2000 (9) TMI 99 - AT - Central Excise

Appellate Tribunal sides with M/s. Haryana Drinks Pvt. Ltd. in valuation dispute over soft drinks

HARYANA DRINKS PVT. LTD. Versus COMMISSIONER OF C. EX., NEW DELHI

HARYANA DRINKS PVT. LTD. Versus COMMISSIONER OF C. EX., NEW DELHI - 2000 (121) E.L.T. 718 (Tribunal) Issues involved:1. Valuation dispute regarding soft drinks produced by the appellant-assessee, M/s. Haryana Drinks Pvt. Ltd.2. Imposition of penalties on M/s. Haryana Drinks, BFCL, Director, and Manager of M/s. Haryana Drinks.Detailed Analysis:1. The primary issue in this case revolved around the valuation of soft drinks manufactured by M/s. Haryana Drinks Pvt. Ltd. The dispute arose from the Commissioner's decision to include the expenditure reimbursed by M/s. Britco Foods to M/s. Haryana Drinks for advertising, marketing, and sales promotion in the assessable value of the soft drinks for central excise duty assessment. The appellants argued that the sale price of the soft drinks had no connection with the purchase of beverage base from M/s. Britco Foods. They contended that the transaction between the supplier and M/s. Haryana Drinks should not impact the valuation of the soft drinks sold to dealers. The appellants cited a previous decision by a Larger Bench of the Tribunal in support of their argument.2. Regarding the imposition of penalties, the appellants challenged the penalties imposed on M/s. Haryana Drinks, BFCL, Director, and Manager of M/s. Haryana Drinks. They argued that since no duty demand was established, penalties should not be levied. The appellants specifically objected to the penalty imposed on the Director without proper identification or clarification of the alleged offense. They contended that the penalties were imposed without due consideration of the issues involved, especially concerning penalty imposition.Judgment Analysis:The Appellate Tribunal, after considering the submissions and reviewing the relevant legal provisions, found in favor of the appellants. The Tribunal referenced a previous case involving Coolade Beverages Ltd. & Ors., where it was established that the relevant consideration for valuation under the Central Excise Act is the amount flowing directly from the buyer to the assessee, not from third parties. Based on this precedent, the Tribunal concluded that the duty demand made in this case was contrary to legal provisions. Consequently, the duty demand was set aside, leading to the dismissal of penalties imposed on the appellants. The Tribunal also noted the lack of specificity in the penalty imposition, particularly the penalty on the Director, emphasizing the need for clear identification and evidence before imposing penalties. As a result, the appeals were allowed, providing consequential relief to the appellants.