LexPARLE BISLERI PVT. LTD. versus COMMR. OF CUSTOMS & CENTRAL EX., AHMEDABAD
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[2010] 14 (ADDL.) S.C.R. 851 PARLE BISLERI PVT. LTD. v. COMMR. OF CUSTOMS & CENTRAL EX., AHMEDABAD (Civil Appeal No. 1160 of 2006) DECEMBER 15, 2010 [DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.] A B Central excise Act, 1944 - Excise duty - Appellant, holding company of PEL, manufacturing flavour, assigned c code name by PEL - Appellant selling flavours to PEL company, PIL company and franchise bottlers - PEL using product sold by appellant - PEL also manufacturing flavours as appellant - SS! Exemption under Notifications No. 1751 86 and No. 1193 CE dated 28.02.93 - Claim by the appellant o I - PEL also availed the exemption benefit during the same period as claimed by appellant - Held: Appellant not entitled to the benefit of the Notification for the products with code names which belonged to PEL since appellant was not the owner of the brand names - As regards, clubbing of valuation E of production/clearance of the companies, three companies were intertwined in their operation and management - Purported fragmentation of manufacturing process was to avail SS/ exemption - Evidence proved the connection in the course of trade between the flavours and the entity using the F flavours through code names - Flavours were earlier manufactured by PEL and supplied to franchise holders, but were subsequently allowed to be made by the appellant - Flavours were developed, researched and concocted by PEL - PEL were in fact, the owner of the code/brand names. The appellant is the holding company of PEL. It was engaged in the manufacturing of soft drink flavours which were assigned certain 'code names' given by PEL. The appellant was selling its product to PEL, PIL and G 851 H 852 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R A franchise bottlers of M/s. PEL and M/s. PEL was using the same. Mis. PEL also manufactured flavours as the appellant. The appellant availed of the benefit of Notifications 175/86 and 1/93 for the years 1989-1990 to 1993-1994 and M/s PEL for year 1992-1993 and 1993-1994 8 (Oct 1993). The Revenue Officers found that M/s PEL and their group companies had indulged in evasion of excise duty. The Revenue Officers demanded excise duty and imposed penalty. The Commissioner set aside the demand raised. On appeal, the Tribunal held that the undervaluation of flavor by appellant was not C sustainable; that M/s. PEL owned the brand name and it could not be said that the flavours of the appellant were marked only by virtue of a code and not identified as a brand; that for the years 1989-1990, 1990-1991 1991-1992 and 1993-1994 (till Oct 1993) the appellant would not be D entitled to the benefit of Notification No. 175/86 and 1/93 for the products with code names which belonged to M/ s. PEL; and that the effective financial control and management emanated from a common core and, therefore, the companies could well be said to be inter- E dependent and even inter-related. The Tribunal partly allowed the appeal. Therefore, the appellant filed the instant appeal. The question which arose for consideration in the F instant appeal was whether the value of production/ clearances of the three companies, namely the appellant, Mis PEL Ltd. and M/s PIL Ltd. could be clubbed for the purposes of ascertaining the eligibility to exemption under Notification No. 1/93 CE dated 28.02.93; and whether the G Tribunal was correct in denying the benefit of the Notification by treating the product code name as a 'brand name' within the meaning of Explanation VIII to the Notifications. Dismissing the appeal, the Court H PARLE BISLERI PVT. LTD. v. COMMNR. OF CUSTOMS & 853 CENTRAL EX., AHMEDABAD HELD: 1.1. The Directors of the appellant are among A those who also serve on the Board of Directors in M/s PEL Ltd. and M/s PIL Ltd. Mis. PEL advanced an interest- free loan of Rs. 1 crore to the appellant, which was used for the purchase of raw material by the latter, as evidenced from the balance sheet. The flavours being manufactured by the appellant were developed by Mis PEL at their R & D Lab at Bombay, whose services were at the disposal of the appellant. They were at one point of time manufactured by Mis. PEL and admittedly, owned B by them. The three companies were intertwined in their c operation and management. Therefore, a careful scrutiny of the· records establish that the two basic features, pervasive financial control and management control, were prese
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