2018 (3) TMI 620 - AT - Central Excise

Clandestine manufacture and removal - aerated / soft drinks - SSI exemption - use of Brand names Bisleri Club Soda - use of brand name CITRA. Clandestine removal - demand of ₹ 9.61,561/- is based on the grounds that the figures of sales indicated in the Sales Manager Report (SMR) sent by the appellants to their franchisors was more than the clearances shown in RG 1 Register - Held that - identical issue in the case of Moon Beverages 1999 (5) TMI 597 - CESTAT NEW DELHI , where it was held that Department has not been able to establish that the assessees have surreptitiously procured such raw materials for use in the manufacture of aerated waters. This, coupled with the fact that the assessees have further explained for the difference in quantity of concentrates purchased and quantity accounted for, renders the duty demand on account of suppression of production, unsustainable - demand in the present case also set aside. SSI exemption in respect of production of clearances of Bisleri Club Soda - Held that - the ratio of the Hon ble Apex Court judgment s in Sri Ganganagar Bottling Co. Ltd. 2007 (8) TMI 23 - SUPREME COURT OF INDIA , is very much applicable to the present case since the facts are pari materia. In the facts of Sri Ganganagar Bottling case the brand name owners were themselves not manufacturing CITRA aerated water and therefore was alleged that the franchisee who was in fact manufacturing the same would not be eligible for SSI exemption - demand not sustained. SSI exemption - LFFL, brand owners of CITRA - Held that - when PBPL was not within the knowledge of the fact whether LFFL had crossed the aggregate value of clearances prescribed for SSI benefit and further, when the belief that the former had not, was strengthened by way of certificates issued by the Range Superintendents, even as on 12.4.1993, the benefit of SSI exemption cannot be denied to PBPL not only for the impugned period covered by N/N. 175/86-CE but also that covered by N/N. 1/93-CE - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Allegation of clandestine removal and suppression of production.
2. Wrong availment of SSI exemption for goods using the brand name "Bisleri Club Soda."
3. Wrong availment of SSI exemption for goods using the brand name "CITRA."

Detailed Analysis:

1. Allegation of Clandestine Removal and Suppression of Production:
The demand of ?9,61,561/- was based on the Sales Manager Report (SMR) submitted by PBPL to PEL, which indicated higher sales figures than those recorded in the RG-1 register. The appellants argued that the SMR was inflated to meet sales targets and should not be the sole basis for alleging clandestine removal. They cited the Tribunal's decision in the case of Moon Beverages, which held that a single factor like SMR could not substantiate clandestine removal without corroborative evidence such as excess raw material procurement or higher electricity consumption. The Tribunal found that the Moon Beverages decision applied to this case, as there was no additional evidence of clandestine removal. Therefore, the demand of ?9,61,561/- was set aside.

2. Wrong Availment of SSI Exemption for Goods Using the Brand Name "Bisleri Club Soda":
The demand of ?11,44,571/- was based on the allegation that PBPL was not eligible for SSI exemption because Aqua Minerals Pvt. Ltd. (AMPL), the brand owner of Bisleri Club Soda, did not manufacture the goods themselves. The appellants contended that there was no legal requirement for the brand owner to manufacture the goods to qualify for SSI exemption. They cited the Supreme Court's decision in the case of Sri Ganganagar Bottling Co., which held that the notification is goods-specific and the unit should be eligible for exemption in respect of the specified goods. The Tribunal found that the facts of the present case were similar to those in Sri Ganganagar Bottling Co., and thus, the demand of ?11,44,571/- was set aside.

3. Wrong Availment of SSI Exemption for Goods Using the Brand Name "CITRA":
The demand of ?38,30,633/- was based on the allegation that Limca Flavours & Fragrances Ltd. (LFFL), the brand owner of CITRA, exceeded the statutory limits of aggregate value of clearances, making PBPL ineligible for SSI exemption. The appellants argued that they relied on certificates issued by the jurisdictional Superintendent certifying LFFL's eligibility for SSI exemption. They also cited the Supreme Court's decision in Brindavan Beverages, which held that SSI exemption could not be denied if the assessee was not aware of any deliberate fragmentation by the franchisor to avail SSI exemption. The Tribunal found merit in the appellants' contention and noted that there was no evidence of collusion or misrepresentation by PBPL. Therefore, the demand of ?38,30,633/- was set aside.

Conclusion:
The Tribunal found in favor of the appellants on all three contentious issues. Consequently, the total demand of ?59,36,765/- with an equal penalty on PBPL was set aside. The penalties imposed on Shri Arun G. Nagar, M/s. Parle Bisleri Pvt. Ltd., Ramesh Chauhan, S.K. Motani, and Kadeer Khan were also set aside, and their related appeals were allowed.