it is undisputed that the main appellant is a bottler of Pepsi brand of aerated waters and is purchasing concentrate from PFL and converting into aerated waters sells the same to various distributors, PFL discharges central excise duty on the concentrate so sold to the main appellant; the manufacturing activity of aerated waters is diluting the concentrate purchased from PFL; the main appellant is also engaged in the trading activity of various canned products of Pepsi brand which are purchased by them from Pepsico India Holdings Ltd. which is not the same as PFL. In order to enhance the sales of aerated waters, the main appellant undertakes marketing and advertising of the products. As per the agreement entered into with PFL, the said expenses are shared in a particular manner and the main appellant has received an amount during the relevant period from PFL, which is sought to be taxed by the adjudicating authority under the head business auxiliary service.
We have perused the agreement entered into by the main appellant with PFL and find that the entire agreement talks about the sale of concentrate to the main appellant and the conditions for bottling the said trade mark like Pepsi, Mirinda, 7-up etc. The said agreement also provides for rights of PFL to sell and distribute beverages in other areas by appointing various bottlers. We have specifically perused the clauses relied upon by the adjudicating authority which is 11(b) and (d). On perusal of the said clauses, we notice that it talks about the steps necessary to be taken by the main appellant to promote and enhance the visibility and goodwill of trademarks and in particular the main appellant shall endeavour to maximise the sales and to increase the beverages share of market. Both the clauses when scrutinised in depth, do not indicate that the main appellant is required to promote or market or sale of goods produced or provided or belonging to PFL. In the case in hand, PFL is only producing and selling concentrate to the main appellant for converting into aerated water. The adjudicating authority’s findings that the concentrates are belonging to PFL, also does not cut the ice, inasmuch the said concentrate is sold on payment of excise duty to the main appellant, which would indicate that once the sale takes place, the concentrate does not remain the property of PFL.
The definition of business auxiliary service may not cover the transaction in this case, as the main appellant is not promoting or marketing of services provided by PFL as there is no service which has been provided by PFL in the case in hand. The findings of the adjudicating authority that the agreement requires the main appellant to promote the trademarks, which in term is nothing but the goods, seems to be far fetched as in the case in hand there is no mention of trade marks in the definition of BAS (as reproduced herein above). In short, we conclude that the main appellant is not promoting or marketing or selling the concentrates which are produced or provided by PFL to them for manufacturing of aerated waters.
