TMI Blog2009 (6) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... hat- the process undertaken for treatment of water did not result in the emergence of new product. Thus there is no infirmity in the order of Commissioner (Appeals), thus reject the revenue appeal. - E/169 and 292-293/2008 - 849-851/2009 - Dated:- 29-6-2009 - S/Shri T.K. Jayaraman, Member (T) and M.V. Ravindran, Member (J) Ms. Joy Kumari Chander, JCDR, for the Appellant. Shri Naresh Thackkar, Advocate, for the Respondent. [Order per: T.K. Jayaraman, Member (T)]. - All these three appeals have been filed by the Revenue against order-in-appeal No. 56,57 58/2007 (H-III) CE dated 29-11-2007 passed by the Commissioner (appeals). We heard both sides. 2. The brief facts are as follows:- The appellants are the manufacturers of aerated beverages which are excisable. They have water treatment plants in their factory for purifying and treating water which is captively consumed in the manufacture of aerate waters. Some quantity of treated water is supplied to few retail outlets selling beverages such as Cocoa Cola, Thumpsup etc., through vending machines. The treated water was supplied through canisters embossed with monogram "COCOCOLA" or jerry cans/stainless steel tan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 22 of the CETA processes such as filtration, purification to any other process or any one or more of these processes, labeling or re-labelling of containers and repacking from bulk pack to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture in relation to waters including natural or artificial or mineral waters of heading 22.01 and waters including mineral waters of heading 22.04 of the Excise Tariff Act. Hence, the process adopted by the assessee for purification, treatment of water to render the product marketable to the consumer amounts to manufacture under Section 2(f) of the Central Excise Act. (iii) The Commissioner's observation that the adjudicating authority has erred in holding that the expression "to render the product marketable to the consumer" used in the Chapter note applies only to the expression adoption of another treatment and any other process is not correct. The adjudicating authority has given a clear finding in this regard (in para 19 of the OIO) distinguishing the case laws in respect of M/s. Lakme Lever Ltd. [2001 (127) E.L.T. 790 (T)] and Lupin Laboratories Ltd., reliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the vending machines. These activities of manufacture of goods which are marketable finding a place in the Central Excise Tariff, 1985 render them excisable. (vii) It is significant to note from the OIA that during the appeal proceedings the assessee brought out a new ground altogether that the cost of treated water is included in the cost of post mix cleared along with such water which is incorrect and goes against their own statement that the treated water is supplied free of cost. (viii) Coming to the issue of brand name, treated water is consumed captively within the factory in the manufacture of aerated water and some quantity of this water is supplied outside to retail outlets in canisters of 18 litres under the brand name "coca-cola" by the assesse and that means all the canisters carrying purified water bear the company name "Cola". As per note 6 to chapter 22, brand name means the name or mark such as symbol, monogram, signature, or invented word or any writing whether registered or not, which is used in relation to a product for the purpose of indication or so as to indicate a connection in the course of trade between the product and some person using such name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commitment of offence. Therefore he is concerned himself in the manufacture and clearance of purified water without payment of duty and thereby rendering himself liable to penalty under Rule 26 of CE Rules. (xii) Shri S. Sridhar, Manager (Finance) of Hindustan Coco Cola is not a mere employee but is an authorized signatory and is well conversant with law and procedures of central excise and as such is instrumental person in the commitment of offence. Therefore he is concerned himself in the manufacture and clearance of purified water without payment of duty and thereby rendering himself liable to penalty under Rule 26 of CE Rules. 3. The learned SDR reiterated the above grounds of appeal. She particularly invited our attention to the Chapter notes of the Chapter 20 stating that in terms of the said note, the processes undertaken would amount to manufacture and the assessees are liable to pay central excise duty. 4. Shri Naresh Thakkar learned advocate appeared for the respondents. The learned advocate for the respondent urged the following submissions. (a) The respondents do not sell water to their retail outlets. They only supply water to their retail outlets in canis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to retail packs or the adoption of any other treatment, which renders the products marketable to the consumers as being that of manufacture. For a manufacturing process to come into existence, ingredients contained therein must be strictly complied with. In the present case the respondents do not render the product marketable. The processes specified in Note 2 to Chapter 22 would amount to manufacture only if it renders the product marketable to the consumers. It is a settled law that the burden to prove marketability lies on the department. The department has not conducted any enquiry to discharge its burden to show that the treated water was marketed by the respondents simply because the respondents have supplied treated water to the vending machines outlets, it cannot be said that treated water has become marketable which otherwise was also marketable as water. The respondents do not sell the treated water to their retail outlets for any consideration much less with a profit motive. The essential ingredient of sale and thus marketable is entirely missing. The processes carried out did not change the nature and composition of water. The water remains as water. The water in it's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la", no duty is payable therein for the following reason. (1) The marking "cococola" embossed on the canisters were made by the supplier with a view to identify the canisters meant for supply to the respondents and not under the express direction of the respondent. Coco-cola is the brand name of a specific aerated water drink manufactured by the respondent. Each product manufactured and sold by the respondent in bottles/cans carries such a specific name unique and specific to each product such as "Maaza" for the mango pulp based drink, 'Fanta' for it's orange flavoured drink and 'Kinley' for the soda and pure drinking water manufactured by the respondents. None of these names can be associated with treated water and, in fact, no generic name whether branded or otherwise has been developed for treated water. Treated water is not required to be supplied only in canisters and that in some locations, the treated water is filled in SS tanks which are carried to the retail outlets in trucks. It shows that there is no specific brand name under which treated water is sold by the respondents. The basic intent of branding a product is to enable charging of a price which is at a premium ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 2 to Chapter 22 such as filtration, purification, labeling or relabeling of containers and repacking from bulk packs to retail packs etc., render this treated water marketable in the absence of its actual sales to buyers. The treated water had not been sold with any profit motive. In the absence of the essential ingredient of sale, we do not agree that the said product is marketable. Moreover, the processes undertaken had not changed the nature and composition of water. Before the processes were undertaken, the product was water and afterwards also it remains water. The deeming provision, namely Note 2 to chapter 22 is not applicable in the absence of market enquiry and proof of sale of the treated water. The process of purification/filtration merely improved the quality of water. There is no evidence to show that the treated water had been supplied to any consumer. They were only sent to the vending outlets for producing the cococola. The fact that the canisters bore the name "Cococola" is not material. It is the brand name of a specified aerated water drink manufactured by the respondents. It was stated that only with a view to identify the canisters, the said name was embosse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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