TMI Blog2004 (8) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 2. Shri Natarajan, Sr. Advocate along with Shri B.V. Kumar, Advocate, appeared for hearing on behalf of both the appellants. Shri Natarajan pleaded that the present Order-in-Original has been passed by the Commissioner consequent to the remand order of the Tribunal under its Final Order Nos. 907- 908/2003, dated 8-7-2003. He referred to Paras 5 and 6 of the order of remand and pleaded that the case was remanded back as the invoices of sales made, which were produced before the Tribunal, were not considered by the learned Commissioner and therefore, keeping all the issues open, the case was remanded back to the Commissioner. The Commissioner has passed the impugned order after taking into consideration the directions issued by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to two different contracts with the Contract Bottling Units - one is manufacturing agreement and the other is Usership agreement. They are receiving royalty charges, service income from the Contract Bottling Units under the Franchise Agreements entered with them. They do not receive any royalty/service charges from independent bottlers who purchase food flavours from them but are selling the liquors under their own brand names. Therefore, the department's plea, that the royalty/service charges received by them from the Contract Bottling Units who manufacture the IMFL in their brand name under the franchise agreement should be added in the assessable value of the food flavours, is not a correct preposition. He pleaded that all the charges li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bottled beverage in addition to the trademark of Pepsico and comply with the instructions of the assessee in regard to manufacture, sale and distribution of beverages. There is an element of control in respect of the entire business operations of the bottlers. There exists an inextricable bond between the obligation of the bottler to purchase the concentrate exclusively from the assessee and the user of trade-mark of assessee subject to payment of royalty. The royalty, which is realisable as a consideration for authorising the use of trade-mark, cannot, therefore, be viewed in isolation. The appellant's sale of concentrate, the bottler's manufacture of beverages out of that and the sale thereof by using assessee's trade-mark are all int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the flow of the funds of the appellants. 5. We have carefully considered the submissions made by both the sides. We find that in this case, the appellants are clearing the food flavours to themselves for their captive consumption, and supplying it to the Contract Bottling Units who are manufacturing IMFL of the brand of the appellant and who are under the terms and conditions of the appellant and as per the Franchise agreement, manufacturing the goods from the food flavours and the appellants are also selling some quantity to other manufacturers of liquor who are manufacturing the liquors of their own independent brands. The Commissioner in Para 21 of the impugned order has given a finding that- "The food flavours manufactured and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale and purchase of food flavours. Hence it is clear that the instant case falls directly within the ambit of the decision of the Hon'ble Supreme Court in the case of M/s. Pepsi Foods Ltd., mentioned supra". In view of this finding and also from the findings of the Commissioner in Para 23 of the impugned order that the price of food flavour is controlled by the assessee and hence not on a principal-to-principal basis. We do not find that the appellants have a strong prima facie case in their favour as in terms of Apex Court ruling in the case of M/s. Pepsi Foods Ltd., in an identical situation, the Apex Court held that the royalty amount, service and commission charges collected by the assessee for use of trade-mark is required to be ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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