TaxTMI 
TaxTMI 
1990 (11) TMI 259
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....mount of Rs. 5/- per crate as container hire charges besides the ex-factory price charged for the sale of aerated waters. There is also an understanding between the appellants and the wholesale dealers to the effect that the dealers have to lift a particular number of crates in a year and if they fail to do so they would be liable to pay at the rate of Rs. 3/- per crate to the appellants by way of compensation for the quantity short purchased. During the relevant period the appellants received Rs. 4,35,176/- towards the compensation. The appellants are also availing the benefit of exemption Notification No. 175/86. They have availed the said benefit on the value of clearances for the year 1986-87 at Rs. 7,23,483.60 and for the year 1987-88 at Rs. 6,84,080/-. 2. Adjoining their factory is located the factory of M/s. Vidharbha (P) Ltd. at plot No. C-102 M.I.D.C. Indl. Area. Since the factory was closed for annual maintenance and repairs from 12th July, 87 M/s. Vidharbha Beverages requested the appellants to execute urgent orders for supply of Mr. Pik (Soda). The appellants manufactured the said Mr. Pik in their factory, a trial production of 97 crates was made on 20th July, 87 and....
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....lue. 7A. On the question of eligibility of exemption under Notification 175/86 he held that the clearances from both the factories should be clubbed. According to him "there is a common planning/market strategy adopted for the products of both the notices." "That there is a financial flow back and no separation of financial interest as much as the services of common staff is being utilised without any proper accounting or payment, and services of Shri Hasmukh Das Panchmatia are rendered to M/s. Vidharbha Beverages without any financial consideration. This is further proved by the fact that M/s. Spring Fresh Drinks (P) Ltd., Nagpur has suppressed the production of aerated waters and attempted to divert the same in the name of Vidharbha Beverages, Nagpur." He also observed that on earlier occasion the appellants tried to divert the production of 157 crates of Campa Cola in the name of M/s. Vidharbha Beverages. Therefore, according to him there is financial interest in both the units and the relations of both the companies are not based on commercial terms and they are running the business as a family business. He also held that the Directors and the appellant company and that of V....
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....ps. 11. It is an admitted fact that the appellants, and M/s. Vidarbha Beverages (P) Ltd. are limited companies, and therefore, they have independent and separate legal identity. The claim of the appellants is that they are entitled for the benefit of the notification. In order to consider their claim we may refer to the language used in the notification. It says that "by a manufacturer from one or more factories upto the value limit of Rs. 30 lakhs etc." 12. The Collector says that there is financial flow back, therefore the clearances from M/s. Vidarbha Beverages should be clubbed. He does not refer to any material on record with reference to the audited accounts, payment of salaries, expenses incurred by both the companies and the income received - how apportioned between the two companies. The close relationship between the Directors of the two companies and the situation of both the companies in adjacent plots may not be by itself enough to establish that the clearances from Vidarbha Beverages is on behalf of the appellants. There is no evidence to establish that the appellants in fact manufactured the goods on their behalf in M/s. Vidarbha Beverages Factory. The Collecto....
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....by the appellants for non-performance of the contract by the dealers as quality discount." In other words the appellants are collecting from the buyers i.e. customers the notional cost for not lifting the contracted quantity of the aerated water. It is actually compensation for non-performance of the entire contract. This is an income or profit for the manufacturer, but not the price for the manufacture of aerated water. It is not the case of the department that the price of the aerated water is depressed by making a provision for compensation for short lifting the contracted quantity. In the absence of such evidence the profit earned or income cannot be added to the assessable value. In this context we may refer to the observations of the Supreme Court in CCE v. Indian Oxygen [1988 (36) E.L.T. page 730 (SC)] which are to the following effect: "It is true that the gas being a commodity of peculiar nature had to be delivered in cylinders but these cylinders might be supplied either by the supplier as an ancillary activity or brought by the consumer or purchasers at their own risk and cost. For purchasers taking it in their own cylinders supplied by the to there was no charge for ....