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CASE NO.: Appeal (civil)  3417-3425 of 2002

PETITIONER: Commissioner of Central Excise, Bangalore

RESPONDENT: M/s Brindavan Beverages (P) Ltd. and Ors

DATE OF JUDGMENT: 15/06/2007

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T (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) Ltd.  (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.

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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.

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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

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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 be faulted.   

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.