1998 (7) TMI 393

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ee and has licence from the owner of the trade mark to manufacture particular branded beverages. The manufacturers of the NABB prescribes a formula according to which it requires that the beverages will be manufactured. The formula contemplates use of specified quantities of NABB and other raw materials in order to arrive at a given quantity of the beverages. According to this formula, one unit of NABB should give to M/s. Parle Beverages and M/s. Thums Up 400 cases of the drinks, and in the case of M/s. Voltas Ltd. of Pepsi 567 cases. Each contains 24 bottles of 250 ml each). 2. The officers of the department on examination of records of the manufacturers found that the quantity of drinks which was produced felt short of the quantity that could have resulted by applying the formula. The shortfall was 1.77, 1.28 and 2% in the case of Parle, Thums Up and Voltas. Notice was accordingly issued demanding duty on the quantity of drinks represented by this percentage which the department was of the view had been manufactured and cleared without payment of duty. Each of the notices invoked the extended period. The Commissioner in each of the three orders confirmed the demand for du....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... recorded. With one exception, none of the persons concerned with the production of the commodity had agreed that there was either a contractual requirement generally practicable or that it was possible to produce the quantity of the beverages as specified in the formula. While they say that it is their attempt to adhere to the formula in the case of production of the drinks they also say that it is not possible for various reasons. Prakash Jha, Managing Director of M/s. Parle & Thums Up has stated that it is technically not possible to achieve for the formula because it does not provide for wastages caused during start up and shut down and on account of substandard production. R.P. Mugale, Chief Executive of Parle, takes the same stand. C.G. Hegde an employee of Parle International, another franchisee also states that the yield of 400 crates in the formula is theoretical. The same view is expressed by R.N. Ranade the Production Manager of Voltas. The exception is of Krishnan, the Production Manager of Thums Up who says that it is the bounden duty of the franchisee to achieve the production of 400 cases. He however, also says in the same statement that "we try our best to achieve o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ste only occurs when production commences i.e. start up loss. In any event the Commissioner does not quantity the loss on account of start up loss deficiency attributable which he admits exists. 10. The question of how much loss is attributable to the waste is not of any great significance to the central issue required to be decided. That issue is whether duty was demanded on a quantity of production of excisable goods based upon the consumption of single raw material. It has been consistently held by the Tribunal that production of commodity cannot be taken only assuming the raw material. In Padmanabh Dyeing & Finishing Work v. C.C.E. - 1997 (90) E.L.T. 343 the Tribunal set aside the order of Collector demanding duty on a quantity of processed fabrics determined entirely by the electricity consumption of the assessee. In Lili Foam Industries (P) Ltd. v. C.C.E. - 1990 (46) E.L.T. 462 the Tribunal took into account the fact that raw materials other than one had not considered by the department been shown to have been used for the quantity of finished products on which the duty was demanded in striking down the demand. In V.K. Thampy v. C.C.E., 1994 (69) E.L.T. 300 the Tribun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... factors mentioned in the rule are present simultaneously. The rule does not say so nor is it can be capable of being so interpreted". This observation does not support the view that production can be determined on the basis of one raw material alone, as has been done in this case. The Court in coming to its conclusion took note of the fact that the accounts were found fabricated and untrue. There is no such allegation here. 12. The position in Standard Pencils P. Ltd. v. C.C.E. - 1996 (86) E.L.T. 245 as follows. The Collector had determined the quantity of eyebrow pencils manufactured on the basis of formula mentioned in "MICAL Test Register" and the quantity of four essential raw materials. Before the Tribunal the appellant accepted these norms. Tribunal ordered that the quantity of eyebrow pencils removed without payment of duty be worked out on the basis of quantity of four essential raw materials used exclusively in the manufacture of eyebrow pencil as indicated in the raw material account on the formula adopted by the Collector. The decision therefore is to be confined to a situation where there is an admission as to the acceptability of formula of production. 13.&....