2004 (8) TMI 532 - AT - Central Excise

Summary

Issues involved:
1. Inclusion of sales promotional expenses in assessable value.
2. Includibility of transportation charges, freight, and insurance in assessable value.

Issue 1: Inclusion of sales promotional expenses in assessable value

The appellants were required to pre-deposit duty and penalty for incurring sales promotional expenses and adding 50% of such expenses in the assessable value. The department sought duty on the remaining 50% reimbursed to dealers. The appellant argued that as per the agreement, dealers also benefited from the sales promotion, so the remaining 50% need not be added to the assessable value. The appellant cited various judgments including CCE v. Pepsi Foods Ltd., Philips India Ltd. v. CCE, and others to support their contention. The Tribunal found that the appellants had a strong prima facie case in their favor based on the agreement terms and previous judgments. Hence, the stay application was allowed, waiving the pre-deposit and staying recovery until the appeal's disposal. The appeal was scheduled for an out-of-turn hearing due to the significant amounts involved.

Issue 2: Includibility of transportation charges, freight, and insurance in assessable value

Another issue raised was the includibility of transportation charges, freight, and insurance in the assessable value. The learned Counsel referred to Supreme Court judgments in cases like Escorts JCB Ltd. v. CCE and Prabhat Zarda Factory Ltd. v. CCE to support their argument. The Commissioner's para-wise comments distinguished these judgments. Upon careful consideration, the Tribunal found that the appellants included 50% of sales promotion expenses in the assessable value and questioned the need to add the remaining 50% reimbursed to dealers. The appellants argued that dealers also benefited from the agreement, hence the reimbursement need not be added. The Tribunal found a strong prima facie case in favor of the appellants based on agreement terms and previous judgments, granting a waiver of pre-deposit and staying recovery until appeal disposal. The appeal was expedited for a final hearing.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore highlights the issues of including sales promotional expenses and transportation charges in the assessable value, along with the legal arguments, relevant judgments cited, and the Tribunal's decision to grant a stay and expedite the appeal process.