2013 (11) TMI 1222 - AT - Central Excise

Addition of advertisement and publicity expenses in the assessable value of soft drinks - Penalty set aside on the ground that the ingredients for imposition of penalty on M/s. Coca Cola India Ltd. under Rule 209 A of the Central Excise Rules are absent Held that - The assessee had neither acquire possession of the excisable goods nor were concerned in removing, depositing, keeping, concealing, selling or purchase of the goods manufactured by Varanasi Bottling Co. - Just because, they partially reimbursed the advertisement expenses incurred by Varanasi Bottling Co. the assessee cannot be said to be concerned in dealing with the excisable goods manufactured by M/s. Varanasi Bottling Co. in any other manner under Rule 209 A of the Central Excise Rules, 2002, as the terms in any other manner has to be construed in enjusdem generis with the preceding terms Decided against Revenue.

Summary

Issues:
- Dispute over central excise duty on soft drinks manufactured by a company.
- Reimbursement of advertisement and publicity expenses by another company.
- Imposition of penalty under Rule 209 A of the Central Excise Rules.
- Appeal against the penalty imposed.

Issue 1: Dispute over central excise duty on soft drinks:
The case involved M/s. Varanasi Bottling Co. Ltd., engaged in manufacturing soft drinks chargeable to central excise duty. The dispute arose regarding the assessable value for duty payment, with the Department contending that advertisement and publicity expenses reimbursed to Varanasi Bottling Co. Ltd. by Coca Cola India Ltd. should be included. The Addl. Commissioner confirmed a duty demand of Rs.10,41,005/- along with penalties. The Commissioner (Appeals) later set aside the penalty on Coca Cola India Ltd. The Revenue appealed against this decision.

Issue 2: Reimbursement of advertisement expenses:
Coca Cola India Ltd. reimbursed Varanasi Bottling Co. Ltd. for advertisement and publicity expenses incurred by the latter. The Revenue argued that this reimbursement led to underpayment of duty due to collusion between the companies. However, the Commissioner (Appeals) found no grounds for imposing penalties on Coca Cola India Ltd. under Rule 209 A of the Central Excise Rules.

Issue 3: Imposition of penalty under Rule 209 A:
The Departmental Representative contended that penalties should be imposed on the companies due to their involvement in dealing with goods liable for confiscation. However, the Advocate for the respondent argued that the companies did not deal with the excisable goods in any manner that would attract penalties under Rule 209 A. The key point was whether the companies had knowledge that the goods were liable for confiscation, which was not established.

Issue 4: Appeal against the penalty imposed:
The appeal filed by the Revenue was challenged on the grounds that it lacked proper authorization as required under Section 35 B(2) of the Central Excise Rules. Additionally, it was argued that the penalties imposed were not justified as the companies were not directly involved in activities that would warrant such penalties. The Tribunal dismissed the Revenue's appeal, citing lack of grounds for imposing penalties and procedural irregularities in filing the appeal.

Overall, the Tribunal dismissed the Revenue's appeal, finding that the companies were not directly involved in activities warranting penalties under Rule 209 A and that the appeal itself lacked proper authorization. The judgment highlighted the importance of establishing knowledge of goods liable for confiscation before imposing penalties and emphasized adherence to procedural requirements in filing appeals.