PEPSICO INDIA HOLDINGS (P) LTD. Vs. CCE

JUDGEMENT

(1.) M /s. Pepsico India Holdings Pvt. Ltd. manufacture a syrup which is a mixture of soft drink concentrate and sugar. This syrup is liable to central excise duty under hearing 2108 of the Central Excise Tariff. The syrup in question is packed in Bag in Box (BIB) containing 20 liters per BIB and is dispensed to consumers after dilution and carbonation by retailers through dispensing machines. The appellants sell the syrup to their marketing subsidiary M/s. Pepsi Cola India Marketing Company and the marketing subsidiary sells to retailers. Part (2 -3%) of the syrup produced is also sold ex -factory to two independent distributors M/s. Sheena Agencies, Kalyan (West) and Thirst Quenchers Karjat.

(2.) THE issue raised in this appeal is the valuation of the syrup to central excise duty. The dispute turns on two elements. The central excise authorities have held that the assessable value should be fixed at the sale price of the marketing subsidiary of the manufacturing company, that too without allowing the deduction of discounts allowed by the marketing subsidiary to their buyers. The second element is that Rs. 30/ - received by the marketing subsidiary from the retailers towards rental on the dispensing machines leased out by the subsidiary should also form part of the assessable value of the syrup.

(3.) ASSESSMENT based on the sale price of the subsidiary is made by relying on the special provision contained in Section 4 of the Central Excise Act relating to the valuation of goods sold to or through related persons. The denial of discount is made on the ground that the discounts are not uniform. Inclusion of lease charge of the dispensing machine is made on the ground that the dispensing machine is essential for the sale of the goods and, therefore, its rental also is in connection with the sale of the goods.