1. Appeals 3548 to 3553/02 have been filed by the assessee and others against the Order-in-Original No. 21/Meerut/02 dated 24.5.2002 passed by the Commissioner of Customs and Central Excise, Meerut. By this order the assessee Swadeshi Detergent Ltd (Appeal 3548/02) was directed to pay duty of Rs. 19,69,91,673/-. The order also imposes penalty of an equal amount on the assessee, under Section 11AC of the Act. The order also imposes a penalty of Rs. 1 crore on the assessee under Rule 173Q (2) of the Central Excise Rules. It imposes penalty of Rs. 1 crore on Godrej Soaps Ltd., Rs. 50 lakhs each on A.B. Godrej, Sudhir Awasthi and Rs. 25 lakhs on Jatinder Gurtu and Rs. 15 lakhs on S.C. Kaul.
2. Two Appeals namely E/3474/02 and 3475/02 have been filed by two other appellants namely Procter & Gamble Hygiene & Health Care Ltd and Procter & Gamble Home Products Ltd against the same order imposing penalty of Rs. 1 crore each on them under Rule 209A of the Central Excise Rules.
3. Godrej Industries Ltd (the assessee) is a company carrying on the business of producing detergent and they filed Price Lists in Form IV up to March 1994 declaring inter alia that wholesale price at which the goods were sold by Godrej Soaps Ltd (now known as Godrej Industries Ltd). The assessee claimed deduction from duty from the assessable value on various counts like equivalent freight, octroi, CST, turnover tax etc. The price lists were approved provisionally under Rule 9B read with Rule 173C of the Central Excise Rules, after allowing certain deductions. The assessing authority found that the show cause notice dated 23.5.1996 to the appellant in Appeal 3548/02 proposing to allow deductions in respect of Excise Duty only but disallowing various other deductions and proposing to approve Price Lists on that basis.
Accordingly, the Adjudicating Authority, namely, the Assistant Commissioner proposed to disallow other deductions claimed by the assessee. It resulted in the Assistant Commissioner passing Order-in-Original dated 31.7.1996. The assessee filed an appeal to the Commissioner (Appeals) and the Appellate Authority by Orders dated 11.2.1997 and 2.4.1998 remanded the matter against both the orders.
Appeals were filed before the Tribunal and the Tribunal by its order dated 30.4.1999 in Appeal 3941/97 arising out of Order-in-Appeal 204/97 dated 11.2.1997, the Delhi Bench of the Tribunal, after hearing the parties remanded the matter to the Assistant Commissioner to consider the matter in accordance with the judgment of the Supreme Court in MRF Ltd v. CCE 1995 (77) ELT 433 (SC). The other appeal filed against Order-in-Appeal No. 219 dated 2.4.1998 is still pending in the Tribunal. In the meantime, in the present case, a show cause notice dated 22.4.1998 was issued mentioning inter alia reading as under: 4.1 An Enquiry was initiated by the Central Excise Officers of Mumbai-II Commissionerate to check whether M/s. Godrej Soaps Ltd., (GSL) situated at Pirojshanagar, Vikroli, Mumbai-400 079, engaged in manufacture of Toilet Soaps & other products,have undervalued the assessable value of toilet soaps of certain brands during the period of their alliance with M/s. Procter & Gamble Godrej Ltd. (PGG).
4.2 The investigations were carried out which revealed following facts.
(a) M/s. Procter & Gamble Godrej Ltd. was promoted by M/s. Procter & Gamble Far East Inc. (PGFE) and members of Godrej family (Godrej Designees), in Dec. 1992. The 51% share capital was held by PGFE and remaining 49% was held by Godrej Designees. The main object of the company was to market & Sell toilet soaps, sell & distribute cosmetics toiletries etc. The family members holding share capital of PGG were headed and represented by Mr. Adi B. Godrej, who was also the Director of Godrej & Boyce Manufacturing Co. Ltd. (G & B), Managing Director of GSL and SDL.
(b) GSL, PGFE, PGI, PGG and Godrej family (i.e. Godrej Designees represented by Shri. Adi B. Godrej) entered into a joint venture agreement (JVA) dated 24th June 1993, made affective from 16.12.1992 (RUD-2). As per the JVA, PGFE and Godrej designees 'wished' to form a Joint Venture Company and they participated in the equity capital of the PGG to the extent of 51% by PGFE & 49% by Godrej designees (Clause 1.1 of JVA); that PGG was to manufacture synthetic detergent bars; market, sell & distribute toilet soaps (Clause 1.2 of JVA); that PGG was to sell & distribute the consumer products & pharmaceutical products manufactured in India by PGI and GSL and associate companies of PGI in India. The JVA contains several conditions, agreements & arrangements defining the activities, responsibilities arrangements for sale and marketing business of GSL, Transfer of Employees, Protection of Mutual Interests, Management of the Company, Brand arrangements etc. There were several agreements, which were annexed to the JVA, or were related with the joint venture.
(d) The JVA entered into as above, was a peculiar arrangement between PGG and other parties. As per the Clause 1.4 of JVA, GSL was required to transfer certain personnels (i.e. 412 persons) working/involved in their marketing, selling and distribution of consumer products, to PGG. PGI was also required to transfer certain personnels to PGG, but it was not compulsory and the number was also far less. It was also agreed that both the parties will co-operate to effect the orderly "transition" of these persons. Such personnels were given the benefit of continuity of service while transfer of employment' to PGG, alongwith party of remuneration, conditions of services and gratuity (Clause 7.4 of JVA).
(e) GSL was required to arrange the trade marks/brands of toilet soaps to be licenced to PGG, which were to be marketed by them (Clause 2.6 & 8.1 of JVA). It was also stipulated that "such arrangement will be co-terminous with the JVA and manufacturing agreements. GSL was also required to sell and assign to PGI certain detergent & scouring products trade marks (including trade mark 'Trilo' of detergent bar and key detergent powder) for a consideration (Clause 2.4 to JVA).
(f) GSL, vide an assignment deed dated 23.11.1992, (RDD-9) assigned all the trade marks/brands owned by them to G & B, w.e.f.
31.12.1992, (except the trade marks, interalia, TRILO and KEY which were to be assigned to PGI). The consideration for such assignment was Rs. 6 Crores. G & B licenced these trade arks/brands again to GSL w.e.f. 01.01.93 w.e.f. 31.07.96, however the said brands had been restored to GSL in view of the Termination of J.V.A. dt.
23.07.96 (RUD-8).
(g) As per the manufacturing Agreement (Trilo) dt. 22.01.1993 (RUD-11) between GSL and PGI effective from 01.04.93, GSL was to manufacture 'Trilo' brand detergent bars and PGI was to purchase the said detergent bars at a negotiated price subject to condition that for the initial two years, such purchases were not to exceed 11500 Tonnes and out of which 500 tonnes were to be procured from GSL's Malanpur Plant. The 'Trilo' brand was sold to PGI as per the terms of JVA and PGI allowed GSL for use of the said brand for the manufacture of the same. As per Clause/Article 11 of the agreement, GSL was allowed to sub-contract the manufacturing of the product to any other party or parties.
(h) For the JVA, both GSL and Godrej Designees were represented by Shri. Adi B. Godrej. Shri A.B. Godrej was also the M.D. of GSL and SDL and Director of G & B. (i) The investigations also revealed that there was a letter of Intent (LOI) issued by Procter & Gamble, USA to GSL, dated 30.09.92.
On the scrutiny of the said LOI, it was observed that certain trademarks and know how in respect of detergent and scourers, were to be purchased by PGI. The LOI also provided that PGI had to enter into a manufacturing agreement with Godrej for manufacture of 'TRILO' detergent bar; that for initial two years, PGI will guarantee purchase of 11,000 M.T.; and that until JVC begins to manufacture detergent bar, the rest of PGI's requirement were to be sourced from GSL's Malanpur Plant.
(j) The exhibit 9.1A annexed to the J.V.A., contains interalia formula A. As per formula A, the selling price was required to be determined adopting the following Formula: selling price = Total Cost x 1.05, which elements were required to be included in the "total cost" as aforesaid were also mentioned in the said exhibit 9.1A. The perusal of the elements of cost reveals that the expenses incurred on advertisement, Sale promotion and the like on toilet soap were not included in the "Total Cost" as aforesaid.
10. The discussion made in the preceding paras appear to indicate that Shri. Sudhir Awasthi was incharge of the SDL and had been reporting to Adi. B. Godrej in regard to the activities conducted in SDL. It also appears that representative of the Godrej was Director of SDL Managing Director of GSL and representative of the Godrej Designees who held 49% share in the PGG created in terms of JVA. It also appears that pricing patterns of Toilet soap manufactured by GSL and the Trilo brand of detergent bar were inter-relating. The discussions which have already made in this notice appear to indicate that the said discussions are replete with such facts indicating that SDL, GSL, PGI/PGHPL, PGG had been carried on the joint business. It appears that activity under taken by one of them was influenced directly or indirectly by the other. They appeared to be so related with one another that one furthered the interest of the other. Therefore it appears that the omissions and commissions done by SDL were not isolated but were part of mode, method and contrivance devised by the Godrej Group companies and P & G Group to evade payment of duty on the products manufactured by, interalia, SDL. Therefore, the amount of Central Excise Duty as aforesaid, appears to be recoverable from them under Rule 9 (2) read with Section 11-A of the Act, by invoking extended period as provided in proviso to Section 11A (1) and they are liable to pay interest at the prevailing rate in terms of Section 11AB. Further since the SDL removed, from their factory, excisable goods without payment of Central Excise duty contravening Rule 9(1); did not furnish correct information in the GPI/invoice contravening Rule 52-A, did not declare correct assessable value in the price list contravening Rule 173-C, did not assess appropriate duty contravening Rule 173F, and did not follow all the Central Excise procedures contravening Rule 173G, they are liable to penal action under Rule 173-Q of the said Rules read with Section 11AC of the Act. It also appear that since they evaded payment of Central Excise duty and contravened several rules, as aforesaid, the land building, plant, machinery etc. as mentioned in 173-Q (2)(b) used in connection with manufacture, production, storage, removal of disposal of the offending detergent bars, are liable to confiscation under the said rule. Further the fats discussed in the earlier part of this notice appear to indicate that GSL, PGI, PGFPL, Shri Adi B. Godrej and Shri Sudhir Awasthi played pivotal role in evasion of Central Excise duty on detergent bars. In other words, it appears that each of them either acquired possession of or were concerned in transporting, removing, depositing, keeping, selling or purchasing of the offending goods.
Therefore, each of them are liable to penalty under Rule 209A. 10.1 In addition to the above responsible persons, Shri Jatinder Gurtu and Shri. S.C. Kaul were also closely associated with the factory management. Shri Gurtu was factory Manager and Shri Kaul Admn. Manager. The aforesaid facts seems to be clear from answers to the questions No. 1, 4, 5, 13, 18, 22 and 33 of the statement dt.
13.04.198 of Shri Guru (RUD-41). They were also responsible for the correct assessment of the products manufactured by SDL. However, they did not do so in order to fetch undue advantage to the Company intentionally abetted in the evasion of Central Excise duty. The fact that in response to a summons issued to Shri Awasthi Shri Gurtu was asked by the management of SDL to appear before the Superintendent (P), Central Excise, Ghaziabad, indicate the locus standi of Shri Gurtu in the affairs of SDL. Shri Kaul had been looking about the excise matter. And therefore, he was actively concerned with the activities relating to the offending goods. In view of the above it appears that both Shri Gurtu and Shri Kaul are liable for penal action under Rule 209-A of the said Rules.
4. The notice proposed to demand duty of Rs. 19,69,91,673/-, and also proposed to impose penalty under Rule 173Q and Rule 173Q (2B) of the Central Excise Rules on the assessee and also proposed to impose penalty under Rule 209A of the said rules on the other appellants. A reply dated 24.12.1998 to the show cause notice was filed by the assessee through its advocate and other appellants. The appellants filed written submissions before the Commissioner contending at page 434 and in the said submissions it was specially pointed out that the show cause notice as premature without jurisdiction and bad in law as it has been issued when the assessments were provisional. It was contended that the Assistant Commissioner finalised the assessment by his order dated 31.7.1996 and 17.1.1997. By orders dated 11.2.1997 and 2.4.1998 the Commissioner (Appeals) directed that the assessment should be finalised by applying the decision of the Supreme Court in Ujjagar Prints Ltd v. Union of India as the appellant Swadeshi Detergent Ltd was a job worker. The order of the Commissioner (Appeals) passed on 11.2.1997 was set aside by the Tribunal in Appeal E/491/97-A filed by the appellants by its order dated 13.4.1999 when the Tribunal directed that the assessment should be finalised by allowing deductions permissible as laid down in the judgment of the Supreme Court in MRF Ltd. v. CCE's case. It was also specifically mentioned in the said written submissions that there were various decisions on the High Courts and the Tribunal where the assessments were provisional, show cause notice could not have been issued. During the course of the argument, the learned Senior Counsel Shri Atul Setalvad along with Shri D.B. Shroff, advocate, emphasised before us that the matter has already been settled by the decision of the Tribunal in the case of Godrej Boyce & Mfg Co Ltd v. CCE 2002 (148) ELT 161. The learned Senior Counsel further argued in support of the proposition that in terms of the observation of the Tribunal in the said case at paragraphs 62 to 69, once the assessments are provisional, there could not have been issuance of the show cause notice. He also invited our attention to the judgments of the Supreme Court in the case of Godrej Boyce & Mfg Co Ltd in SLP 1282 of 1989 where the Supreme Court has specifically held as follows: "It is pertinent to note by inter-locutory order the petitioners were not interdicted from initiating or continuing the proceedings for final assessment, otherwise, than in pursuance on the basis of the impugned notices. The petitioners are entitled and at liberty to the inter-locutory order stands and even consistent with it, to proceed with any enquiry for the purpose of making the final assessment in the case. Nothing prevents the petitioners from utilising any material collected by them for purposes of making the final assessment and that such material does not cease to be available to the assessing authority by reason along of the circumstances that such material had been referred to and incorporated in the impugned notice. The interdiction of the stay is only in respect of proceedings pursuant to the impugned notices. The material contained in the impugned notices could be used as independent material to support the final assessment, of course, after affording an opportunity to the respondent to meet the case and after considering the cause shown. This the petitioners could do as part of the proceedings for assessment and is implicit in and incidental to it, without prejudice to petitioners' right and contention in the writ-petition.
In this view of the matter we should decline to interfere at this stage. The Special Leave Petition is disposed of accordingly." The learned Senior Counsel states that nothing prevented the department for issuing the notice after the assessment is finalised and use the same material for purpose of finalisation of the assessment as has happened in the case of Godrej Boyce referred to above. He states that whatever be the value at which the assessee sold, if they sold at a price which is commercially viable to them and he states specifically that is what is referred to in paragraph J at page 4 of the impugned order includes post manufacturing expenses and once the same is deducted the proper valuation for the purpose assessment could be arrived at.
5. The departmental representative emphasises that in paragraph J of the impugned order, the adjudicating authority has clearly brought out how there has been under valuation. He also invited our attention to paragraph 14 which reads as under: "14. PGG & GSL had agreed that GSL would sell the toilet soap manufactured by them to PGG & PGG would do marketing & distribution of the same. They had also entered into a manufacturing Agreement.
As per Clause of 9.1A of JVA, GSL was required to sell the toilet soaps at prices calculated in accordance with the formula in JVA. As per the said formula, the selling price was to be worked out as Total cost x 1.05 i.e. GSL was to earn a profit of 5% on the cost of production of toilet soaps. The elements of cost to be taken into consideration were also specified therein. Further, the formula was to be revised after the total sale of toilet soaps crossed 30,000 M.T. p.a. in a financial year.
The element of costs to arrive at the selling price of toilet soap did not include expenditure on advertisement, sales promotion etc.
GSL was not free to determine its own selling price but had to sell the goods only at predetermined profit above cost. This clearly shows the direct control on prices by a marketing company. It appears that it can not be said that toilet soaps were sold to PGG at a mutually negotiated price.
Moreover, as seem from LOI dated 30.09.02 the above said 'cost + 5%' formula was linked with pricing of 'Trilo' brand detergent bar. The transaction for Toilet soaps were between GSL & PGG and transaction of 'Trilo' bar between GSL & PGI. This nexus and pricing clearly shows that the pricing of toilet soaps as well as detergent bar were not on P to P basis." 6. He emphasised the fact that the combination of all the action of the persons in this case went to show that the entire transaction is not as clean as it is sought to be made. He also invited our attention to the statements of Awasthi referred in paragraph 12 and 13 of the impugned order which reads as under: "12. In his further statement recorded on 16.09.97, Shri Sudhir Awasthi interalia stated that he had submitted entire copies of the balance sheet of SDL for the year ending 31st March, 1993, 1994, 1995; that he had also submitted costing and selling price in respect of 'Trilo' detergent bar sold by GSL to PGI; that he was overall incharge of SDL and was reporting to Shri A.B. Godrej; that SDL was only a processor for GSL; that SDL used to hand over the goods (to GSL) against processing charges; that subsequently GSL used to sell the same (i.e. Trilo detergent bar) to PGI/PGHP; that during 1993-94 and 1994-95. SDL was not manufacturing any other detergent bar except 'Trilo'; that the raw materials were directly supplied by GSL to SDL; that initially GSL supplied 'Trilo'; detergent bar to PGI and subsequently to PGHP: that they continued to supply 'Trilo' till Feb.'95. He was pointed out that as per the costing details and selling prices submitted by him, it was evident that 'Trilo' was always sold at a price below the cost and he was asked to explain why 'Trilo' was sold at price below the cost and what were the elements of cost included in the details submitted by him. To this he stated that selling 'Trilo' below cost was a commercial decision and the details of cost included all elements of cost like raw materials administrative expenses, packing materials and processing charges. He further stated that SDL paid the excise duty on 'Trilo' detergent bar at PGI/PGHP's wholesale price; that the amount of excise duty was reimbursed by GSL to SDL from time to time; that GSL never supplied 'Trilo' to any other company than PGI/PGHP' that GSL was informing SDL about PGI/PGHP's wholesale prices of 'Trilo' bar that he was not in a position to submit details thereof as SDL and GSL's Sahibabad offices were closed due to Industrial Relations problems. On asking about the breakup of elements of cost he stated that he was not giving breakup of elements of cost since it would serve no purpose; that it included various elements of cost; that giving breakup of cost would take around thirty days; that he would provide the costing details, submitted by him duly attested by cost/chartered accountant in thirty days; that selling 'Trilo' bar to PGI/PGHP at a price below cost was a policy decisions taken by top team/board keeping in mind market condition, competition etc. After confronting with the fact that rights of 'Trilo' brand were sold by GSL to PGI's property, he was to how the factors such as competition and market condition affecting PGI's property were relevant in taking GSL's policy decision, Shri Sudhir Awasthi stated that since they were paying excise duty on their (i.e. PGI's) selling price and if their 'Trilo' brand was sold it would help SDL to manufacture; that there was no board revolution passed for this decision. He was asked since the competition and market conditions were factors affective to PGI, whether GSL was happy to bear some part of loss for PGI, he stated that the loss was SDL's.
13. In his further statement recorded on 09.12.97 Shri Sudhir Awasthi, interalia stated that the Manufacturing Agreement - TRILO dated 22.1.93 was terminated in 2 or 3 years; that he does not remember the exact period; that he had been shown the detergent bar termination Agreement dated 30.7.96 between GSL and PGHP. As Mr.
Awasthi in his statement dated 16.9.97, had claimed that SDL was paying duty on PGI/PGHP's wholesale price, he was countered with the price lists of SDL, certain GPI/Invoices of SDL and was asked to explain the basis of his claim, to which he stated that to the best of his knowledge the prices were on the depot prices of PGI/PGHP based on the letter dated 18.3.93 given by PGI. However, on pointing out that in the letter dated 18.3.97 PGI had quoted the purchases price of PGI form GSL and how he could say that the same is wholesale price of PGI, Mr. Awasthi could only say that he was not sure. Mr. Awasthi was countered with the costing and pricing details of 'Trilo' and Ariel detergent bar which showed that the same were sold at a price below cost in 1993-94 and 1994-95, and was asked why the selling prices were below the cost to which he stated that the same was a business decision. He stated that SDL had not started its operation as yet; that earlier he had stated that he could not give the breakup of cost of detergent bar as SDL was closed; that he wanted to say that as the factory was closed due to I.R. problems: giving such details would take long and could not be given immediately; that PGI/PGHP are purchasing detergent bars from GSL on outright purchase basis. He was shown letters dated 19.9.94, 17.10.94 and 24.10.94 issued by PGI to Mr. A.B. Godrej which discuss about the conversion charges to be paid by PGI to GSL for detergent bars of 'Trilo' and 'Ariel' brand and was asked if the agreement for the same was on P to P basis what was need for PGI to pay the conversion charges. To this, Mr. Awasthi stated that processing charges forms the component of total selling price from GSL to PGI. He stated that conversion charges paid by GSL to SDL was inclusive of charges for making Acid slurry which is an integral raw material (for making detergent bar). He accepted that the sale of detergent bars to PGI at a price not exceeding the cost was in accordance with terms of para 7 of the letter of intent dated 30.9.92 issued by P&G to GSL; that Ariel bar was not covered therein as it was introduced much later and it was not their brand. He was asked whether it is compulsory for a marketing company to be licensed user of the trade marks/brands and if so under which law and provisions, to which Mr.
Awasthi stated that he was not aware and he will get if clarified." 7. As far as the other two appeals are concerned, Appeal 3474 and 3475/02 Shri V.S. Nankani, the learned advocate states that the goods were purchased by Procter & Gamble Hygiene and Health Product Ltd, then known as Procter & Gamble India Ltd from Godrej Soaps Ltd (now known as Godrej Industries Ltd). As far as the other appellant Procter & Gamble Home Products Ltd is concerned, there was no transaction between the other appellant at all in the relation to TRILO. Therefore, invocation of Rule 209A of this Rules is not warranted. The learned departmental representative adopts the impugned order.
8. We have considered the submissions made by the learned Senior Counsel as well as that of Shri Vikram Nankani and the arguments of Shri Arun Chopra, the learned departmental representative for the department. It is an admitted fact that the assessments have always been provisional. This is evident by the fact that Orders in Original dated 31.7.1997 and 17.1.1997 prove that the assertion by the assessee before the adjudicating authority in its written submission have not been controverted effectively by the adjudicating authority. Therefore, the status of the assessment being provisional has not been challenged.
When that is the position, as decided by the various judgments of the Tribunal, as well as the judgments of the High courts and Supreme Court, latest one being ending with the judgment of the Supreme Court in the case of Serai Kella Glass Works Pvt Ltd v. Collector 1997 (91) ELT 497 it has to be held that the show cause notice could not be issued. This is what this Tribunal has held in the case of Godrej Boyce & Manufacturing Co Ltd v. CCE 2002 (148) ELT 161. Therefore, the impugned show cause notice could not have been issued. However, we have to state that whatever materials the department has, could always be utilised by them for purpose of assessing the goods in question, namely, TRILO as was observed bye the Supreme Court in the case of Godrej Boyce & Mfg Co Ltd v. Union of India (S.L.P. Civil No. 12824 of 89 and judgment dated 8.3.1990 which has been extracted above in the earlier portion of the order. Therefore, we allow the Appeals E/3548 to 3555/02 and order accordingly.
9. As far as the other two appeals are concerned, namely Appeal ER/3474 & 3475/02 are concerned, the appeals have been filed by Procter & Gamble Hygiene & Health Care Ltd and Procter Gamble Home Products Ltd. In the said order the only allegation made against them is in paragraph 4 at page 3 of the show cause notice which is extracted above. In the show cause notice at page 7 para 6.5 it is noted as follows: 6.5 In his statement dated 31.07.97 (RUD-20) Shri Sudhir Awasthi submitted Zerox copies of manufacturing agreements dated 22.01.93 entered into between GSL & PGI in respect of detergent bar of 'Trilo' brand and detergent powder of 'Key' brand and stated that these (two) agreements were not inforce at that time; that the agreement in respect of 'Trilo' brand detergent bar expired in two years; that agreement in respect of Key detergent powder expired with in 6-12 months, that GSL was allowed to use the brand Key and Trilo by PGI; that 'Trilo' was manufacturing at Swadeshi Detergent Ltd. (SDL) which is one of the Godrej Group Company and 'Trilo' was not manufactured at GSL's Vikroli plant. He further stated that as per JVA, GSL was to sell its manufacturing equipments at Malanpur plant to PGG, but as per the business decision it was not sold; that the above referred manufacturing agreements do not provide any cost formula for sale of detergent bars; that the agreement was P to P agreements based on cost of Raw Materials Plus Labour/Processing charges; that the elements of costs were not prescribed by PGI to workout the cost as PGI had no role to play in the costing. He further stated that the processing charges were charged by GSL by an agreed upon rate on Per Metric Tonnes (PMT). On asking whether he could provide the details of actual processing cost incurred by GSL & the charges charged by GSL to PGI, Shri Awasthi stated that he could not provide the same as the factory (i.e. SDL) is closed.
However, on asking if the details of actual processing charges could not be given, could be say if GSL could recover the actual cost of processing or the charges wars less then the cost, Shri Awasthi stated that they recovered full cost. He also deposed that the 'Trilo' bar was never made in Vikroli plant but small quantity might have been made at Malanpur Plant.
In his statement dated 31.7.1997 Awasthi is reported to have stated inter alia that the elements of cost were not prescribed by Procter & Gamble India Ltd to work out the cost, as Procter & Gable India had no role to play in the costing. In the order the adjudicating authority's observation is as under: "When we look into the entire transaction we have to bear in mind the statement made by Awasthi which is referred to in the show cause notice. He specifically states that Procter & Gamble India was not at all concerned about it. When that is the position it passes one's comprehension as to how the adjudicating authority could pass this type of finding. We are therefore of the view that the invocation under the peculiar circumstances of the case of Rule 209A of the Rules insofar as it relates to these two appeals at this juncture is not at all warranted. Invocation of Rule 209A will come only if the person who is charged with the violation of such rule is having the knowledge or having reason to believe that the goods were confiscable.
The question of confiscation will arise only if there is a violation of any rules and a proper notice has to be given. The notice under Section 11A could be given only after the relevant date. Therefore, the invocation of Rule 209A under the circumstances as far as these two appellants are concerned cannot be upheld. Even on merits here in view of the specific statement of Awasthi there cannot be any charge of Rule 209A against these two appellants. The appellant Procter & Gamble Home Products Ltd did not have any transaction with Swadeshi Detergent Ltd and Godrej Industries Ltd as far as detergent 'trilo' is concerned.
This product is the item in question before us in these appeals. We are therefore of the view that Appeals 3747 & 3475/02 are allowed and other appeals are remanded to the adjudicating authority to take action in accordance with law.