Lumbini Beverages Pvt. Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the appellants are manufacturers of aerated water of pepsi brand having their bottling plant in industrial area at hajipur. the preventive team of muzaffarpur central excise division on a surprise visit intercepted a truck inside the premises of the appellant on 9-4-99. search of the goods loaded on truck and the premises, revealed 50 cartons of pepsi (1.5 litres) p.e.t. bottles containing 9 bottles each, loaded on the truck along v/ith 350 crates of 500 ml. bottles of other pepsi brands. also search of premises revealed recovery of 1593 (1.5 litres) p.e.t. bottles stored in a room inside the unit. the appellants could not produce any valid documents in respect of recovery of 1.5 litre bottles loaded on truck nor could they submit any valid document regarding 1593 nos. of similar.....

Judgment:
1. The appellants are manufacturers of aerated water of Pepsi brand having their bottling plant in industrial area at Hajipur. The preventive team of Muzaffarpur Central Excise Division on a surprise visit intercepted a truck inside the premises of the appellant on 9-4-99. Search of the goods loaded on truck and the premises, revealed 50 Cartons of Pepsi (1.5 litres) P.E.T. Bottles containing 9 Bottles each, loaded on the truck along v/ith 350 crates of 500 ml. bottles of other Pepsi brands. Also search of premises revealed recovery of 1593 (1.5 litres) P.E.T. bottles stored in a room inside the Unit. The appellants could not produce any valid documents in respect of recovery of 1.5 litre bottles loaded on truck nor could they submit any valid document regarding 1593 Nos. of similar goods stored inside their unit.

Invoice related to other products of Pepsi packed in 300 ml. bottles was however produced. The appellants admitted that the 1.5 litre Pepsi bottles recovered belonged to M/s. Annanda Marketing (Pvt.) Ltd., Vaishali and the appellant had given storage facilities to the said company. In support of their contention, the produced invoice bearing No. 2900, dated 26-3-99 issued by M/s. Pepsico India Holding Ltd., Charaktala, West Bengal in the name of M/s. Annanda Marketing (Pvt.) Ltd., Hajipur, covering the impugned goods.

2. A show cause notice was issued alleging violation of Rules 51A, 52A and Rule 173H of the Central Excise Rules, 194.4, inasmuch as that excisable duty paid goods of nature similar to their finished products were allowed to enter in their factory premises and retained therein without proper permission and without valid reason and were cleared from their premises without any documents (invoices), and they were asked to explain as to why the said goods should not be confiscated and penalty should not be imposed upon them under Rule 173Q, Rule 52A and Rule 209 of the Central Excise Rules, 1944.

3. While deciding the case the adjudicating authority observed that the room where the impugned goods had been stored was in the premises of their main factory and falls within the definition of factory and the Board's Circular No. 451/17/99-CX, dated 6-4-99 covered those cases where different duty paid goods of same management/manufacturer which are manufactured in a different unit can be entered into the factory for loading on the same truck or conveyance. This case did not fulfil the conditions of the circular as above and further the assessee had stored the duty paid goods inside their premises which is not permitted as per the circular. The fact that the goods have been manufactured in a different unit, are duty paid, are stored in a place where there is no provision to manufacture such goods was not relevant in the context of this case and violation of Rule 173H read with Rule 51A stood proved beyond doubt. With the above observations, he ordered confiscation of the goods under Rule 209(i) (b) and Rule 52A(8) of Central Excise Rules, 1944 and truck under Section 115 of the Customs Act as made applicable to Central Excise matters by Notification No. 68/63, dated 4-5-63 as amended and gave option to the assessee to redeem the goods and truck on payment of fine of Rs. 15/000/- and Rs. 30,000/- respectively. He also imposed penalty of Rs. 15,000/- on the assessee for alleged contravention of the Central Excise Rules, 1944.

4. Appeal against the above order did not succeed before Commissioner (Appeals).

5. Shri K.K. Bhattacharjee, ld. Consultant and Shri M.S. Dey, ld.Advocate appearing for the appellants submitted that there is no dispute about the fact that the goods in question were manufactured and cleared on payment of duty by M/s. Annanda Marketing (Pvt.) Ltd. They are not capable of manufacturing the seized goods. The Central Board of Excise and Customs has given a general permission for loading of parts consignment of their own product along with the goods manufactured by others. They have also submitted that in the month of March, 1999, an application was made to the Chief Commissioner of Central Excise, Patna seeking his permission to bring duty paid goods in their factory, which application is still pending with him. He also submits that the Tribunal in the case of Autolec Industries Ltd. v. Collector of Central Excise reported in 1992 (57) E.L.T. 350 (Tribunal) has held that no penalty is imposable if duty paid goods other than those manufactured in the factory are received in the factory premises. He has also submitted that the provisions of Rule 173H are not applicable inasmuch as no permission under the said Rule is required for storage of duty paid goods inside the factory premises.

6. Shri A.K. Pandit, ld. JDR, appearing for the Revenue reiterates the reasoning of the authorities below.

7. I have considered the submissions of both sides. It is admitted that the appellants are not manufacturing 1.5 litre P.E.T. Bottles in their factory. They have also produced an invoice issued by M/s. Pepsico India Holding Ltd. in the name of M/s. Annanda Marketing (Pvt.) Ltd. covering the impugned goods. The authorities below have not accepted the appellant's defence on the ground that the Board's circular relied upon by them only permits an assessee to bring the goods manufactured in other factory when both the factories belong to the same manufacturer. They have also observed that in their application written to the Chief Commissioner, they have nowhere disclosed the name of M/s.

Annanda Marketing (Pvt.) Ltd. However, I find that the appellants have filed an application to the Chief Commissioner for bringing the one 1.5 litre P.E.T. Bottle and 330 ml. Aluminium cans of various branded aerated water manufactured by other manufacturer in their factory premises inasmuch as they do not have any facilities to manufacturer, even to be packed in their factory and they arc required to bring the goods in their factory premises for removal along with their own product to their various customer who insist upon supply of both types of goods. Merely because the name of M/s. Annanda Marketing (Pvt.) Ltd. has not been mentioned in the said letter will not make the same as invalid. I also note that the Tribunal in the case of Autolec Industries Ltd. referred (supra) has held that if an assessee brings the duty paid goods of other manufacturer in his factory, which goods are different than the one manufactured in his own factory, no penalty is imposable upon him. Trade notice issued by Vadodara Collectorate Trade Notice No. 99/92, dated 23-12-1992 is also to the effect that permission under Rule 51A is required only in respect of the goods manufactured by an assessee or similar goods manufactured by other manufacturers. Inasmuch as the impugned goods are not similar to the goods manufactured by the appellants, the confiscation of the same and the imposition of the penalty upon the appellants is neither justified nor warranted. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellants.