Pepsi Foods Ltd. vs Union Of India Through Secretary, ...
1995 Latest Caselaw 217 Del

JUDGMENT

D.P. Wadhwa, J.

(1) This petition under Article 226 of the Constitution is directed against the order dated 16 June 1994 read with order dated 21 October 1994 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, Special Bench "A", passed under section 35-F of the Central Excises & Salt Act, 1944 (for short 'the Act').

(2) The petitioner had filed an appeal before the Appellate Tribunal against the appellate order dated 7 February 1994 of the Collector of Central Excise (Appeal), Chandigarh, by which he confirmed the order-in-original dated 11 November 1993 passed by the Assistant Collector, Central Excise, Patiala. The Assistant Collector had raised a demand of central excise duty of Rs.2,16,06,131.00 . In the appeal before the Appellate Tribunal the petitioner sought stay of recovery of the aforesaid Central Excise duty, and for that purpose had filed an application under section 35-F of the Act. The Appellate Tribunal by order dated 16 June 1994 directed the petitioner to deposit a sum of Rs.1 crore within a period of 12 weeks from the receipt of the order. The petitioner then filed another application for modification of the order dated 16 June 1994 which was rejected by the Appellate Tribunal by order dated 21 October 1994 but granted one month's further time to enable the petitioner to comply with its earlier order dated 16 June 1994. The petitioner aggrieved by both the orders dated 16 June 1994 and 21 October 1994 has filed this petition seeking to quash the same. When the matter came up for admission before us we, while issuing notice to show cause as to why rule nisi be not issued, directed the petitioner to deposit Rs.50 lakhs which the petitioner has done. The respondents have filed their answer to show cause notice opposing the admission of the petition.

(3) The petitioner is engaged in the manufacturer of soft drink concentrates which it is selling to various bottlers who are in no way connected with the petitioner. The petitioner pays appropriate excise duty on the manufacture of concentrates on ad valorem basis on the price at which the goods are sold to the bottlers. Petitioner, it is stated, collects royalty charges from bottlers for use of the brand name 'Lehar' which belongs to the petitioner on the basis of agreement entered into with the bottlers. It is averred that this collection of royalty charges is over and above the sale price at which the concentrate is sold to the bottlers. The adjudicating authorities have demanded duty on the royalty charges collected by the petitioner. They have also demanded duty on the advertisement expenses incurred by the petitioner. On the examination of the relevant records the adjudicating authorities found that under the franchise agreement between the petitioner and the bottlers it was mandatory for the bottlers to use the brand name 'Lehar' with their beverage and that the said agreement also contained the clause that the bottlers would undertake appropriate advertising and sale promotions activities. The department also found that the petitioner was also advertising for its product, but that advertising was for final product, i.e., soft drink concentrates like Lehar Pepsi, Lehar Mirinda, Lehar 7UP, etc. The department was of the view that since the word "LEHAR" was a brand name whereas Lehar Pepsi, Lehar Mirinda & Lehar 7UP, etc., were names of its soft drink concentrates, as per section 4 of the Act, the expenses incurred on the sale promotion/advertisement were to be included in the assessable value of the concentrates sold to the bottlers. Element of excise duty towards royalty comes to over Rs.32 lakhs and that of advertisement over Rs.1.77 crores.

(4) Mr. Lakshmi Kumaran, learned counsel for the petitioner, said that the petitioner had a strong prima facie case and that both the items which are sought to be included in the assessable value could not be so added in view of the various judgments which he said favored the petitioner. He, therefore, said it was not a case where the petitioner should have been asked to deposit any duty as a pre- condition for hearing the appeal by the Appellate Tribunal. Mr. Lokur, Central Government Standing Counsel, said that all the relevant factors had been taken into consideration by the Appellate Tribunal while directing the petitioner to deposit Rs.1 crore under the proviso to section 35-F of the Act.

(5) Appeal is not a matter of right. It can be subject to conditions and one of the conditions in the present case is that person desirous of appealing shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied. The Appellate Tribunal may, however, dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interests of the revenue. Before that the Appellate Tribunal has to reach a opinion that deposit of the duty demanded would cause undue hardship to the appellant. It has also to be noted that there cannot always be stay of the duty even if there is a prima facie case in favor of the appellant. Neither the giving of a security or a bank guarantee is a substitute to the deposit of the duty demanded. In the present case, the Appellate Tribunal did come to the conclusion that demand to deposit whole of the duty would cause undue hardship to the petitioner. It, therefore, directed the petitioner to deposit a sum of Rs.1 crore. In a case like this it is not possible to say as to how the Appellate Tribunal arrived at the figure of Rs.1 crore. In the circumstances, it has to be some estimate, and when there is a question of estimate there is a discretion. No case can be precedent for another, legal principles apart. It is stated before us that the appeal is already on the board of the Appellate Tribunal, and the question raised in the appeal would arise in subsequent years as well. On the view taken by the department liability to pay duty would arise every day. It is, therefore, a case which should be heard at an early date.

(6) In the circumstances of the present case, we will modify the orders of the Appellate Tribunal and would say that condition of pre-deposit of Rs.50 lakhs should suffice the Appellate Tribunal to hear the appeal. The appeal, it is stated, is to be heard by Special Bench "A" of the Appellate Tribunal. We do hope, in spite of heavy schedule the Special Bench "A" would be able to hear the appeal expeditiously and may be within a period of three months from the date of the order. With these observations, this petition stands disposed of.