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TMI Blog2012 (7) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... E/8/2002, E/10/2002 & E/12/2002 - 197-199/12 - Dated:- 31-1-2012 - Dr. CHITTARANJAN SATAPATHY, Mr. D.N.PANDA, JJ. Shri Ravinder Narain, Advocate, Smt. L.Maithili, Advocate, Sri C.Saravanan, Advocate, Sri Ajay Aggarwal, Advocate For the Appellant/s Shri Parmod Kumar, SDR For the Respondents For the Respondents Per D.N.Panda All the three appeals came up for fresh consideration pursuant to the directions of the Apex Court in Civil Appeal Nos.3494-3496 of 2004 filed by Revenue. While remanding the matter, Apex Court observed as under :- The Tribunal without even adverting to the basic facts and without making any independent analysis of the agreement between the parties but only relying on the earlier decision in Kwality Ice Cream Co. Vs. Commissioner of Central Excise, Chandigarh 2002 (145) ELT 584 (T) allowed the appeal filed by the assessee. It is no doubt true that the Tribunal has copiously referred to the findings in the said Judgment but without saying anything as to how those findings are applicable to the facts at hand. The Tribunal disposed of the appeal with the observation that the findings in the earlier case are clearly applicable to the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dard prescribed by BBLIL under the supervision of the latter. (para 16 of OIO). BBLIL was taken over later by Hindustan Lever ltd.(in short, HLL). (para 19 of OIO). 6. Aforesaid background revealed that KIMPL as a brand owner of the ice cream Kwality was manufacturing ice cream till Nov 95 and thereafter manufacture of the same was done by KFRL from Dec 95 onwards till Feb 99 (the period under adjudication). 7. Adjudication was made in respect of all the three parties i.e. KIMPL, KFRL and HLL on the allegation that price was not sole consideration in respect of clearance of ice cream by KIMPL to BBIL and by KFRL to BBIL for part of the period and to HLL thereafter. For the period from 1.4.95 to Nov 95 duty demand of Rs.1,14,469/- was made on KIMPL followed by penalty of Rs.1 lakh under Rule 173Q of Central Excise Rules, 1944 issuing show cause notice dated 9.5.96. KRFL was adjudicated in two spells. First spell relates to the period Dec 95 to Feb 99 proposed by SCN dt. 3.7.2000 raising duty demand of Rs.21,22,455/- in respect of clearance made to BBLIL (later known as HLL) and subsequent period comprising 1.2.2000 to 31.12.2000 raising duty demand of Rs.10,70,652/- was proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s between them are not on principal to principal basis as well as the whole sale market exists only in the hand of M/s.HLL who has managerial control and control over the products, and hence the differential duty become demandable from them. 11. Since factual scenario in all the three appeals was same, all these appeals were heard analogous. 12. Ld. adjudicating authority framed the issue in para 38 of the impugned order to decide as to whether the value adopted by KIMPL and KFRL was the normal price in terms of Section 4 (1) (a) of Central Excise Act, 1944 or not. Considering various averments and the arguments made by the parties during different periods, he held that BBLIL and HLL controlled the affairs of KIMPL and KFRL; advances were given by HLL to KFRL; BBLIL and HLL had controlling interest over KIMPL and KFRL (Ref. Paras 67, 59 and 55 of OIO) and came to the conclusion in para 67 of OIO that there was more than one reason on record to hold that the value declared by M/s.KIMPL and KFRL for the purpose of levy of duty of excise was not normal price in terms of Section4(1) (a) of Central Excise Act, 1944 and clearance value was depressed for which assessable value was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kwality Ice Cream shall make necessary investments for upgradation, modification or alteration in the existing factory/manufacturing facilities as per required by BBLIL subject to necessary approvals and pending such investments M/s. Kwality Ice Cream shall not be responsible for any deficiency. On M/s. Kwality Ice Cream making such investment for upgradation or modification, the pricing agreed upon is on a formula which has taken into consideration the investments made by M/s. Kwality Ice Cream for upgradation, modification. The Tribunal rightly arrived at the conclusion that pricing in terms of clause (6)(iii) would not lead to the conclusion that the transaction was not one between principal to principal. 14. Noticing that Kwality Ice Cream was not under control of BBLIL/HLL as it was not under any obligation to shut down its unit or even move to some other location against its will and it also was the option of Kwality Ice cream to discontinue or close down the manufacturing facility and there was nothing to show that BBLIL/HLL can compel Kwality Ice Cream to close down the factory or move it from its current location, apex court held in para-24 of its judgement as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y SCN as to how appellant was influenced by BBLIL to carry out its manufacturing activities and fix sale price. Purchase of raw material was only done from agreed source to maintain quality and standard of finished goods. Fixation of sale price was done in terms of agreed conditions and that was not found faulty. Therefore, adjudication needs to be set aside. 17. Ld. Counsel appearing on behalf of KIMPL adopting arguments of ld. Sr. Counsel in KFRL submitted that when authorities dropped earlier proceeding for the period 16.11.95 to 13.3.96 in the case of KFRL in terms of OIO dt. 5.9.96, and that reached finality without any appeal by Revenue, there is no case for Revenue since facts and circumstance remain unchanged. Accordingly, KIMPL should neither be penalized nor any duty is demandable from it. 18. Ld. Counsel appearing on behalf of HLL submitted that when there is no duty leviable and no prejudice was caused to Revenue, penalty is not imposable under Rule 209A of Central Excise Rules, 1944. 19. Ld. Representative appearing on behalf of Revenue submitted that agreement relied upon by BBLIL/HLL and KFRL prove controlling interest held by BBLIL / HLL which influenced asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of rates, so computed shall be mutually agreed upon and communicated from time to time in writing. 23. In terms of para 4 of the aforesaid agreement, the quality standard was ensured to be maintained by KFRL under supervision of BBLIL. In terms of Para 8, it was agreed between the parties that in case of failure of KFRL to supply the agreed quantity, BBLIL was at liberty to buy that from outside at the cost of KFRL. The sole licensee and user of trade mark was BBLIL (later on taken over by HLL). Because entire product manufactured by KIMPL and KFRL were taken by BBLIL/HLL and certain machineries were supplied by HLL to KFRL (Ref. Para 20 of OIO), it was held by Revenue that assessable value of the goods was depressed because BBLIL/HLL had managerial control over KFRL and price was not sole consideration and parties were related persons. When pricing formula was agreed by the parties, how depression to the assessable value was made was failed to be justified by Revenue. No objective analysis of cost data, no comparison of price of competitors goods was done. Neither adjudication order nor arguments of Revenue brought out any evidence of flow back. Managerial control was mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not make them related persons. If the manufacturer or buyer are one and the same person behind curtain in that circumstance, holding them related person applying section 4 of Central Excise Act, 1944 may be possible. But merely holding of controlling interest does not ipso facto influence assessable value for which no re-determination thereof is called for. Price was sole consideration in the case in hand and there was no flow back established by Revenue through any evidence. Nothing came to record to establish that HLL had monopoly over KFRL. Because quality of goods need to be maintained, making advance for procurement of raw material does not alter sale price when cost of manufacture was computable taking cost of raw materials, inputs, packing materials, manufacturing costs and manufacture s profit margin into consideration which remained undisturbed by no contrary evidence led by Revenue. Manufacturer and buyer had their separate commercial interest without being related to each other. Merely bringing machineries for upgradation does not make parties related persons when object of each other is different. Trade practice many a times call for advance payments to meet requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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