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TMI Blog2010 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... id brand names in question, the Tribunal was justified in holding that the appellant will not be entitled to the benefit of SSI exemption - 1160 of 2006 - - - Dated:- 15-12-2010 - Mukundakam Sharma and Anil R. Dave, JJ JUDGMENT 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, on the issue of misuse of brand name by the appellant, the Tribunal came to the conclusion that M/s. PEL did in fact, own the brand name and held that the defence of the appellant that the flavours were marked only by virtue of a code and not identified as a brand did not hold water. To quote the Tribunal:- "25. In view of the language of the explanation [Explanation VII of Notifications No. 175/86 and 1/93] quoted above it is necessary to see whether the code names on the flavours indicate a connection in the course of trade between the specified goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearance of Limited Companies are not be clubbed together, and held that the Circular was concurrent in operation with that of Notification No. 175/86. However, since this Court, according to the Tribunal, also held that the same Circular was not applicable after the issue of Notification No. 1/93, the appellant could not claim SSI exemption from 1.4.1993 to October, 1993. To this effect, the appeal was partly allowed. Aggrieved by the decision of the Tribunal, the appellant has approached this Court by way of Civil Appeal. 8. The appeal was listed for hearing and we heard the learned counsel appearing for the parties who have ably taken us through all the relevant documents on record and also placed before us the various decisions which may have a bearing on the issues raised in the present appeal. 9. The issues in contention between the parties have been filtered through the stages of appeal, and before this Court we are primarily faced with two of them, which are: I. Whether the value of production/clearances of the three Companies, namely the appellant, M/s PEL Ltd. and M/s PIL Ltd. can be clubbed for the purposes of ascertaining the eligibility to exemption under Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the companies are indeed interdependent and possibly even related through financial control and management, the value of clearances has to be clubbed together in the interests of justice. The operation of Circular 6/92 admittedly protected entities like the appellant prior to the commencement of Notification No. 1/93, but certainly not after the same. In this case, this Court has been presented with a preponderance of evidence to suggest that the companies are related not only in terms of financial control, but also through management personnel. In Modi Alkalies and Chemicals Ltd. and Ors (supra) this Court has held that two basic features which prima facie show interdependence are pervasive financial control and management control. We, therefore, proceed to apply the said two tests to the facts of this case. 13. R. Chauhan, P. Chauhan, R.N. Mungale and S.K. Motani, who are the directors of the appellant herein are among those who also serve on the Board of Directors in M/s PEL Ltd. and M/s PIL Ltd. It is also a fact on record that that M/s. PEL advanced an interest-free loan of Rs. 1 crore to the appellant, which was used for purchase of raw material by the latter (As evidenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the flavours which are commercially transferable. 15. Furthermore, it is expressly clear that the code names on the flavours indicate a connection in the course of trade between the specified goods and such person using such name or mark. The flavours in question, which were earlier manufactured by M/s PEL Ltd. and supplied to the franchise holders, were subsequently allowed to be made by the appellant. The franchise holders were in effect buying the very same flavours from the appellant and were placing orders by referring to the same code name, as is evident from the respective purchase orders. The users of the flavours, i.e. M/s PEL Ltd., M/s PIL Ltd. and specified bottlers are all interconnected since the latter group comprises franchisees of PEL and thus there is more than an iota of evidence to prove the connection in the course of trade between the flavours and the entity using the flavours through code names. Furthermore, the ownership of the code names by M/s PEL Ltd. is clearly evidenced from the fact that these flavours were developed, researched and concocted by M/s. PEL Ltd in its research labs. That M/s. PEL Ltd. have given the brand names to the flavours and allow ..... 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