9911796707
TMI Blog2006 (1) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Central Excise, Hyderabad, had dropped the proceedings by OIO No. 45/2003, dated 22-9-2003. Therefore, the appellants moved an application for recall of the interim Stay Order directing them to pre-deposit Rs. 25 crores. They had taken additional grounds which had not been urged by the lower authorities in E/590 591/2004 inasmuch as they had contended that the mixing of flavours and adding essences to it which were duty paid and clearing the same to their franchisee holders does not amount to manufacture and, therefore, the Revenue s contention that they had collected Royalty, Service and Commission charges and not added the same on the value of the food flavours supplied to their franchisees was not dutiable and not to be added. The Tribunal, after due consideration of the misc. applications in Appeal Nos. E/590, 591 and in E/1051/2004, allowed their prayer for modification of the stay order including the misc. application filed for raising additional grounds by Misc. Order No. 1008 to 1010/2004 and Stay Order No. 1217/2004, dated 13-12-2004 and directed the appeals to be listed for out of turn hearing on 14-3-2005. The Revenue was aggrieved with this order and filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of the Supreme Court, jurisdictional High Court or a Special Bench of the Tribunal. It held that in spite of prima facie case, if the assessee is directed to pre-deposit duty and penalty, then it would cause undue hardship to the assessee. It also noted that absence of the financial hardship in such a case would be no ground to decline the dispensation of pre-deposit under the proviso to Section 35F of the Act. It has been held that the power to dispense with such deposit is conferred under the authorities and if it is not exercised under such circumstances, then this Court will require it to be so exercised. 3. After taking us through the plethora of judgments on the aspect pertaining to pre-deposit, rendered by the Apex Court, High Courts and Tribunals, the learned Senior Counsel proceeded to argue on the additional grounds raised by them in the appeal. It was pointed out that the misc. application for raising additional grounds in the first three appeals was allowed by the Tribunal along with the stay applications and that has not been challenged by the Revenue before the Single Member Bench of the High Court. The Single Member Bench, while remanding the matter, has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended in the first place that :- (a) the remand order of the Tribunal (Final Order Nos. 907 908/2003, dated 8-7-2003) to re-consider their prayer has not been complied with by the Commissioner and, therefore, the impugned orders are not speaking orders and are required to be set aside. He took us through the grounds made out by them in the reply to the SCN. It was pointed out that a specific stand has been taken by them that the duty calculation has not been properly made by the Revenue. At best considering even the revenue s case, the total duty liability would be only Rs. 38 lakhs. In this context he has produced all the invoices to show that the royalty, service and commission charges were towards the fixing of trade mark McDowell by the manufacturers of Indian Made Foreign Liquor (IMFL) i.e. the Franchise holders. It has been pointed out that the food flavours are also sold to other units who are not franchise and the price has remained the same. In such a situation, the royalty, service and commission charges are received not for food flavours but it was only for the bottling of liquor by the franchises on using the trade name of the appellant. Therefore, the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out from the record that the department was fully aware of all these correspondences including the Superintendent s letter to the DC not to initiate the proceedings and, therefore, the question of invoking larger period in all the three demands does not arise. He submits that the demands and SCN dated 11-4-2002 for the period April, 1997 to March, 2001 for Rs. 35 crores would be clearly barred by time. So also, he pointed that the SCN dated 8-3-2004 for demands for April, 2001 to February, 2002 would be barred by time except for a small period of six months. The demands are to an extent of Rs. 33.36 crores. The learned senior Counsel submits that if they are directed to pre-deposit the entire amounts, then severe financial difficulties would arise and, therefore, the appellants should be given full waiver as they have a very strong case of succeeding in the matter. In view of (i) the mixing of food flavours does not amount to manufacture; (ii) the royalty, service and commission charges were received for using the trade mark of IMFL and it has no connection with the sale of the food flavours to the franchisees; (iii) that the blending of flavours sold to the franchises in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They had undervalued the price of food flavours and had received the extra consideration in the nomenclature of royalty, service and commission charges and, therefore, the same were required to be added to the assessable value of the food flavours. He pointed out that food flavour is excisable and the mixing of several other essences would bring into existence new goods and merely because it does not carry a different name and kept as a trade secret that by itself cannot be held that it is not a new product. He pointed out that the internal correspondence of Superintendent to the Deputy Commissioner, relied by the assessee, cannot be taken into consideration. There was suppression of facts and, therefore, larger period was invokable. He pointed out that the appellants do not have a financial hardship and the revenue interest is also required to safeguarded in the light of the observations made by the Single Judge of the Karnataka High Court. 8. After detailed consideration and several queries raised by the bench on the prima facie nature of the case in the light of the documents and on the aspect that the Commissioner had not considered the various remand directions given by the ..... 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