearances of the appellant during the period from 1989 to October 1993 must be clubbed with that of M/s PEL and M/s PIL as they are effectively one and the same company, and thus the appellant is not entitled to the benefit of the aforesaid Notifications. It was also an issue of appeal before the CESTAT that the appellant herein was using the brand name belonging to another person (M/s PEL) who was not entitled to the benefit of the said Notifications. The third and final issue concerned the allegation of undervaluation of flavours by the appellant, which resulted in an inaccurate assessment and hence the differential duty should be extracted.
6. In response to these issues in appeal, the CESTAT ruled the Revenue’s claim of undervaluation in favour of the appellant primarily on the ground that the Department did not come out with quantifiable data to indicate the extent to which the price was suppressed by the appellant. Howeve
