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TMI Blog1988 (4) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... o a number of wholesale dealers and not through the sole selling agents. 3. Certain inquiries were conducted by the Excise Department. The statements of those persons who were declared by the appellants to be their wholesale dealers were recorded and certain records were also examined by the Department. From these investigations the Department came to the tentative conclusion that the dealers were really not independent entities but were selling aerated waters under the direction of Kismat. In other words, the Department was of the opinion that the change of the sales pattern was not real. 4. The Department, therefore, issued a show cause notice setting out the charges and alleging that Kismat and Company under the appellant's management, were still the sole selling agents and that the so-called wholesale dealers were actually working under the control and direction of the appellant. The Department, therefore, claimed that duty should be paid at the prices charged by Kismat to the wholesale dealers as was done prior to 1.1.1973 (from which date their revised price list was to come into operation) and that the trade discount claimed by the appellants was inadmissible. The Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same on payment of fine of Rs. 25 lakhs. Hence this appeal. 8. Shri Anil Dewan, the learned Sr. Advocate (with others) during the course of his arguments recalled the facts of the matter. He submitted that prior to December, 1972 the appellant company was selling their product to its sole distributor Kismat but decided to withdraw the sole distributorship and to have all selling activities directly from the factory gate to the wholesale dealers or customers. The fresh price list effective from 1.1.1973 was accordingly filed and approved by the Assistant Collector on 29.12.1972. Between 1.8.1973 to June, 1974 the appellant company cleared the products after paying excise duty as per approved price list. Shri Dewan further submitted that 18 show cause notices were issued to the appellants between 28.6.1978 and 4.12.1979 for the period 1.10.1975 to 30.9.1979 demanding aggregate duty of over Rs. 80 lakhs. He submitted that the Collector of Central Excise, Bombay Shri S.R. Narayan set aside the 18 show cause notices and directed the refund of all amounts paid by the appellants. The learned Counsel further stated that 22 show cause notices were issued to the appellants between 27.9.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such confiscation as required by Rule 173Q(i). He submitted that in any event the imposition of the fine of Rs. 25 lakhs could not be justified under any circumstances. 14. Shri V.M. Doiphode, the learned SDR opposed the arguments and submitted that though the appellants claimed that all their dealers are independent, they really insisted on such independence in respect of only 7 of their dealers, namely :- (1) M/s. Janta Soft Drinks, Bombay. (2) M/s. Shalimar Soft Drink Centre, Bombay. (3) M/s. Tushar Agency, Bombay. (4) M/s. Poona Bottling Co., Poona. (5) M/s. Ruby Agency, Nasik. (6) M/s. Surat Bottling Co., Surat. (7) M/s. Indore Bottling Co., Indore. Out of these 7, the appellants pressed only the names of M/s. Janta Soft Drinks, M/s. Poona Bottling Co. and M/s. Surat Bottling Co. before the Collector with claims that they were independent. Therefore, the learned SDR argued, the appellants cannot now be permitted to argue about four more dealers. Explaining that none of the independent dealers was really independent of the appellants, Shri Doiphode argued that: (i) the dealers were under strict obligation to operate only on given routes and were compensated by paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that even according to this affidavit at all relevant times the salesman of Kismat were used for distribution and sales of the product purchased by them. Further, it was pointed out by the learned SDR that proof is found in respect of the Collector's finding, in the statement of Shri Motani, Shri Jaswala, Shri Chauhan and Shri Ramesh Mehta all of whom deposed facts which indicated that they were not independent wholesale dealers but only commission agents. 16A. Shri Doiphode further argued that dealers such as Poona Bottling Co. and Surat Bottling Co., as also those who are far away from Bombay cannot be considered as independent dealers. Shri Doiphode explained that Poona Bottling Co., Surat Bottling Co., Ruby Agency and Indore Bottling Company were Franchise holders to whom the appellants might have sold some stray consignments at times when there was shortage of soft drinks in those distant places. Such sales, the learned SDR submitted, could not be considered as being in the ordinary course of trade. Besides, he pointed out that the quantum of such sales is too small to be taken into consideration. 17. Finally, Shri Doiphode submitted that the sales made to the so-called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect that the deponents were under obligation to pay for the services of 3 loaders of Kismat, to buy petrol from the pump belonging to Kismat and for operating on given routes. 22. We have carefully gone through these statements. So far as "given routes are concerned", we do not consider that this condition should result in rendering a dealer dependent. A manufacturer has a right to give dealership in specified areas and to restrict their sales so that one dealer does not clash with others. The claim that buying petrol at Kismat's petrol pump should be considered as a sign of dependence has to be considered in the total context. Petrol costs the same anywhere and even if some of the dealers purchased petrol at Kismat this fact alone does not lead to an inference that the dealers were dependent on Parles. Providing empolyment to Kismat's loaders has also to be considered as peripheral evidence. 23. We cannot, however, brush away the contents of the statement of Sh. Sodawala to the effect that Rs. 1.20 per crate was the "commission" allowed to him. The Ld. Counsel for the appellants submitted that the affidavit filed by Shri Sodawala corrected his version and also explained to us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject these affidavits as incorrect. Here, the Collector had, before him, statements of the deponents and a number of other attendant circumstances which he kept in view while not giving any weight to the affidavits. We feel that in the light of what we have discussed above the Collector's omission does not render the order void or unsustainable. We also take note of what was stated before the Collector of Central Excise, Bombay on behalf of the appellants as recorded in Order-in-Original No. 66/1984 the arguments related to a period subsequent to the period in question in these appeals (111/1983 to 228/1983). During the course of arguments the Ld. Counsel for the appellants referred to the practice prevailing prior to 1.10.1975 and stated as follows, according to the Collector's order :- "Shri Hidayatullah explained that the show cause notices which are at present the subject matter can be broadly divided in three groups. First will include the show cause notices covering the period upto 1.10.1975. The second group will include the show cause notices covering the period upto 30.9.1979 and the third and the last group of show cause notices will cover the period from 1.10.1979 onwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is supplied). 26. We refer to this portion to note what the appellants themselves stated with regard to the position prevailing during the period covered by the present appeal. Taking all the circumstances into consideration we hold that M/s. Janta Soft Drinks, Bombay cannot be considered as an independent dealer. 27. We do not place any value on the 4 franchise holders to whom small quantities of goods was sold. These sales cannot be considered to be in the ordinary course of business as they are infrequent and are very small. We had already observed that the sales to these 4 Bottling Companies together with the sales to M/s. Shalimar Soft Drink Centre, Bombay and M/s. Tushar Agency, Bombay constitute only 1.6 per cent of the company's sales. (These two were not claimed before the Collector as independent). Therefore, these sales cannot be said to be illustrative of the price charged by the company, especially keeping in mind that between Oct., 1973 and June, 1974 Kismat Pvt. Ltd. accounted for 56.76 per cent of the sales and 24 other so-called wholesale dealers, in respect of whom there are no claims of independent dealing, accounted for another 36 per cent of the sales. These ..... X X X X Extracts X X X X X X X X Extracts X X X X
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