Parle Bisleri Pvt. Ltd vs Commr.Of Customs & Central ...

2. The facts may be stated in brief here. M/s. Parle Bisleri Pvt., the appellant, manufactures soft drink flavours which are assigned `code names', namely G-44T, L-33A, T-11PC, T-11P, R-66M, K- 55T and L-22L. During the period from years 89-90 to 93-94, the appellant availed of the benefit of Notifications 175/86 & 1/93 as an SSI unit. It is the holding company of M/s. Parle Exports Ltd. (PEL). The appellant sells its product to PEL, Parle International Ltd. (PIL) and franchise bottlers of M/s. PEL. It maybe stated at the outset that the changes the appellant underwent in its transformation from `M/s Limca Flavours and Fragrances Ltd' to `M/s Parle Bisleri Pvt. Ltd' bear no significance to the outcome of this appeal.

3. M/s. PEL uses the products sold by the appellant to manufacture Non-alcoholic Beverages Base (NABB). In addition to NABB, M/s. PEL also manufactures flavours as the appellant does. During the same period mentioned above, M/s PEL enjoyed the benefit of Notification No. 175/86 and 1/93 for the year 92-93 and 93-94. (Oct. 93). The flavours named above are researched and developed by PEL, but were allowed to be manufactured by the appellant with the code names given by PEL. The flavours are used in the manufacture of beverages like Gold Spot, Limca, Rimzim etc.

4. Consequent upon the visit to the factory premises and office premises of Parle Group of Companies at Ahmedabad and Bombay on 20.03.93 by the officers of the Directorate General of Anti Evasion (Central Excise), New Delhi on the basis of the information that M/s PEL and their Group Companies were indulged in evasion of Central Excise Duty, various documents were seized and the statement of key personnel recorded. As we have mentioned earlier, the order-in-original passed by the Commissioner of Central Excise and Customs withdrew the 3 demand for differential duty and found no case for imposition of penalty for any of the companies in question.

5. Before we move on to the appeal as it unraveled before the CESTAT, it is pertinent to note here that Notification No. 175/86 and 1/93 require that the aggregate value of clearances of all excisable goods from a factory by one or more manufacturer should not exceed Rs. 150 lakhs and Rs. 200 lakhs respectively in the preceding financial year. The allegations against the appellant before the CESTAT, then, were that the clearances of the appellant during the period from 1989 to October 1993 must be clubbed with that of M/s PEL and M/s PIL as they are effectively one and the same company, and thus the appellant is not entitled to the benefit of the aforesaid Notifications. It was also an issue of appeal before the CESTAT that the appellant herein was using the brand name belonging to another person (M/s PEL) who was not entitled to the benefit of the said Notifications. The third and final issue concerned the allegation of undervaluation of flavours by the 4 appellant, which resulted in an inaccurate assessment and hence the differential duty should be extracted.

15.Furthermore, it is expressly clear that the code names on the flavours indicate a connection in the course of trade between 13 the specified goods and such person using such name or mark. The flavours in question, which were earlier manufactured by M/s PEL Ltd. and supplied to the franchise holders, were subsequently allowed to be made by the appellant. The franchise holders were in effect buying the very same flavours from the appellant and were placing orders by referring to the same code name, as is evident from the respective purchase orders. The users of the flavours, i.e. M/s PEL Ltd., M/s PIL Ltd. and specified bottlers are all interconnected since the latter group comprises franchisees of PEL and thus there is more than an iota of evidence to prove the connection in the course of trade between the flavours and the entity using the flavours through code names. Furthermore, the ownership of the code names by M/s PEL Ltd. is clearly evidenced from the fact that these flavours were developed, researched and concocted by M/s. PEL Ltd in its research labs. That M/s. PEL Ltd. have given the brand names to the flavours and allowed them to be manufactured by the appellant, their holding company cannot hide the fact that M/s PEL Ltd were in fact, the owner of the code/brand names. This conclusion is fortified by the fact that 14 it was M/s PEL Ltd who transferred the right of the codes when they were sold to M/s. Coca Cola Company in November, 1993. Since the appellant was not the owner of the said brand names in question, the Tribunal was justified in holding that the appellant will not be entitled to the benefit of Notification No. 175/86 and 1/93 for the products with code names G-44T, L- 33A, T-IIPC, T-IIP, R-66M and K-55T which belonged to M/s PEL Ltd.

Issue II

16.After careful consideration of the issues in question and on a thorough reading of the facts on record, we are of the firm opinion that the appeal bears no merit. Consequently, we dismiss this appeal, but leave the parties to bear their own costs.

............................................J [Dr. Mukundakam Sharma] ............................................J [Anil R. Dave] 15 New Delhi, December 15, 2010.