TMI Blog2018 (7) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... he vending machine. It was only if a vendor obtained the vending machine that he thereafter required the syrup, carbon dioxide and cups, as the case may be. The syrup, carbon dioxide and cups were distinct and different commodities and the vendor purchased the same according to his requirements. Some of the vendors did not purchase the cups from the appellant at all. Sometimes a vendor purchased all the three items namely syrup, carbon dioxide and cups, sometimes only the syrup, sometimes only carbon dioxide and sometimes only the cups. Cups and carbon dioxide - Held that:- The cups and carbon dioxide were not manufactured by the appellant. The appellant purchased the cups and carbon dioxide from manufacturers and/or from the market and merely resold the same to the retail vendors. Because the cups and carbon dioxide were the appellant’s trading items, it did not take any cenvat credit upon purchase thereof. The appellant had separate prices for the cups and carbon dioxide which were sold to only those vendors who wanted the same. The sale of the cups and carbon dioxide for separate price had nothing to do with the sale of the syrup or the sale price of the syrup which was the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and mandatory in connection with sale of the syrup and were part and parcel of such sale. The show cause notice referred to the agreement between the vendors and Taratala Soft Drinks Pvt Ltd. This show cause notice was thereafter followed by 10 periodical show cause notices for the subsequent period covering the periods from January 2004 to November 2009. The Adjudicating Authority vide Order-in-Original dated 30.11.2010 adjudicated all the 11 show cause notice (s) and confirmed the demand of duty alongwith interest and imposed equal penalty. Hence, the present appeal before the Tribunal. 2. Ld. Senior Advocate appearing on behalf of the appellant company submits that in terms of the agreement with the Coca Cola Company, the appellant uses the trade marks/brand names of the said company for the goods manufactured by it. For the manufacture of the final products, the appellant requires a non-alcoholic beverage base which is supplied to the appellant by Coca Cola India Pvt Ltd. at the agreed prices which are duty paid. The dealings between the appellant and Coca Cola India Pvt. Ltd. are on principal to principal basis. Ld. Senior Advocate further submits that the Syrup manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he syrup or the sale price thereof because the buyer used other goods and services provided by the seller of the syrup for separate consideration. Ld. Senior Advocate by challenging the impugned order contends that the decision of the Adjudicating Authority has infact subjected the aerated water manufactured by retail vendors, at their respective premises and exempt from excise duty, in terms of notifications issued by the Government from time to time, liable to excise duty in the hands of the appellant. It is his submission that the amount of duty sought to be demanded from the appellant in respect of syrup by including the price of the cups and Co2 gas and maintenance charge of the vending machines is even more than the duty which the appellant would have to pay, if they had manufactured the aerated water in its own factory. Ld. Senior Advocate submits that it would not be out of place to mention that for the subsequent period on the self-same issue the Department issued 4 show cause notices covering the period December, 2009 to February 2013. Show Cause Notice dated 14.12.2010 was adjudicated vide the adjudication order dated 20.12.2011 confirming the demand. On appeal the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g beverages to various retail outlets for the manufacture of aerated water at the vending machines. For better appreciation of facts the method and diagram of the whole process as submitted by the appellant is reproduced: METHOD: Dispensing Machines / Vending Machines-(DIAGRAM II) (i) This Equipment Mini Manufacturing Plant is installed at Retailers Shop. He operates this Machine and Manufactures Carbonated Soft Drink with the help of this Machine. (ii) At the outset let us clarify that the equipment involved is not a Dispensing Machine i.e. dispensing of a Small Quantity from a Bigger Container or even Vending Machine. (iii) It is in fact a Mini Carbonated Soft Drink Manufacturing Plant which contains Refrigeration System, Filtration, Proportionate Mixing Equipment, Carbonation Equipment. (iv) Paper Cups carrying brand name are bought out and sold to these Retailers. (v) Co 2 Cylinders (Small) are also bought out item and being sold to these Retailers. (vi) Co 2 Cylinder and Canister containing the Ready Flavour Syrup and Water are being connected into the Machine. (vii) Machine Manufactures Carbonated Soft Drink and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner erred in holding that the cups, carbon dioxide and the vending machine were essential for the marketability or marketing of the syrup or promoted sale of the syrup. 8. We also find that the Commissioner proceeded on a wholly erroneous construction of the agreement relating to supply of the vending machines to the retail vendors. The said agreement provided the terms and conditions on which the vending machines were provided free of cost to the retail vendors. One of the provisions in the said agreement was that the retail vendor would purchase the syrup, carbon dioxide and cups from the designated authorised bottler of Coca Cola Company and shall not use or dispense any other products through the vending machine without obtaining prior permission. The said agreement was not for sale of syrup and did not stipulate any condition for sale of the syrup. The said agreement was entered into prior to the sale of the syrup. It was only because the retail vendor took the vending machine on the terms and conditions stipulated in the said agreement that the vendor purchased his requirement of syrup, cups and carbon dioxide from the appellant. The purported findings of the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to service tax with effect from July 2003), the retail vendors paid the maintenance charge to the service provider, namely Taratala Soft Drinks Pvt. Ltd. which provided the service upto March 31, 2005 and to the appellant from April 1, 2005 to March 31, 2008, since it provided such service during the said period. The Commissioner failed to appreciate that there was no question of including the maintenance charge in respect of the maintenance service rendered in respect of the vending machines in the assessable value of the syrup manufactured by the appellant. Such maintenance charge was an item of cost for the retail vendors engaged in the manufacture of aerated water and there was no question of the maintenance charge enriching the sale of the syrup. 12. We also find that reliance by the Commissioner on the provisions of Section 4(3)(d) of the Act and Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (in short, Valuation Rules ) for including in the transaction value of the syrup the price separately charged for the cups and carbon dioxide and the maintenance charge of the vending machine is entirely misplaced. The Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus, a 'goods' which is not excisable if transplanted into a goods which is excisable would not together make the same excisable goods so as to make the assessee liable to pay excise duty on the combined value of both. Excise duty, in other words, would be leviable only on the goods which answer the definition of excisable goods and satisfy the requirement of Section 3. A machinery provision contained in Section 4 and that too the explanation contained therein by way of definition of 'transaction value' can neither override the charging provision nor by reason thereof a 'goods' which is not excisable would become an excisable one only because one is fitted into the other, unless the context otherwise requires. 56. It is not a case where the software is being supplied to the customer along with the computer by way of incentive or gift. The Respondent is charging the price therefor. Software therefor along with a computer is being sold both in the form of the information loaded in the computer as also in the form of a CD-ROM. In the invoice, the composite price of the computer and software is being shown, as noticed hereinbefore and therefrom, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es entered into agreements with the retail vendors in terms of which the said 109 machines were delivered and installed by them at the premises of the vendors. The remaining 38 machines were purchased by the appellant and were received at the separate warehouse of the appellant s Sales and Marketing Department at P-43, Taratala Road, Kolkata-700088. The delivery and installation of the said 38 machines at the premises of the retail vendors was handled by the separate staff of the appellant s said Department through a separate dedicated vehicle. In respect of the said 38 machines belonging to the appellant, since the maintenance was undertaken by a company called Taratala Soft Drinks Private Limited (earlier known as Calcutta Soft Drinks Private Limited) as stated in great detail hereinafter, the agreement with the vendors was made by Taratala Soft Drinks Private Limited using the same format as that used by the Coca-Cola Subsidiaries. (iii) The vending machines required regular maintenance by qualified mechanics and technicians by way of checking the machines, repairing, sanitization, replacement of defective parts, etc. The appellant states that during the period upto March 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory nor the appellant has got any infrastructure or machinery or plant to manufacture the same. These were merely trading goods which were purchased and resold as such. 17. We find that the impugned order passed by the Commissioner has in effect resulted in the aerated water manufactured by the retail vendors, at their respective premises and exempt from excise duty in terms of notifications issued by the Government from time to time, being subjected to excise duty in the hands of the appellant. In fact, the amount of duty sought to be demanded from the appellant in respect of the syrup by including the price of the cups and carbon dioxide and maintenance charge of the vending machine is even more than the duty which the appellant would have had to pay had it manufactured the aerated water in its own factory like the rest of its production and sold the same in bottles. 18. We also find that the Commissioner was wholly unjustified in not following the decisions of this Tribunal relied upon on behalf of the appellant and in purporting to distinguish the same on wholly untenable grounds. The said decisions are fully applicable to the instant case. 19. We also find that for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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