Commissioner of Central Excise,
Bangalore Vs. M/S Brindavan
Beverages (P) Ltd. and Ors  Insc 697 (15 June 2007)
Dr. ARIJIT PASAYAT & S.H. KAPADIA
(With Civil Appeal No.4398 of 2003) Dr. ARIJIT PASAYAT, J.
1. Challenge in these appeals is to the judgment of the Customs, Excise and
Gold (Control) Appellate Tribunal, Bangalore (in short the 'CEGAT'). By the
impugned judgment appeals filed by the revenue against the common order of
Commissioner of Central Excise, Bangalore (in short the 'Commissioner') was
dismissed. The Commissioner had dropped the proceedings initiated vide a show
cause notice dated 4.5.1995 relating to availability of exemption under
Notification Nos. 175/86 and 1/93.
2. Background facts, as projected by the appellant are as follows:- Vide the
Show Cause notice, it was alleged that M/s Brindavan Beverages Pvt. Ltd.,
(hereinafter referred to as 'BBPL') who were engaged in the manufacture of
aerated water and were the franchise holders to M/s. Parley Exports Ltd.
(hereinafter referred to as PEL) in whose brand names they had manufactured
goods viz., Limca, Thums Up, Gold Spot, had also manufactured aerated water in
the name and style of Citra which was said to be brand name of M/s. Limca
Flavours and Fragrances Ltd., (hereinafter referred to as 'LFFL'), a holding
Company of M/s. PEL. They had also manufactured goods under the brand name of
"Bisleri Club Soda" with the permission of M/s. Acqua Minerale (P)
(hereinafter referred to 'AMPL'] and they had availed and paid duty under
exemption notification 175/86 and 1/93, for the said Citra and Bisleri Club
Soda bottles, claiming that the brand name owners, were registered with the
Directorate of Industries as a Small Scale Unit and, therefore, they were also
eligible for exemption under the said Notifications.
On the basis of intelligence gathered that M/s Parley Exports Ltd., and
Parley International Ltd., (hereinafter referred to as 'PEL and PIL'
respectively] were under-valuing the concentrate and thereby evading central
excise duty, investigations were caused to be made by Officers of Directorate
General of Anti-evasions and the Central Excise Jurisdictional Officers.
Enquiries were caused and statements were recorded and pursuant to the said
operations, according to Revenue, M/s BBPL availed the SSI exemption
fraudulently in the conspiracy with AMPL and PEL by willfully making a mis-
statement and suppressing correct facts and central excise duty amounting to
Rs.39,51,028/- for the period from July 1993 to January 1994 was demandable by
invoking the longer period of limitation provided under the Central Excise Act,
1944 (in short the 'Act'). It was also found that the Assistant Collector had
passed an order permitting BBPL, SSI exemption on "Bisleri Club Soda"
and "Citra". However, it was noticed that the facts disclosed in the
enquiries conducted were not placed before the Assistant Collector in as much
as the investigations conducted revealed that PEL are the owners of brand name
such as "Bisleri" for club soda and "Citra" and LFFL was
under- evaluating the goods to keep the turn-over below the exemption limits.
It was also alleged that LFFL who own "Citra" brand were engaged in
the manufacture of flavours in their factory at Ahmedabad had availed exemption
of the SSI Notifications as amended and had permitted franchise of small users
the "Citra" brand name on terms and conditions and consequently the
franchise also started availing the SSI benefit which was not eligible as the
investigations revealed that "Citra" was developed and launched by
the R & D efforts of PEL and was got registered as a brand name of LFFL. It
was alleged that they have deliberately fragmented the manufacture of flavours
to avail the benefit. The Parle Group Management, centrally and commonly,
controlled the production including all aspects thereof were managed and
controlled by the executives of PEL.
If the shelter of corporate veil was lifted and removed, then it was seen
that for purposes of other taxes it was one, but for notifications under
Central Excise, they were shown as separate persons. Therefore, the value of
clearance of all excisable goods removed from PEL, PIL and LFFL were to be
taken together to determine the eligibility of LFFL. The benefits which LFFL
were availing of the SSI claimed by them were not available to them and since
there was a deliberate fragmentation of manufacture to avail SSI exemption, the
benefit of exemption on "Citra" was not eligible. Therefore, excise
duty amounting to Rs.79,48,115/- for the period October 1990 to January 1994 in
respect of "Citra" was demandable by invoking the longer period of
limitation in view of the deliberate suppression of facts.
3. Noticees submitted their replies. On consideration of the submissions,
proceedings initiated on the basis of the show cause notice dated 4.5.1995.
Revenue preferred appeals before the CEGAT.
4. After considering the rival submissions, the CEGAT held that the order of
the Commissioner dropping the proceedings did not suffer from any infirmity.
5. The CEGAT did not find any substance in this plea as there was no such
brand name as "Bisleri Club Soda" which has been registered by the
Trade Mark Authorities. What was registered for use under the Trade Marks Act
is the word "Bisleri" for goods "soda" being aerated water
and words "Bisleri for Bear and non-alcoholic beverages and syrups".
The CEGAT found that no evidence was brought on record to indicate the words as
used exist as a trade mark or any other marks belonging to another person who
is not entitled to the benefits under the Notification.
6. In support of the appeals, learned counsel for the appellant submitted
that the CEGAT has lost sight of the fact that there was necessity to lift the
corporate veil and find out as to who was the real owner of the brand name. It
was submitted that the supervision and the decision making power lay with
somebody else and not the respondents.
7. Mr. A. Subba Rao, learned counsel for the appellant has submitted that
respondent BBPL had the franchise of M/s Parley Exports Ltd. under whose brand
name they had manufactured aerated water in the brand names of Limca, Thums Up
and Gold Spot. Respondent had also manufactured aerated water in the name and
style of Citra said to be the brand name of M/s. Limca Flavours and Fragrances
Ltd., a holding company of PEL in which 50% shares are held each by Shri Ramesh
J. Chauhan and Shri Prakash J Chauhan both of whom happened to be brothers.
Additionally, the respondents also manufactured goods under the brand name of
"Bisleri Club Soda" with the permission of M/s Acqua Minerals (P)
Ltd., New Delhi. With reference to the various positions and as Directors in
LFFL, PEL, AMPL, PIL, Apex Traders, M/s Coolade Beverages (P) Ltd. And M/s
Delhi Bottling Co. Ltd. it is submitted that either Shri Ramesh J Chauhan or
Prakash J Chauhan or persons related to him or being members of the Board of
Directors of various companies had right to create facet to avail the benefits
under the Notification in question. Since these concerns could not have availed
the benefits they have created dummy concerns to avail the benefits. It is
submitted that in the circumstances there was necessity to lift the corporate
veil to find out the true owners.
8. Per contra, learned counsel for the respondents submitted that there is
no material that the respondents had ever been parties to the so called
arrangement, even if it is accepted for the sake of arguments but not conceded,
that such arrangement was in reality made. There was no material brought on
record to show that the respondents had any role to play in such matters as
alleged. Even the show cause notice did not refer to any particular material to
come to such a conclusion. Therefore, the Commissioner and the CEGAT were
justified in holding that the respondents were entitled to the benefits.
9. We find that in the show cause notice there was nothing specific as to
the role of the respondents, if any. The arrangements as alleged have not been
shown to be within the knowledge or at the behest or with the connivance of the
respondents. Independent arrangements were entered into by the respondents with
the franchise holder. On a perusal of the show cause notice the stand of the
respondents clearly gets established.
10. There is no allegation of the respondents being parties to any arrangement.
In any event, no material in that regard was placed on record. The show cause
notice is the foundation on which the department has to build up its case. If
the allegations in the show cause notice are not specific and are on the
contrary vague, lack details and/or unintelligible that is sufficient to hold
that the noticee was not given proper opportunity to meet the allegations
indicated in the show cause notice. In the instant case, what the appellant has
tried to highlight is the alleged connection between the various concerns. That
is not sufficient to proceed against the respondents unless it is shown that
they were parties to the arrangements, if any. As no sufficient material much
less any material has been placed on record to substantiate the stand of the
appellant, the conclusions of the Commissioner as affirmed by the CEGAT cannot
11. Therefore, on the facts noticed by the Commissioner and the CEGAT, there
is no scope for interference in these appeals which are accordingly dismissed.
There will be no order as to costs.