ORDER
Lajja Ram, Member (T)
1. In this appeal filed by M/s Delhi Bottling Co. (P) Ltd. (hereinafter referred to as ‘DBC’), the matter relates to the inclusion of the amounts separately collected by DBC by raising subsidiary invoices in the name of Co-operative All India Advertisements, from their customers to whom ‘ they were supplying the beverage base, while determining the assessable value of such beverage base. The Department had alleged that the value mentioned in the regular sale invoices as well as the value collected separately through subsidiary invoices constituted the value of the beverage base manufactured by DBC. The appellants were availing of the benefit of exemption Notfn. No. 120/75-CE dated 30.4.1975 and had declared the value collected through regular sale invoices only. The Department had alleged that the value mentioned in the regular sale invoices as well as subsidiary sale invoices constituted the value of the goods and for assessment under Notfn. No. 120/75-CE dated 30.4.1975 the full invoice price will be taken into consideration. The price separately collected through parallel sale invoices and the facts of separate collection had been suppressed from the Department. The DBC had pleaded that the separate collections in addition to the declared prices of the beverage base were to promote the sale of the beverages themselves and were incurred for advertisement and publicity by the appellants on behalf of their customers. The Additional Collector of Central Excise, Delhi, who adjudicated the matter, demanded Central Excise Duty amounting to Rs. 88,605.50 leviable on the value of the goods collected on parallel sale invoice w.e.f. 17.6.1983 to 17.11.1983 under Rule 9(2) of the Central Excise Rules, 1944. A personal penalty of Rs. 9,000/- was also imposed on DBC.
2. The matter was posted for hearing on 7.5.1996, when Shri D.N. Mehta, Advocate, appeared for the appellants. Shri G.D. Sharma, JDR, represented the respondents/Revenue.
3. Shri D.N. Mehta, learned Advocate, stated that the appellants were engaged in the manufacture of beverage base as well as aerated water produced from such beverage base. They were also supplying beverage base to the different bottlers under franchise agreements. Under one invoice, the cost of the beverage base was being recovered from the bottlers, and separately they were collecting additional charges in the name of advertisements. He explained that the advertisement was for the brand name owned by the appellants and for the aerated waters in whose production the beverage base was used. He contended that these advertisement charges were not for the beverage base, but for the aerated waters in which such beverage base was used. It was his contention that these separate charges recovered from the bottlers were not includible in the assessable value of the beverage base. In support of his arguments, the learned Advocate referred to number of decisions. He mentioned that there was no clandestine removal and the bottlers were not their related persons. The advertisement charges had nothing to do with the beverage base which did not require any advertisement.
4. In reply, Shri G.D. Sharma, learned JDR, submitted that two separate invoices were raised by the appellants and the charges recovered by both invoices were for the base. The rate at which the second invoice was raised was relatable to the base. In fact, with a view to evade payment of central excise duty, the value of the base was bifurcated and a part of the value was collected clandestinely in the garb of Co-operative All India Advertisements. He stated that for the purposes of Notfn. No. 120/75-CE dated 30.4.1975 the value of both the invoices was to be taken as the invoice value. These separate invoices were not submitted by the assessee along with their RT-12 returns. There was a total debit entry for both the invoices in a consolidated account of the individual buyers of the base. The learned JDR submitted that the case law referred to by the learned Advocate for the appellants had no application to the issue under consideration in this appeal. He pleaded for the rejection of the appeal.
5. We have carefully considered the matter. The appellants DBC were engaged in the manufacture of beverage base for aerated water drinks like, Gold Spot, Limca, Thumbs Up etc. They themselves were also engaged in the manufacture of aerated water drinks from such beverage base. The beverage base was also supplied to various bottlers under franchise agreements. Under such an agreement, bottlers were required to obtain the supply of beverage base from the DBC and were required to follow various conditions with regard to the manufacture, packing price, marketing etc. The DBC were collecting the price for their beverage base supply to the franchise holders; at the same time they were also collecting separate sums in the name of advertisements from such franchise holders. These separate sums collected in the name of advertisements were not disclosed to the Department and no Central Excise Duty was paid on these sums.
6. It is seen from the records that the bills for advertisement charges were raised simultaneously with the drawing up of the invoices said to be for the price of the base, with identical serial No., date and the buyer, for the same consignment of goods, as mentioned in the other invoice said to be for the price of the base. Once these charges were collected, a consolidated debit entry adding together the sums of both the invoices (one said to be for the price of the base, and the other for the advertisement charges), was made in the customerwise ledger maintained by the appellants.
7. The so-called Co-operative Advertisement Scheme as seen from annexure ‘B’ at page 32 of the paperbook, was proposed on their own by the DBC. The extra charges on this account were recovered while supplying the beverage base. These extra charges were said to be relatable to the supplies of the base, but were claimed to be for the advertisement of the aerated water drinks manufactured by their franchise holders. In their communication dated 9.11.1993 (annexure ‘E’ at page 56 of the paperbook) they had stated that the advertisement was of the “Name” under which the aerated waters was sold by the bottling companies. In their communication dated 17.9.1984, it had been stated that no advertisement material was supplied to the bottlers and that they themselves had undertaken the advertisement. It is, however, seen that the scope of advertisement and publicity had been mentioned in the proposal for the Co-operative Advertisement Scheme that “the scheme would cover display of Ice Boxes, Bottle Coolers with printed logos of each of the above mentioned beverages, free beverage supply to dealers in the market, Gold Spot Jungle Book Scheme; Gold Spot Mickey Mouse Scheme; exhibition of Walt Disney films in cinema auditoriums, displays at various centres of sports activity of printed boards, banners, counters, stalls etc. in respect of the beverages; free distribution of flickers, dealer boards, danglers, T Shirts and giving of various gift articles and Thums Up Scheme of collecting fun-bottles in exchange for gift like openers, flickers, fresebee, mini-cricket bats and balls, mini football, boxing gloves etc.” If no material was supplied to the bottlers from whom these extra amounts were collected, then it is not clear as to whom they were supplied and at what consideration.
8. It may be stated that the aerated water industry has a number of special features. The brand name owners undertake advertisement to publicise their product. The bottlers are appointed under agreement with specific conditions. The agreement is not only for the trade mark but covers the whole area of the product, production and marketing including the various factors which promote the marketability of the particular brand. In fact, the beverage is not known by the name of the bottler but by the brand name. The advertisement in such a situation is directly relatable to the manufacturing activity of the appellants. When the appellants were advertising, they were advertising for themselves and it could not be said that their advertisement did not enrich the value of their product and did not enhance its marketability in the trade. In the circumstances, the advertisement cost should form part of the value of their product beverage base.
9. Under Notfn. No. 120/75-CE reference is made to the invoice price charged by the manufacturer for the sale of the goods. In a case where more than one invoice is issued, the invoice price will be the price of all such invoices. The invoice prices has to be a genuine, correct and actual price, and that except the relationship of seller and buyer the invoice price should not be influenced by any other relationship or consideration. In the case of M/s. Jeypore Sugar Co. Ltd. v. Collector of Central Excise & Customs , the Tribunal had observed that the invoice value assessment under Notfn. No. 120/75-CE was not admissible to assessee after giving a declaration which was not factually truthful. The Tribunal also observed in para 9 of their order that the assessee could not be absolved of their responsibility to disclose the material fact of actual price realisation which had a bearing on the duty due from them and that if it was not done, then this definitely constituted suppression and justified the application of the Proviso to Section ll-A(1) under which duty could be recovered within five years from the relevant date. In the case before us, the invoice value did not reflect the full value and the invoice on whose basis the central excise duty was paid was not the only invoice and that the totality of the circumstances establish the suppression of the vital facts.
10. The fact that extra collections were being made from the buyers of their beverage base through separate invoices was suppressed from the central excise department. No approval was sought for non-inclusion of these extra collections while determining the assessable value of the beverage base. As to what is a suppression, is a question of fact depending upon the circumstances of each case. In the case before us, it was not a mere omission, but a wilful non-disclosure. As held by the Hon’ble Supreme Court in the case of Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise , whether there was suppression of facts for the Department to be justified to claim duty beyond a period of six months was a question of fact. In the show cause notice dated 9.1.1984, it was specifically alleged as under:
M/s Delhi bottling Co. Pvt. Ltd., New Delhi, have been collecting amounts on account of so-called “Reimbursement of Co-operative Advertisement” from the buyers of the goods (Non-alcoholic Beverage Base) through a set of Parallel Sale Invoices since 17.6.1983. They have been filing the RT-12 returns regularly along with the duplicate copies of G.P. Is. Regular Sale Invoices, but they never filed the Parallel Sale Invoice, through which they have collected extra amounts over & above the value collected on Regular Sale Invoices. They have, therefore, wilfully suppressed the material information involving Central Excise revenue with an intention to evade payment of central excise duty. They never divulged the information of collecting extra amount to any agency of the Central Excise Department, and continued to suppress till it was unearthed by the Range Superintendent on his visit to their factory premises on 24.10.1983. M/s Delhi Bottling Co. Pvt. Ltd., have therefore contravened the provision of Rule 173-G(3) of Central Excise Rules, 1944. On further probe by the Range Supdt. vide his letter C.No. GL-6/TI-68/IAR/LAR/82/1562 dated 26.10.1983 (copy enclosed), the fraudulent device adopted by M/s. Delhi Bottling Co. Pvt. Ltd., New Delhi for collection of excess value for sale of the goods (Non-alcoholic Beverage Base) has come to light. M/s. Delhi Bottling Co. Pvt. Ltd. have admitted vide their letter dated 9.11.1983 that no advertisement/publicity through any media of publicity has ever been undertaken. They have also failed to furnish the particulars of any such advertisement with regard to the excisable goods (non-alcoholic Beverage Base), as asked for by the Range Supdt. vide his letter dated 26.10.1983. It is, therefore, evident that they have adopted fraudulent device for collection of excess value from the buyers of the goods (Non-alcoholic Beverage Base) without undertaking the activity to which it was purported for. It is a fraud with the exchequer as the information of collecting excess value was suppressed from the Departmental officers and they continued to suppress it till it was detected by the Range Superintendent on his visit to their factory premises on 24.10.1983. M/s. Delhi Bottling Co. Pvt. Ltd., New Delhi, have evaded by fraudulent act Central Excise Duty amounting to Rs. 88,605.50 leviable on excess value of Rs. 88,60,55/-collected through Parallel Sale Invoice No. 1 dt. 17.6.1983 to 41 dt. 17.11.1983 for sale of excisable goods (Non-alcoholic Beverage Base).
11. The appellants were called upon to show cause as to why the duty should not be demanded from them under Rule 9(2) of the Central Excise Rules, 1944 read with Proviso to Section 11-A of the Central Excises & Salt Act, 1944. The assessee were collecting these charges by way of separate debit notes which were not disclosed to the Department. The Tribunal in the case of Kerala State Detergents & Chemicals Ltd. v. CCE, Cochin , in para 3(a) had observed as under:
3(a). Section 4 of the Central Excises and Salt Act, 1944 was amended after the judgment in the Voltas case and detailed provisions in relation to the inclusion or exclusion, as the case may be, of various elements of the price at which goods are ordinarily sold in the computation of the assessable value were enacted therein. The procedure for the determination of the assessable value, the forms in which price lists have to be filed were all prescribed. It was for the appropriate officer to determine the assessable value excluding from if such elements of the price (at which goods are ordinarily sold) that cannot form part of the assessable value–not for the assessee himself to deduct whatever he fancies from the actual price and declare the resultant as the price at which the goods are ordinarily sold. In the form prescribed, the assessee has to declare the actual price, at which the goods are ordinarily sold and furnish detailed particulars of such elements like e.g. cost of packing or discount of which he claims exclusion in the determination of the assessable value. All the particulars furnished have to be declared to be true to the best of the knowledge and belief of the assessee.
12. Reference may also be made to the Tribunal’s decision in the case of CCE v. Metal Box India Ltd. . Para 22 of that order is reproduced below:
22. On a study of prices charged by M/s. Metal Box India Ltd. to different buyers, I notice that in certain cases the price charged in respect of M/s. Ponds (India) Ltd. is nearly 50% less than the price charged in respect of certain buyers viz. M/s. Calcutta Chemicals Ltd., and M/s. Viniba Products etc. This does not mean a simple variation in price, but a chasm. When their attention was drawn to this point, the assessees have stated that they require time to set machine for each customer separately because each product is unique and distinct. The mechine setting for one customer will not be same for another customer. Therefore, for small quantity orders it will not be economical for the company to accept orders at lower prices. Where the order quantity is substantial, certain price concession is given. The assessees have further added that the gestation cost before crystallising a contract is very substantial because they give the design and have to try out several sample drawings, colour combinations, photographs with their customers before accepting a particular design for the customer. This is necessary for all customers. Therefore, when a customer does not have the potentiality of taking very large quantities, a very substantial loading of cost has to be made in the case of such contracts, they have pointed out. They have further added that they also provide customer services in the form of sending service engineers to their factory whenever there is a problem. Therefore, the small manufacturers use their services more than relatively larger manufacturers. This is another reason why there would be a variation in price, according to them.
In this connection, paras 22, 23, 24 & 25 of the Tribunal’s decision in the case of Madurai Soft Drinks (P) Ltd, v. Collector of Central Excise, Madurai , are reproduced below:
22. There was no declaration at all about these charges; so there was no occasion for calling of their details or of their justification in not including them in the declared prices. As the department was not aware of the practice adopted by the appellants for collecting the advertisement charges, the extended period of limitation was correctly invokable, on the rationale of the Tribunal’s decision in the case of Jai Drinks Pvt. Ltd. v. CCE 1991 (36) ECR 14, itself relied upon the appellants. The plea that the list of their records included “debit note for collection of advertisement and publicity charges” and “debit notes for collection of delivery charges and management service charges” and as such there is no suppression, has no force in as much as under the Self-Removal Procedure the assessee is required before assessment to file correct classification list/price list. The list of private records may be made use of by the audit, Assessment is made by the assessee himself on the basis of the approved classification list/price list, and it is obligatory on them to furnish true and complete particulars. As they have made some mention of transport charges, they were obliged to declare about the collection of advertisement charges also. In the case of TIL Ltd. v. CCE , the Tribunal had held that non-disclosure of recovery of designing and consultancy charges amounted to suppression, and having been mentioned in the Show Cause Notice, extended period of limitation was invokable. They were raising separate debit notes, and withheld the vital information from the Department. In the case of Mysore Rolling Mills Pvt. Ltd. v. CCE, Belgaum , the Hon’able Supreme Court in para 5 of their judgment have observed as under:
5. The only other submission of the appellant which remains for consideration is the tenability of the contention that the period of limitation under the old provision having expired, the five year rule which has been applied was not available to be applied. Undoubtedly, the rule in intended to relate back and cover a period of five years from the date jurisdiction under the rule is invoked. The provision is, therefore, retrospective in operation. It is not the scand of the earned Counsel for the appellant that only when a period of five years has elapsed from the date of introduction of the rule, jurisdiction under the rule can be exercised in respect of that preceding period of five years. Once the rule comes into existence and jurisdiction under the rule is invoked, it has got to cover a period upto five years preceding the date of issue of notice. The Tribunal has endorsed such action of the departmental authorities. The plea of limitation has no force.
23. The Tribunal in the case of Jabalpur Oxygen Company v. CCE 1991 ELT 455 (Tribunal) in para 6 have held as under:
6. So far as the limitation is concerned, we observe from the copy of the price list filed on 28.7.1979, effective from 1.8.1979 that the price declared therein was Rs. 2.85 per Cub. Mtr. It was not stated in the price list that this declared price included 0.25 P per Cub. Mtr. on account of handling charges. From the remarks given in the price list we, however, observe that a copy of the Appellants’ agreement with M/s. Eastern Air Products Private Limited was enclosed. Their letter No. EAP/AGR/13 dated 18.6.1979 is mentioned in those remarks. Clauses 1 and 2 of the said agreement dated 18.6.1979 reads as follows:
l.Rate
Oxygen gas: Rs. 2.85 (Rupees two and paise eight five per cubic meter)
The above price is on an ex-factory basis and exclusive of Excise duty, sales tax, octroi and any other levy that the Government may impose from time to time which will be on an actual basis.
2. Delivery & Collection of cylinders
You will arrange for collection of full cylinders from our factory and also shall return the empties to our factory. In case we are required to arrange transportation, then the actual cost incurred by us will be recovered from you.
In this agreement it is not stated that the rate of Rs. 2.85 per cubic meter includes handling charges of the cylinders in their factory. Clause 2 of the agreement says that in case the appellants are required to arrange transportation of cylinders then the actual cost incurred by the appellants on transportation will be recovered from the buyers. It is, therefore, clear from the agreement that the handling charges of 0.25p per cubic meter is not’ mentioned in the agreement dated 18.6.1979. This information was suppressed in the price list. The Department came to know about this recovery of handling charges by debit notes only during the time of scrutiny of the private records of the appellant. Shri Kohli’s argument that the Central Excise Officer could have known the fact of recovery of handling charges from the customer is not acceptable. The decision of the Tribunal reported in 1986 (8) ECR 353 (T), relied on by Shri Kohli, is not relevant to the facts of the present case and hence the same does not help the appellants. We, therefore hold that the Department was justified in invoking the five years’ limitation in issuing the show cause notice.
24. The Tribunal in para 14 of their decision in the case of Mysore Rolling Mills P. Ltd. v. CCE, Madras , had held as under:
14. Arguing that the period of limitation under proviso to Rule 10 could not be enforced against the appellants, the appellants further submitted that the non-indication of the fact of their collecting amounts from various customers by debit notes was a bona fide omission and that it was not intended to evade payment of Central Excise duty. The argument was that the debit notes were issued to save income tax. We were not told how it was so but that is immaterial. The debit notes had bearing on the valuation of the goods and the appellants had not only an opportunity to mention the same in the price lists but also they were bound to do so. They did not do so. As many as 916 debit notes were issued by them over a period of nearly three years and these circumstances do not lead us to the conclusion that the omission was bona fide. The appellants referred also to the judgment of the Tribunal in the matter of Mac Laboratory (P) Ltd. Bombay v. CC, Bombay 1985 (19) ELT 407 to argue that only normal period of six months is applicable to their case and not the enlarged time-limit. In the referred case, the position was that the show cause notice neither alleged misstatement, suppression of facts nor invoked the special period of five years. It was further held that unless misstatement or suppression is proved, special period of five years is not applicable. In the present matter the show cause notice dated 13.10.78, in Annexure I, made clear allegations of suppression of information and we have already discussed it in the previous para. The main show cause notice itself cited Rule 10(1)(i) of the Central Excise Rules. Therefore, it cannot be said that in this instance there was no allegation of suppression. A list of 916 debit notes was also enclosed to the show cause notice. Therefore, the case law cited by the appellants does not help them as the facts in this case are different. The appellants further cited, in support of their argument that only normal limitation could apply, the judgment of this Tribunal in the matter of Sriram Pistons and Rings Ltd., Ghaziabad v. Collector of Central Excise, Meerut 1983 ECR 1227D (T) : 1983 ELT 1927. The argument was that there was a duty cast on the officer to verify what was said in the price list and omission to perform this duty protected the appellants. This is not a valid one. The omission by the officer to make such a verification to detect the debit notes cannot have the effect of making null and void the action against the appellants after the discovery of such undisclosed debit notes. The cited judgment in respect of Sriram Pistons and Rings Ltd., does not cover the facts of this case, as allegations of suppression were made in the show cause notice.
25. It was not mere inaction or failure on the part of the assessee but a…. and deliberate withholding of information. Raising of the separate debit note, in addition to the invoice makes it clear that the manufacturer deliberately suppressed the information from the department. The Hon’ble Supreme Court in the case of Collector of Central Excise v. Chemphar Drugs and Liniments 1989 (21) ECR 182 (SC) : ECR C 1364 SC : 1939 (40) ELT 276 (SC) had observed that “whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatements or suppression or contravention of any provision or any Act, is a question of fact depending upon the facts and circumstances of a particular case” (Para 8). As we have analysed the facts and circumstances in this case, there is no doubt that the assessee had suppressed the fact of collecting advertisement expenses separately under specific debit note from the buyers. Once there is a deliberate suppression, penalty is imposable, as held by the Hon’ble Supreme Court in the case of Jai Shri Engg. Co. Pvt. Ltd. v. CCE . In that case, the Hon’ble Supreme Court had also observed in para 10 that “the fact that the department visited the factory of the appellant and they should have been aware of the production of the goods in question, were no reason for the appellant not to truly and properly describe these goods. If such is the case with the production, it is much more necessary as regards valuation, that too when separate debit notes were being raised without the knowledge of the department.
13 Taking all the relevant considerations into account, we find no merit in this appeal and the same is rejected.