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2017 (1) TMI 483 - SC - Central ExciseManufacture - excisability of food flavours - Valuation - inclusion of amount paid for Royalty - the food flavours were “prepared” by mixing of various essences (odoriferous substances) - The liquor manufacturers under the manufacturing agreement would use food flavours in such proportions as identified by the respondent and the blending proportion was maintained as a trade secret of the respondent - The royalty paid to the respondent by the liquor manufacturers, as asserted, is the difference between their selling prices of IMFL to outside buyers and the EDP of such IMFL. As pleaded, the payment of royalty has no nexus or connection with the food flavours. - Extended period of limitation. Held that: - from the order of the tribunal the exact nature of the process undertaking and how mixing is undertaken and the process involved is not discernible and has not been ascertained and commented. It remains ambiguous and inconclusive. The respondent claims that about 26% of the sales of odoriferous substances were brought from third party and sold without any modification or process. These are all questions of fact which must be first authenticated and the actual factual position validated. The tribunal has answered the question in favour of the respondent without the background check as to the actual process involved and undertaken. Different flavours may have different processes. The tribunal has held that certain show cause notices are barred by limitation - As we notice, the tribunal on this score has also not scrutinized the dates appropriately, but has returned a cryptic finding. Appeal allowed by way of remand.
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