2005 (6) TMI 405 - AT - Central Excise

Summary

Issues:
- Appeal against dropping the demand of duty of 30% of expenses incurred by agents for advertisement.
- Whether expenses borne by agents for advertisement should be included in assessable value.

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal passed by the Commissioner of Central Excise (Appeals), Ahmedabad. The case involved M/s. Nirma Limited, a manufacturer of excisable goods, where consignment agents incurred advertisement expenses, with 70% reimbursed by the units and the remaining 30% borne by the agents. The Revenue contended that duty should be charged on the 30% expenses borne by the agents.

2. The Revenue argued that advertisement and publicity expenses incurred by agents should be considered additional consideration as the functions of sale promotion and advertisement are the manufacturer's responsibility. They cited relevant Supreme Court decisions to support their claim. The Revenue emphasized that the 30% expenses borne by agents were on behalf of the manufacturing units and should be subject to duty, as per the decision in CCE v. Bajaj Tempo Ltd.

3. On the other hand, the respondents argued that the advertisement benefits both the manufacturer and dealers, sharing the expenses equally. They referred to the Supreme Court decision in Philips India Ltd. v. CCE, where it was observed that advertisement costs shared by dealers and manufacturers should be divided equally. The respondents also highlighted a Tribunal decision supporting their stance.

4. The Tribunal considered both parties' submissions and found that the case aligned with the Supreme Court decision in Philips India Ltd. v. CCE. They noted that the situation in the present case, where dealers bore 30% of the advertisement expenses, differed from the scenario in CCE v. Bajaj Tempo Ltd. The Tribunal concluded that the expenses shared by dealers should be deducted from the assessable value, following the precedent set by Philips India Ltd. v. CCE.

5. Ultimately, the Tribunal ruled against the Revenue's appeal, stating that the case was in line with the decision in Philips India Ltd. v. CCE. They emphasized the distinction between the present case and CCE v. Bajaj Tempo Ltd., affirming that the expenses shared by dealers should not be included in the assessable value. The appeal of the Revenue was dismissed based on the application of relevant legal precedents.

6. In conclusion, the Tribunal found no merit in the Revenue's appeal and rejected it, upholding the decision that the expenses borne by agents for advertisement should not be included in the assessable value, following the principles established in Philips India Ltd. v. CCE.