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TMI Blog2003 (10) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... ri A.R. Madhav Rao, learned Advocate, submitted that the Appellant No.1 manufacture Aqua Minerals water in their unit No. l (Water unit), Hot and Cold Water Dispenser in their unit No. 2 (Dispenser unit) and Polycarbonate bottle and PP bottles in their unit No. 3 (Bottle unit); that all these units are located at different places in Noida; that Mineral water and Dispensers were removed after obtaining Central Excise Registration and following the procedure thereof; that, however, no separate registration had been taken for Bottle unit since the bottles were used captively and necessary endorsement in this regard was obtained on the Central Excise Registration for the water unit. 2.2 He, further, submitted that the granules required for manufacture of 12/24 litre bottles were removed from the water unit and bottles manufactured out of such granules were received back in the water unit under the cover of internal challans; since the said bottles were of durable and returnable nature and the approximate life of these bottles was 40 cycles, the proportionate cost of the bottle is included in the value of mineral water; that they stock transfer mineral water in 12/24 litre to their d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsed subsequently which does not satisfy the condition of Notification No. 15/94; that this finding is incorrect in law; that it has been held in Wearwell Tyre and Tube Industries v. CCE, Final Order No. 424/97-D, dated 19-5-1997 that once Modvat credit has been reversed, it cannot be said that credit of duty paid on the inputs has been taken. Reliance has also been placed on the decisions in Raman Boards Ltd. v. CCE, 1988 (36) E.L.T. 615, Franco Italian Co. Ltd. v. C.C.E. [2000 (120) E.L.T. 792 (T-LB) = 2000 (40) RLT 295 (CEGAT)] and Chandrapur Magnet Wires Ltd. v. CCE, 1996 (81) E.L.T. 3 (S.C.) wherein the Supreme Court has held that reversing the credit would be equivalent to the Appellants having not taken Modvat credit on the inputs used in the manufacture of exempted final product. 4.2 Alternatively, he claimed the benefit of Notification No. 214/86-C.E. as the proportionate cost of the bottle was included in the price of the mineral water; that for the same reason, benefit of Notification No. 67/95-C.E. would be available and reliance has been placed on the decision in the case of Black Diamond Beverages Ltd. v. CCE, [1998 (103) E.L.T. 340 (T) = 1997 (22) RLT 37 (CEGAT)]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs . 5.3 Alternatively, the learned Advocate mentioned that if the transactions with the franchisees are regarded not to be at arm s length, then necessary abatement towards retail margin is admissible. He relied upon the decision in the case of Modi Xerox Ltd. v. C.C.E., 1998 (98) E.L.T. 12 (S.C.). 5.4 Finally he mentioned that demand has been made under Heading 85.16 of the Schedule to the Central Excise Tariff Act which is wrong as the water dispenser has been classified under Heading 84.79 by the Assistant Commissioner, under Order-in-Original dated 27-3-98. 6. The learned Advocate also claimed the benefit of Notification No. 1/93-C.E., dated 28-2-1993 contending that the value of bottles is not to be included in the aggregate value of clearances since the bottles were captively consumed. He relied upon the decision in the case of Universal Electrical Industries v. CCE, 1994 (70) E.L.T. 279. He contended that no penalty is imposable on the Appellant-company either under Section 11AC of the Central Excise Act or under Rule 173Q of the Central Excise Rules, 1944; that moreover the entire period involved is prior to 28-9-96 and Section 11AC of the Act came into force on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission on the gross sale proceeds of mineral water; that franchisees would also give a security ranging from Rs. 1 lakh to 6 lakhs; that they would also independently give the publicity to the products of the Appellants; that thus the transactions with the franchisees were not at arms length; that the Appellants thus reduced the assessable value from Rs. 7,072/- to Rs. 5,800/- for Deluxe model and from Rs. 6,887/- to Rs. 5,500/- for regular model; that Shri Deepak Goel, initially stated that the security deposits received by them were interest free which he later retracted; that this shows that the Appellants did not pay any interest on the security deposit received from franchisees. He finally mentioned that penalty on all the three Appellants is imposable; that both Appellants No. 1 and 2 as Directors, are responsible to discharge their obligations under the Central Excise Law which they had not discharged. 10. In reply, the learned Advocate submitted that the publicity given by the franchisees is in addition to the publicity given by the Appellants and is confined to the areas of operation of the franchisees only; that it is now settled law that the advertising undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. [Emphasis provided]. It is thus apparent that debit entry has to be made in the Credit account before removal of the product. In Chandarapur Magnet case the assessee reversed the credit entries of duty paid on inputs which were utilised for manufacture of duty free copper wires. In Wearwel Tyre Tubes Industries P. Ltd. case also the Appellants had made the reverse entry before officers visited the factory. 12.2 We observe that the benefit of Notification No. 67/95-C.E., dated 16-3-95 is available only if the cost of the packaging materials or containers is included in the assessable value of the final products under Section 4 of the Central Excise Act. The Tribunal in the Appellants own matter, vide Final Order Nos. A/715-28/99-NB, dated 18-8-99 has remanded the matter to the Department to consider as to whether the cost of bottles was included in the assessable value of mineral water. We, therefore, remand this aspect to the adjudicating authority for reconsideration with liberty to both the sides to adduce evidence to substantiate their claim of inclusion/non-incl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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